2025 budget proposes amending Competition Act greenwashing provisions

In its highly anticipated Budget 2025, the Canadian government has unexpectedly proposed amending the Competition Act (the Act) greenwashing provisions by:

1. Removing the requirement for businesses to substantiate their environmental claims based on internationally recognized methodology standards.
2. Removing the ability for third parties to bring cases directly to the Competition Tribunal for greenwashing complaints. 

These provisions were only added to the Act in November 2023 as part of Bill C-59 and came into force on June 20, 2024, with the right of private action coming into force on June 20, 2025. 

They have been the subject of considerable concern and criticism by the business community—largely driven by the uncertainty regarding the creation of the new and undefined internationally recognized methodology standard. This uncertainty, combined with the risk of private litigation by activist groups, led many companies to either significantly amend or withdraw their environmental representations altogether. For more information regarding these provisions, please see our series of updates in our Competition Act amendments hub.

Environmental claims

The budget is silent on whether claims regarding a product’s benefits for protecting or restoring the environment or mitigating the environmental, social and ecological causes or effects of climate change must still be based on an adequate and proper test. Given the language in the budget, our sense is this substantiation standard will remain unchanged. 

Removing the requirement for businesses to substantiate claims about 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 accordance with internationally recognized methodology standards is a much-needed change that, if passed, could have the effect of reducing significant costs and uncertainty for businesses. While the Competition Bureau’s guidance on environmental claims was helpful in providing some context regarding the application of the internationally recognized methodology standard, significant uncertainty remains about this standard, in particular regarding how to substantiate novel claims (for example, in connection with new abatement technologies). 

Next Steps

At this time, it is unclear if the Competition Bureau intends to review, revise, or withdraw its guidance respecting greenwashing claims, or if a disclaimer will be added to address the proposal in Budget 2025. It is also unclear whether the specific greenwashing provisions of the Act relating to internationally recognized methodology substantiation standards will be removed altogether, or whether they will be subject to a different substantiation requirement. 

Companies need to be aware that, regardless of any changes to the greenwashing provisions, the general misleading advertising provisions of the Act prohibiting making representations that are false or misleading in a material respect will continue to apply to all environmental representations made by companies to promote their products or business activities. 

For more information on the provisions of the Act that apply to environmental claims, including those that will likely remain in force, see our update on the Competition Bureau’s guidance on environmental claims.

Greenwashing complaints before the Competition Tribunal

Removing the ability for private parties to bring greenwashing complaints to the Competition Tribunal could reduce the risk of strategic litigation by activist organizations (who had previously made complaints to the Bureau). Private actions can, however, still be brought under the general misleading advertising provisions noted above.   

While it was anticipated that private parties would bring greenwashing cases before the Competition Tribunal in short order after the right to do so came into force in June 2025, as of the date of this update, this has not occurred. 

Key takeaway

Assuming Budget 2025 passes, whether or when the proposed amendments to the greenwashing provisions of the Act will be tabled is unclear.  Given the uncertainty and compliance costs that these provisions have caused and continue to cause for companies doing business in Canada, these changes cannot come soon enough.  

We will continue to monitor the government’s activities in these areas, in particular the timing and language of any proposed amendments.  

For more information about Budget 2025, see our updates on the tax and defence spending implications.