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Canada Increasing Regulation of Environmental Claims and Greenwashing


On June 20, 2024, the Canadian federal government enacted Bill C-59, amending the Competition Act by granting royal assent to Bill C-59.

 

What is Greenwashing? 


“Greenwashing” is when a business, intentionally or inadvertently, makes false or misleading claims about the environmental or sustainability attributes of its business, products or services. Greenwashing has the effect of deceiving or influencing consumers into purchasing from “green” businesses or to purchase “green” products or services. 


How Might You Be Liable? 


The primary source of liability in the area of greenwashing in Canada at this time is the Act which prohibits the making of “false or misleading” representations to the public. The amendments to the Act expressly target greenwashing claims instead of relying on the Act’s existing (and more general) false or misleading claims provisions. These misleading representations can be statements, warranties or guarantees and can be in written, oral or other media form. If a business claims a product’s benefiting in protecting or restoring the environment or mitigating the environmental, social and ecological causes or effects of climate change or that business’ activity is doing such, they must verify its accuracy through proper substantiation and internationally recognized methodology before making such a representation to the public. It is important to note the phrases “adequate and proper substantiation” and “internationally recognized methodology” are not defined in the Act.  


Understanding the Guidelines 


The Competition Bureau has indicated that green marketing guidelines will be created to clarify which standards of testing and substantiation are acceptable in the Canadian context. To assist in this regard, on July 22, 2024, the Competition Bureau launched a public consultation period with respect to such provisions and the considerations and challenges of businesses and advertisers in complying with these provisions. 


By comparison, the EU is already considering banning the use of common “green” terms such as “carbon neutral “ and making claims about specific emission reduction targets. The EU has also implemented its Ecolabel regime over three decades ago, which identifies consumer products with reduced environmental impacts based on scientifically sound criteria. It is suspected that the Canadian government will look to the EU as a benchmark of success. 


If you would like help navigating your advertising claims so that they do not trigger greenwashing issues, Froese Law is happy to help. Reach out to us for a free 15-minute consultation at www.froeselaw.com 

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