New greenwashing guidance released as public consultation period opens | Insights

As discussed in our previous articles, new “anti-greenwashing provisions” in the deceptive marketing practices sections of the Competition Act are now in force.

Canadian businesses may finally have some clarity regarding the anti-greenwashing provisions, especially with respect to the concept of “internationally recognized methodologies,” as the Competition Bureau (the “Bureau”) released a set of draft environmental claims guidelines for public consultation on December 23, 2024 (the “Draft Guidelines”). The Bureau has encouraged businesses to submit their views and concerns regarding the Draft Guidelines by February 28, 2025.

This article provides an overview of the Draft Guidelines and explains how businesses can participate in the Bureau’s public consultation process. While the Guidelines won’t have the force of law, they will be persuasive in any litigated proceeding before the courts.

Important points on the Competition Bureau’s anti-greenwashing approach

The Draft Guidelines highlight several important points about the Bureau’s approach to environmental claims under the anti-greenwashing provisions and its interpretation of certain concepts under the Competition Act:

• Internationally recognized methodology: The Bureau reaffirmed that Canadian standards are generally acceptable as are standards “recognized in two or more countries,” but not necessarily “recognized by the governments of two or more countries.”
• Net-zero methodologies: The Bureau left the door open to net-zero claims and indicated that “many” different standards have been developed to help businesses learn how to meet the challenge of reaching net-zero. The Bureau did not, however, recommend any specific methodologies or provide links to acceptable standards, ultimately leaving it up to advertisers to self-assess compliance.
• Testing: Consistent with past guidance and case law, testing must be done before introducing a performance claim. Evidence of consumer use over a long period of time, technical books, bulletins and manuals, anecdotal stories and studies or sales of similar products are not tests that satisfy the testing requirement, nor are technological facts. For example, even if a competitor has a similar product in market, the Draft Guidelines indicate that the advertisers must conduct their own testing.
• Testing vs. substantiation: Testing and substantiation are separate concepts. Substantiation will be required in the context of business claims and will require evidence to support an environmental representation. While substantiation does not necessarily involve lab or field testing, businesses should ensure that the internationally recognized methodology selected is suitable for the claim, having regard to all the relevant circumstances.
• Third-party verification: Third-party verification is only necessary where the internationally recognized methodology relied upon for adequate and proper substantiation requires third-party verification.
• New technologies: The Bureau recognized the challenge related to claims involving new technologies that have not been adequately tested. If there is no existing methodology to test a particular claim, multiple internationally recognized methodologies that substantiate the claim may be used, but the risk continues to lie with the advertiser. If a new internationally recognized methodology is developed after the fact, the business should substantiate the claim with the new methodology.

Environmental claims and the anti-greenwashing provisions

The Draft Guidelines include additional guidance with respect to making environmental claims in light of the new anti-greenwashing provisions.

(a) Product and service-related environmental claims

Environmental claims in the form of a statement, warranty or guarantee of the benefits of a product or service for protecting or restoring the environment, or mitigating the environmental, social and ecological causes or effects of climate change must be based on “adequate and proper testing.”

To meet the requirements of adequate and proper testing, businesses must actually perform testing before the claim is made. What constitutes adequate and proper testing will differ in each situation, but courts have previously held that the determination of whether testing is adequate and proper will depend on the circumstances, the literal meaning of the representation as well as the general impression that the representation conveys to consumers.

The advertiser bears the legal burden of demonstrating that the claim was based on adequate and proper testing once the Bureau or a private party demonstrates that the claim involves a representation to the public containing an environmental claim.

(b) Business-related environmental claims

Representations to the public regarding 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 in the absence of “adequate and proper substantiation in accordance with internationally recognized methodology.”

As above, once the Bureau or a private party demonstrates that the claim relates to an environmental benefit of the business, the burden shifts to the advertiser to provide adequate and proper substantiation in accordance with internationally recognized methodology.

Principles for compliance

The Draft Guidelines outline six principles for compliance with the anti-greenwashing provisions, which build on the Bureau’s earlier guidance published in the July 2024 edition of its Deceptive Marketing Practices Digest:

Principle 1: Environmental claims should be truthful and not false or misleading

• Environmental claims must be true in both literal meaning and the general impression that is conveyed.
• Disclaimers and fine print cannot necessarily cure materially false or misleading general impressions and generally should not be relied on when making an environmental claim.

Principle 2: Environmental benefit of a product and performance claims should be adequately and properly tested

• Claims about the environmental benefit of a product and performance claims must be supported by adequate and proper testing.
• The general impression conveyed by a claim is important when considering if testing is adequate and proper.

Principle 3: Comparative environmental claims should be specific about what is being compared

• Comparisons in environmental claims should be clear about what is being compared and explain the extent of the difference between what is being compared.

Principle 4: Environmental claims should avoid exaggeration

• Exaggeration should be avoided when making claims about the environmental benefits of a product, business or business activity as to avoid misleading consumers, even if the use of exaggeration seems obvious to the business.

Principle 5: Environmental claims should be clear and specific – not vague

• The general impression of environmental claims should accurately communicate the environmental benefit to consumers.
• Businesses should be certain that representations hold true for the product throughout the product’s entire lifecycle.
• Claims that apply to a business as a whole must accurately depict the environmental impact of all activities of the business.

Principle 6: Environmental claims about the future should be supported by substantiation and a clear plan

• Claims about the future must be well-founded and supported by adequate and proper substantiation in accordance with internationally recognized methodology.
• Businesses that make environmental claims about the future should:
  • understand what needs to be done to achieve what is being claimed;
  • have a concrete, realistic and verifiable plan in place to accomplish the objective, including interim targets; and
  • have taken meaningful steps to accomplish the plan.

Participating in public consultation

The Bureau invites feedback on the Draft Guidelines before February 28, 2025, via email to [email protected]. Submissions will be posted to the Bureau’s website unless the submitting party asks that their feedback remain confidential.

If you or your business have any questions regarding compliance with competition laws or want assistance participating in the public consultation process, please do not hesitate to contact a member of our Competition Law team or your existing MLT Aikins contact.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.

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