Environmental Claims and Greenwashing 

FAQs: Addressing common greenwashing and Competition Act questions

null1. Will the Bureau revise its draft guidelines?

The Competition Bureau released draft guidelines for consultation, and it is expected that they may be refined, but not broadly revised, based on stakeholder feedback. At this time, the draft guidelines lack substantive compliance guidance relative to the archived guidance and international equivalents. The draft guidelines leave much to be determined by future court decisions and offer little guidance to businesses seeking to proactively comply with the law. Businesses should remain agile, closely monitor regulatory developments and be prepared to adjust their practices as new caselaw and enforcement actions continue to shape the legal landscape. Staying proactive will be key to ensuring ongoing compliance and minimizing risk.

 

null2. How do we define "adequate and proper testing," "adequate and proper substantiation in accordance with internationally recognized methodology” and "public interest"?

At this stage, the situation remains unclear — and the draft guidance does little to resolve that uncertainty. That said, the Competition Bureau’s draft guidelines do offer the following limited guidance:

  • Adequate and proper testing: The Competition Act does not currently provide a precise definition. However, the Bureau has emphasized that businesses will often require substantiation that is scientific in nature. This may include independent lab testing, lifecycle analyses or third-party certifications.
  • Adequate and proper substantiation in accordance with internationally recognized methodology: This means that businesses must align environmental claims that pertain to the benefits of a business or business activity to a methodology that is “recognized in two or more countries”. However, the methodology must be appropriate for the Canadian context, including with regard to Canada’s geography and climate.
  • Public interest: Under the new private right of action, the Competition Tribunal will allow private litigation challenging environmental claims when it is “in the public interest”. We are currently awaiting further guidance from the Competition Bureau which should help shed light on how the new 'public interest' test will be applied in practice.

 

null3. What are the potential penalties for non-compliance?

Non-compliance with the Competition Act’s greenwashing provisions can result in significant consequences, including:

  • Substantial fines: For corporations, up to $10M (or the greater of: three times the value of the benefit obtained through the offence, or 3% of the corporation’s annual worldwide revenue) for first offenses, and $15M+ for repeat violations. Larger corporations – particularly multinationals – should pay close attention to these potential penalties.
  • Corrective notice orders: Businesses may be required to issue public retractions or correction notices for non-compliant claims.
  • Private litigation risks: Starting June 20, 2025, private litigators (including actions brought by competitors, consumers, and activist organizations) can bring claims before the Competition Tribunal, significantly increasing the likelihood of actions that could result in penalties and reputational damage.
  • Criminal liability in extreme cases: While most violations are likely to be pursued as civil matters, recklessly or knowingly engaging in greenwashing could lead to criminal prosecution.

 

null4. How can we set up a credible and effective compliance program that ties into a due diligence defence?

A credible and effective compliance program can buttress a due diligence defence. Key elements of a credible and effective compliance program may include, but are not limited to:

  • A clear policy on developing compliant environmental claims, outlining legal obligations, internal approval processes and performance feedback protocols.
  • Regular training and guidance for employees, particularly marketing, legal and leadership teams.
  • Internal audits and risk assessments to identify and rectify compliance issues.
  • A rapid response protocol in case of regulatory scrutiny or legal challenges.