Environmental Claims and Greenwashing

The new heightened risks of greenwashing: How recent amendments to the Competition Act raise the stakes for environmental claims

Environmental claims have carried inherent legal and reputational risks since the Competition Bureau archived its Environmental Claims: A Guide for Industry and Advertisers on November 4, 2021. However, recent changes to Canada’s Competition Act make those risks sharper, costlier and harder to ignore. With the passage of Bill C-59 in June 2024, the Competition Act has been amended to introduce new substantiation requirements based on novel concepts that have not been substantively defined.  

The consequences for non-compliance are steep: for a first time violation penalties can be up to 3% of a corporation’s annual worldwide revenue and—starting June 20, 2025— a new private right of action will come into force and will be available broadly, including to consumers, competitors, and activist organizations.

Paired with a lack of substantive guidance from the Competition Bureau regarding how to prepare compliant environmental claims, we are currently in an era in which environmental claims represent an unprecedented relatively high risk. For in-house counsel and marketing teams, the message is clear: environmental claims must be carefully evaluated to align with risk tolerance, and risk mitigation measures (including a credible and effective compliance program) must be implemented in a manner commensurate with such risk tolerance.