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Environmental Claims and Greenwashing 

FAQs: Addressing common greenwashing and Competition Act questions

null1. What changed under Budget 2025?

Bill C-15, which received Royal Assent on March 26, 2026, changed the Competition Act in two important ways for environmental claims about a business or business activity.

  • First, it removed the requirement that those claims be substantiated in accordance with "an internationally recognized methodology" and, as a result, such claims must be supported by "adequate and proper substantiation".
  • Second, it removed the right of private parties to allege non-compliant "adequate and proper substantiation" via an application to the Competition Tribunal. However, applications can still be brought to challenge such claims under broader prohibitions against false or misleading advertising.

The requirements and private right of action in respect of product-level environmental benefit claims, however, were not changed in Budget 2025.

null2. How do we define "adequate and proper testing for product claims?,"adequate and proper substantiation" and "public interest"?

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: The Competition Bureau has yet to update its guidelines to align with the amendments under Budget 2025. However, we note that the guidelines state the following regarding the concept of "substantiation":
    • Establishing by proof or competent evidence.
    • While substantiation does not necessarily involve testing in a lab, businesses should ensure that the methodology selected is suitable for the claim, having regard to all the relevant circumstances.
  • 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: Private litigators (including actions brought by competitors, consumers, and activist organizations) can bring applications before the Competition Tribunal to challenge: (i) product level environmental benefit claims on the basis that they are not substantiated by an adequate and proper test contrary to section 74.01(a) of the Competition Act; and (ii) environmental claims broadly on the basis they are false or misleading contrary to the broad prohibition stipulated in section 74.01(a) of the Competition Act. The private right of action significantly increasing the risk of 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.