Guidance: Environmental Claims and the Competition Act

Posted by on Jan 31, 2025 in Blog | 0 comments

 

In our July 15, 2024, blog, we discussed Bill C-59 and the substantial changes to Greenwashing under the Competition Act.  On December 23, 2024, the Competition Bureau released draft guidelines: “Environmental Claims and the Competition Act.”  Comments close on February 28, 2025.

Competition Act: Six Principles

As stated in the draft guidance, while the Bureau does not tell businesses what they can or cannot say, “The Bureau has developed six high-level principles that together can help your business stay onside of the law when it comes to environmental claims.”

  • Principle 1: Environmental claims should be truthful, and not false or misleading.
  • Principle 2: Environmental benefit of a product and performance claims should be adequately and properly tested.
  • Principle 3: Comparative environmental claims should be specific about what is being compared.
  • Principle 4: Environmental claims should avoid exaggeration.
  • Principle 5: Environmental claims should be clear and specific – not vague.
  • Principle 6: Environmental claims about the future should be supported by substantiation and a clear plan.

Who Does This Affect?

If you make environmental claims, you should assume it will affect you.  According to a blog by Aird Berlis, “Amendments to the Act targeting greenwashing claims impact a broad array of businesses, including those in the energy, mining, oil and gas, consumer products, health, food and beverage, financial services and construction sectors.”

Marketing Channels

As the focus is on marketing and promotional representations, you may want to look at any statements you have made with respect to environmental stewardship or protection (Image purchased from Shutter stock).

Focus on Marketing and Promotional Representations

The Bureau’s focus is on marketing and promotional representations made to the public rather than representations made exclusively for a different purpose, such as to investors and shareholders in the context of securities filings (Source: Competition Bureau).  With many, if not most, companies using online channels including websites, blogs, social media platforms, etc… it may be important to closely reexamine environmentally-related statements.

When the legislation passed in 2024, at least one group of companies removed all content about environmental goals from its website and social media pages, citing “significant uncertainty” over the federal government’s anti-greenwashing legislation (Source:  Dragun Corporation July 15, 2024, blog).

What is Adequate and Proper Testing?

One of the main areas of focus is that an environmental claim cannot be made before there is adequate and proper testing of the claim.  Under Part VII.1, Deceptive Marketing Practices, the Act states a person engages in reviewable conduct who, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever,

  • (b)makes a representation to the public in the form of a statement, warranty or guarantee of the performance, efficacy or length of life of a product that is not based on an adequate and proper test thereof, the proof of which lies on the person making the representation;
  • (b.1)makes a representation to the public in the form of a statement, warranty or guarantee of a product’s benefits for protecting or restoring the environment or mitigating the environmental, social and ecological causes or effects of climate change that is not based on an adequate and proper test, the proof of which lies on the person making the representation;
  • (b.2)makes a representation to the public with respect to the benefits of a business or business activity for protecting or restoring the environment or mitigating the environmental and ecological causes or effects of climate change that is not based on adequate and proper substantiation in accordance with internationally recognized methodology, the proof of which lies on the person making the representation;

In the Aird Berlis blog, they write, “Courts have interpreted an adequate and proper test to mean fit, apt, suitable or required by the circumstances, based on the general impression conveyed.  Evidence such as long-term consumer use are not considered a ‘test.’  Testing is required regardless of the size of the business.”

Due Diligence Protection

Businesses can rely on due diligence protection.  As provided in the Act, “No person shall be convicted of an offence under this section who establishes that the person exercised due diligence to prevent the commission of the offence.”

Legal Action Stating Law is Unconstitutional

This law is far-reaching and potentially creates substantial liability for companies going forward.  We know of at least one legal challenge to the new law.  As reported in the Calgary Herald, “In a 46-page statement of claim filed in Calgary Court of King’s Bench…the Alberta Enterprise Group and the Independent Contractors Business Association seek a judicial declaration the law is unconstitutional.”  According to the article, the plaintiffs allege even true claims could lead to substantial fines, creating a “chill effect” on public commentary.

It’s worth noting that, under the law, any six persons who reside in Canada can trigger a review of an environmental claim (see Application for inquiry).

Concluding Remarks

With the low bar for triggering a review and the challenging conditions of the law that define adequate and proper testing, companies may choose to forgo making any environmental claims that are not required by law or as part of a contract.  While the public may want to see more information about a company’s environmental stewardship efforts, simple statements such as we are an ISO 14001 certified company might be the safer route.  It may not be glamorous, but it is easily provable.

As the focus is on marketing and promotional representations, you may want to look at any statements you have made with respect to environmental stewardship or protection.  You may also want to discuss this with internal or outside legal counsel.

If you have questions about an environmental issue, contact Christopher Paré, P.Geo., Q.P., at 519-948-7300, Ext. 114.

Dragun Corporation does not use artificial intelligence to draft our blogs or any other material.

Alan Hahn drafted this blog.  Alan has an undergraduate degree in Environmental Studies and completed a graduate program in Environmental Management.  He has worked in environmental management for more than 45 years.  He has written hundreds of blogs and articles.  His published work includes HazMat Magazine, BizX Magazine, Michigan Lawyers Weekly, GreenStone Partners, Manure Manager Magazine, and Progressive Dairy.

Christopher Paré, P.Geo, reviewed this blog.  Chris is a senior geoscientist and manager of Dragun’s Windsor, Ontario, office.  Chris has more than 30 years of experience on projects ranging from environmental site assessments (Phase One/Two ESA), excess soils, remedial investigations, soil and groundwater remediation, Permits to Take Water, Records of Site Conditions, vapour intrusion, and site decommissioning.  Chris is a frequent speaker, author, and expert witness.  See Chris’ bio.

Follow Dragun Corporation on LinkedInX, or Facebook.

Sign up for our monthly environmental newsletters.

Principled Foundation | Thoughtful Advice | Smart Solutions

Established in 1988