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Greenwashing, Supply Chain Resilience and More: Timely Topics January 2023 Edition

Timely Topics with McCarthy Tétrault curates the latest market trends on a monthly basis to help you stay informed of developments that can affect your business. This content is current as of January 4th , but please connect with us if you have any questions on any of the topics below.

Here are this month’s trending topics:

1) The Cost of Greenwashing: Practical Tips for Reducing the Risk

Rising consumer expectations, an international commitment to reducing carbon emissions and a changing regulatory environment put sustainability as a top priority for many organizations. This shift in corporate purpose has made greenwashing – making false, misleading or unsupported environmental claims – a popular headline over the last few years. On a global scale, we are continuously seeing new enforcement efforts come into effect tackling greenwashing across sectors.

As well as making so-called greenwashing claims a top enforcement priority in 2022, Canada recently enacted significant amendments to the Competition Act, some of which are aimed at deceptive marketing. Civil deceptive marketing infringements – such as greenwashing – may now attract significantly larger administrative monetary penalties – from a previous cap of C$10 million for the first infringement to up to three times the value of the benefit derived from the deception or, if this cannot be reasonably determined, up to 3 percent of a company’s annual worldwide gross revenues.

How do companies reduce the risk of greenwashing at a time when the cost of non-compliance is higher than ever before? Check out this recent article in Today’s General Counsel from our partners Nikiforos Iatrou and Michael Caldecott, “Greenwashing Just Got More Expensive in Canada,” for practical tips for making environmental claims.

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Please connect with our Competition/Antitrust and Foreign Investment Group if you’d like to discuss how the amendments to the Competition Act affect your business. 

2) Strengthening Canada’s Port and Railway Systems: The Path to Supply Chain Resiliency

The pandemic and current geopolitical climate highlighted long-standing challenges with Canada’s supply chain operations. The National Supply Chain Task Force, formed in early 2022, aimed to recommend improvements to Canada’s transportation supply chain. The Task Force’s final report, issued in October 2022, included recommendations for short and longer-term strategies to lessen congestion and build resiliency in Canada’s transportation supply chain.

Stemming from the report’s recommendations, Bill C-33, Strengthening the Port System and Railway Safety in Canada Act, was recently introduced to the House of Commons and aims to:

  • “Amend current legislation and modernize the way Canada’s marine and railway transportation systems operate;
  • Remove systemic barriers to create a more fluid, secure, and resilient supply chain;
  • Expand Canada Port Authorities’ mandate over traffic management;
  • Position Canada’s ports as strategic hubs that support national supply chain performance and effectively manage investment decisions for sustainable growth;
  • Improve the government’s insight into ports and their operations; and
  • Modernize provisions on rail safety, security, and transportation of dangerous goods.”

The amendments to the Railway Safety Act (RSA) are of particular interest to federally-regulated rail carriers, as Transport Canada (TC) inspectors and enforcement officers will now have increased powers under the RSA to compel railways to provide information in response to their investigations, as well as steeper penalties in case of non-compliance. It remains to be seen whether regulated companies will bring challenges to these updates to the administrative monetary penalty scheme in the RSA, on the grounds that compelled speech is used by TC in order to establish proof of the commission of a violation.

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If you have questions about Bill C-33, or would like to discuss your organization’s supply chain stability, please connect with our Supply Chain team.

3) Sweeping Updates to the Investment Canada Act: What Does it Mean for Foreign Investors?

On December 7, 2022, the Federal government tabled Bill C-34: An Act to Amend the Investment Canada Act. This marks the first significant legislative changes to the Investment Canada Act (the “ICA”) since 2009. Bill C-34 follows the Prime Minister’s 2021 mandate letter for the Minister of Innovation, Science and Industry (the “Minister”), which tasked the Minister with “reviewing and modernizing the ICA to strengthen the national security review process and better identify and mitigate economic security threats from foreign investment.”

The proposed changes have significant implications for foreign investors establishing a presence in Canada or making investments in Canadian businesses. Check out our recent article which summarizes the proposed changes and their impact on your business and investments.

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If you would like to learn more, please connect with a member of our Competition/Antitrust & Foreign Investment Group. 

4) Labour & Employment Updates: Stay In the Know

Nearing the end of 2022, there were interesting developments across Canada that impact labour and employment policies and practices. Here’s a quick recap of the most noteworthy updates, starting in the west:

In British Columbia, the Provincial legislature recently completed the first reading of Bill 41 – 2022: Workers Compensation Amendment Act (No.2), 2022 (“Bill 41”). Containing several new employer obligations and non-compliance penalties, Bill 41 would most notably impose an obligation on employers to accommodate and re-employ injured workers up to a point of undue hardship. If enacted, Bill 41 will have significant administrative, cost and labour relations implications for employers. A full overview and discussion of Bill 41’s potential impacts can be found in our recent blog post.

In Quebec, a recent arbitral decision is of interest to employers with unionized workplaces. In Syndicat canadien de la fonction publique, section locale 4333 et Services de quai Fagen inc (terminal Sorel-Tracy), an arbitrator considered the scope of an employer’s ability to proceed with an administrative suspension without pay for the purpose of an investigation along with several other issues. The decision is in line with current trends in employment arbitrations. Separately, another ruling of interest is the Quebec Court of Appeal’s recent ruling that disability insurance benefits should not be deducted from the indemnity in lieu of notice of termination.

Of national interest, recent amendments to the Competition Act mean new prohibitions on wage-fixing and no-poach agreements, which will be coming into force on June 23, 2023. The amendments will make it a criminal offence for unaffiliated employers to enter into agreements to fix salaries, wages or terms and conditions of employment, or to refrain from soliciting or hiring another firm’s employees. These buy-side agreements between employers will carry severe maximum penalties, including imprisonment and unlimited fines, and can lead to follow-on class actions.

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To stay up-to-date on labour and employment updates, please subscribe to our blog, McCarthy Tétrault Employment Advisor. We welcome you to contact a member of our National Labour & Employment group if you’d like to discuss these or other related topics. 

5) Canadian Strategy for the Indo-Pacific Region: A Big Step Away from China

Canada continues to tune its foreign economic policy to shifting geopolitical realities. On November 27, 2022, Global Affairs Canada announced the formal launch of a new Indo-Pacific Strategy (the “Strategy”) to support long-term growth, prosperity and security for Canadians.

The Strategy includes five interconnected strategic objectives supported by a Federal investment of $2.3 billion over the next five years:

  1. Promoting peace, resilience, and security;
  2. Expanding trade, investment and supply chain resilience;
  3. Investing and connecting people;
  4. Building a sustainable and green future; and
  5. Positioning Canada as an active and engaged partner in the Indo-Pacific.

The new Indo-Pacific Strategy raises both opportunities and challenges for Canadian businesses with ties to that region of the world. There are certainly opportunities in expanding investment and trade in goods, services and technology, but also challenges in addressing what the government referred to as a “global China” engaged in “coercive diplomacy and non-market practices”. Companies with direct or indirect ties with China should be carefully monitoring steps being taken by Canada and its allies to defend global trade rules and international human rights, including expanding economic sanctions, intensifying export and technology transfer controls, stepped up enforcement of forced labour and modern slavery laws and other measures impacting supply chains with touchpoints in the region.

“A good understanding of the Info-Pacific and its significance on politics and business is essential to mid- and long-term planning for any business,” Former Quebec Premier and current partner at our firm, Jean Charest, weighs in. “It is paired with robust ‘industrial policies’ that are now anchored in the U.S. and mirrored in every other region of the world, including Canada. Canada’s strategy affects all of today’s hot topics, including supply chains, EVs, strategic minerals, infrastructure, 5G, chips, semi-conductors, PPE, the financial sector, energy, clean tech, and on and on. The rise of China as a world superpower will make this one of the most compelling issues of our time.”

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To learn more about the potential opportunities the new Indo-Pacific Strategy has for your business, please contact a member of our International Trade and Investment Law Group. 

This newsletter is designed to provide general information only. This newsletter does not provide legal advice on specific issues. You are encouraged to consult with legal counsel should you require assistance in addressing a particular issue or concern.

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