Competition Bureau releases final guideline on “Environmental claims and the Competition Act”

Context

Effective June 20, 2024, amendments to the Competition Act’s deceptive marketing provisions came into force that specifically address environmental claims made to promote a product or other business interest. The amendments are intended to target “greenwashing”—i.e., making a business or product seem better for the environment and/or climate than it is. While the existing deceptive marketing provisions already prohibited making false and misleading representations to the public to promote a product or business interest, the anti-greenwashing provisions impose specific substantiation requirements on a broad range of environmental claims.

The guideline was circulated in draft form for consultation in December 2024, and the Bureau stated the final version incorporates feedback it received through approximately 400 submissions from the public, though not much has changed from the draft version. 

The guideline outlines the Bureau’s enforcement approach but is not binding on the Bureau and the commissioner retains substantial discretion to decide whether to proceed with enforcement action. 

Importantly, businesses will likely have to wait for jurisprudence from the Competition Tribunal before there is clarity regarding how these provisions will apply in cases involving complex facts (such as representations made regarding the environmental benefits of new technologies) or whether the Bureau’s enforcement approach reflects the actual application of the law (for example, for environmental representations in securities filings), or the extent to which the law applies to representations made from outside of Canada (for example, representations by global companies that do business in Canada). 

In other words, while the guideline does provide some clarity, there remains considerable uncertainty. This is especially so given that activist groups may seek to push the range of conduct covered by the law, for strategic or publicity purposes.  

The guideline

Below is a summary of the Bureau’s position on the Competition Act’s misleading advertising provisions relevant to environmental claims, as set out in the guideline. It is the Bureau’s view the Competition Act regulates a broad range representations, including those related to services, processes, businesses, business practices and activities, or a product’s impact on the environment, from the sourcing of its materials to how it is produced, packaged, and distributed, and the way in which it is disposed. 

There are four separate provisions that can apply to environmental claims and it is important for companies to ensure their environmental representations comply with all of them.

• False or misleading representations (s. 74.01(1)(a)): This is a longstanding and broadly worded provision of the Competition Act that, in the environmental context, prohibits any false or misleading representations about the environmental attributes of a product, service or business that are made to promote a product or business interest and could influence consumer behaviour. 

• Product performance claims (s. 74.01(1)(b)): This is another longstanding provision of the Competition Act that, in the environmental context, prohibits any representations to the public about the environmental performance of a product or service if the claim is not based on “adequate and proper testing” (which requires actual testing). 
• Claims about the environmental benefits of a product (s. 74.01(1)(b.1)): This is a new anti-greenwashing provision that came into effect on June 20, 2024. It prohibits persons from making representations to the public in the form of a statement, warranty, or guarantee of a product’s benefits relating to protecting or restoring the environment or mitigating the environmental, social, or ecological causes or effects of climate change if that representation is not based on “adequate and proper testing.” 

While this provision has not yet been interpreted by the Competition Tribunal or the federal courts, the Bureau’s position is that, similar to the more general provision governing product performance claims, it requires actual testing. If the Bureau can prove a performance claim was made to the public by a business to promote a product or business interest, its view is the onus shifts to the business to prove the claim was based on “adequate and proper testing” before the claim was made.

• Claims about the environmental benefits of a business or business activity (s. s. 74.01(1)(b.2)): This is also a new anti-greenwashing provision that came into effect on June 20, 2024. It prohibits persons from making representations to the public on the benefits of a business or business activity relating to protecting or restoring the environment or mitigating the environmental, social, or ecological causes or effects of climate change if those representations are not based on “adequate and proper substantiation in accordance with internationally recognized methodology.” This provision targets company-level claims, such as net-zero goals, other aspirational environmental goals, statements regarding emissions reductions, among a broad range of other types of environmental claims. This provision also has not yet been interpreted by the Competition Tribunal or the federal courts. The Bureau’s position is that “business activity” is, quite broadly, “any” activity carried on by a business. 

The addition of “adequate and proper substantiation in accordance with internationally recognized methodology” is new language that does not appear in any other part of the Competition Act and is extremely vague. The Bureau’s view is the method of substantiation should be suitable, appropriate, and relevant to the claim being made, and rigorous enough to “establish” or prove the claim. The method of substantiation will often be scientific and the Bureau will require third-party verification where called for by the methodology relied upon. To be “internationally recognized,” a methodology must be recognized in two or more countries, such as by standards-setting bodies or regulatory authorities. This appears to provide some flexibility in terms of what constitutes an “internationally recognized methodology.” The Bureau’s view is that, if it can prove a performance claim was made to the public by a business to promote a product or business interest, the onus shifts to the business to prove the claim was based on “adequate and proper substantiation in accordance with internationally recognized methodology” before the claim was made. 

Key principles

The guideline provides the following six key principles for businesses to consider when making environmental representations: 

1. Environmental claims should be truthful, and not false or misleading. This includes both a claim’s literal meaning and the general impression that it conveys, as determined by the entire context of the representation, including how information is presented. It is important for companies to understand that application of the law to a particular claim will be based on the general impression of that claim.
2. Environmental benefits of a product and performance claims should be adequately and properly tested.  The testing must have occurred prior to the representation.
3. Comparative environmental claims should be specific about what is being compared. Businesses should be specific about what is being compared and the extent of any differences between the comparators. This can include a comparison between products or businesses, or with past practices. 
4. Environmental claims should avoid exaggeration. The general impression of a representation should be considered. For example, when small benefits to the environment are positive, they should not be marketed as significant benefits.
5. Environmental claims should be clear and specific—not vague. Vague claims, including claims that a product is “eco-friendly,” may convey a misleading general impression. The Bureau's position is businesses should be clear and specific, including being transparent about whether the claim applies to the whole or only part of a product, business, or activity. 
6. Environmental claims about the future should be supported by substantiation and a clear plan. This includes net-zero plans. The Bureau’s position is these types of claims must be well founded, and adequately and properly substantiated in accordance with “internationally recognized methodology.” Before making claims about forward-looking or aspirational environmental claims, businesses should have “a clear understanding of what needs to be done to achieve what is being claimed,” “a concrete, realistic and verifiable plan to accomplish the objective, with interim targets,” and “meaningful steps underway” toward accomplishing it.

Significant uncertainty remains

The Bureau states “it remains to be seen how the courts will interpret many of the key concepts” of the greenwashing provisions.  This highlights the uncertainty companies will face when assessing how best to comply with these provisions. 

In addition to this general uncertainty, the Bureau has not provided any guidance regarding how the law applies to multi-national companies.  Specifically, the guidance is silent as to when a representation made from outside of Canada will have a sufficient nexus to Canada for the new greenwashing provisions to apply.  This is a major concern for international companies who worry that activists will seek to test the jurisdictional limits of these provisions. 

In addition, while the examples provided in the guideline are helpful, they are somewhat simplistic and do not necessarily provide meaningful guidance for companies dealing with more complicated facts.

Key takeaways

The greenwashing provisions create substantial compliance risk for businesses operating in Canada that make environmental claims about their products, services, or business activities. While the Bureau’s guideline sheds some light on the Bureau’s enforcement approach, it does not change the broad language of the law. Accordingly, even where the Bureau has suggested it may not take enforcement action, businesses should not assume there is no risk of private enforcement.  

The uncertainty regarding how the Bureau will apply the greenwashing provisions is compounded by the fact that activists can bring private enforcement cases as of June 20, 2025 (subject to obtaining leave to do so on public interest grounds). (The Bureau has indicated it will be publishing a guideline related to private enforcement of the greenwashing provisions but has not indicated when it will do so.) The Competition Tribunal is not bound by the Bureau’s view as set out in this guideline and has yet to interpret the new greenwashing provisions or the application of the public interest leave test for private applications.  

While the greenwashing provisions have drawn a lot of attention since they were enacted in June 2024, the coming into force of the private right of enforcement means companies (both Canadian companies and multi-national companies that do business in Canada) should review their existing and future environmental claims to ensure they comply with the greenwashing provisions of the Competition Act.