Skip to content.

Competition Bureau Releases Long-Awaited - if Provisional - Greenwashing Guidelines

Important legislative amendments to the Competition Act (the “Act”) enacted in June 2024 have had a significant impact on the legal and enforcement risks associated with environmental claims in Canada, as reported in our last bulletin on the subject. In late December 2024, the Competition Bureau (“Bureau”) released draft enforcement guidelines regarding these amendments, which we outline and explain below.

The recent amendments expanded the Act’s civil deceptive marketing regime, codifying two additional prohibitions for representations made to the public in relation to the environment: (i) claims concerning a product or service’s environmental benefits must be based on an “adequate and proper test”; and (ii) claims with respect to the “benefits of a business or business activity” for the environment must be based on “adequate and proper substantiation in accordance with internationally recognized methodology.” In the absence of clear guidance from the Bureau or courts, these greenwashing amendments—particularly the requirement that substantiation be in accordance with an internationally recognized methodology—introduced considerable uncertainty among businesses and other stakeholders as they prepared for the potential for expanded enforcement risks arising from the amended regime.  

In response to widespread public calls for guidance, the Bureau launched a consultation to gather feedback in July 2024, and has accelerated the release of draft guidance based on over 200 submissions received from a wide range of stakeholders during the consultation period that closed on September 27, 2024. In late December, the Bureau issued draft guidelines to address the Act’s new prohibitions on greenwashing (the “Draft Guidelines”); they are open for public consultation until February 28, 2025. It remains possible that the final guidelines will change materially from what is set out in the Draft Guidelines, though this is unlikely to be the case.

While the Draft Guidelines provide welcome clarity in several respects regarding the Bureau’s position, the most important of which we discuss below, they are considerably less prescriptive than guidance documents released by peer agencies, such as the US Federal Trade Commission’s Green Guide and the UK Competition & Markets Authority’s Green Claims Code. With a broad and flexible approach, the Bureau retains its ability to assess environmental claims on a case-by-case basis. In so doing, however, the Draft Guidelines inevitably fail to address certain of the concerns raised by stakeholders during the consultation period.

For example, the Bureau’s guidance does not address whether investment funds and private equity firms may rely on the environmental disclosures made by underlying portfolio companies to satisfy the new substantiation requirements—a question raised by a number of stakeholders in their submissions to the Bureau. Despite certain continuing grey areas, the Draft Guidelines provide much needed clarity, namely with respect to the scope of the new greenwashing provisions; the interpretation of “internationally recognized methodologies”; and whether a business could be the target for Bureau enforcement for claims made before the new provisions came into effect.

Key Takeaway 1: The Bureau’s focus is on marketing and promotional representations

The Draft Guidelines make clear that the Act’s deceptive marketing provisions, including the new greenwashing provisions, are intended to capture marketing and/or promotional representations made to the public “for the purpose of promoting a product or business interest”, which is consistent with the statutory language. In other words, where a representation is made “exclusively for a different purpose, such as to investors and shareholders in the context of securities filings” the Bureau is of the view that such claims fall outside the purview of the Act’s deceptive marketing provisions.

While helpful in principle, especially for companies with mandatory securities law disclosure requirements, there will inevitably be grey areas. For example, while some disclosures on environment-related activities may be mandatory, some firms may choose to disclose more than is statutorily required, resulting in questions as to whether such voluntary disclosures were made for the purpose of promoting a business interest. Similarly, the Bureau has made clear that where information contained in regulatory disclosures is then used in a business’s promotional or marketing materials, such claims will fall within the Bureau’s likely enforcement scope. While details of the Bureau’s deceptive marketing investigations are not typically made public, the way the Bureau classifies such marketing and promotional materials will have a material impact on the enforcement risks for many companies moving forward.

Key Takeaway 2: Methodology recognized in two or more countries will generally be considered by the Bureau to be “internationally recognized”

With respect to representations about the environmental benefits of a product, the Draft Guidelines adopt the principles established by the courts and previous Bureau guidance with respect to performance claims, which must similarly be adequately and properly tested prior to the claim being made. In contrast, the requirement to substantiate claims promoting the “benefits of a business or business activity” with an “internationally recognized methodology” was an entirely new concept and has never been subject to judicial interpretation. The Bureau’s Draft Guidelines are therefore the first and only interpretative guidance regarding this new requirement.

By way of summary, the Draft Guidelines provide that:

  • A methodology that has been recognized in two or more countries will generally be considered by the Bureau to be “internationally recognized”, provided it results in adequate and proper substantiation. However, the Bureau does not interpret the Act as requiring that the methodology be recognized by the governments of two or more countries.
  • While the Act does not require third party verification, “internationally recognized methodologies often require third party verification.”
  • The Act does not require businesses to use the “best methodology available” to substantiate claims and, where more than one internationally recognized methodology is available, any such methodology will meet the requirements of the provision.
  • If no testing methodology exists for a particular claim, advertisers and businesses may rely on internationally recognized methodologies that “together can create substantiation for the claim, or that are used for substantiating similar claims.” Where a business concludes that there is no way to substantiate a claim, “it should avoid making that claim, and instead make claims that it can back up.”
  • For methodologies required or endorsed by a Canadian federal or provincial government, the Bureau assumes that such methodologies are consistent with internationally recognized methodologies. However, the Bureau is of the view that responsibility lies with businesses to conduct thorough due diligence to confirm that the government-approved, Canadian methodology is recognized internationally.

These details provide a useful indication of how the Bureau is likely to examine the internationally recognized methodology concept in active enforcement cases, and underscore the continuing importance for companies to ensure that their substantiation efforts are grounded in reputable metrics and/or standards prior to making any promotional statements.

Key Takeaway 3: New greenwashing provisions do not apply to representations made before June 20, 2024

The Draft Guidelines confirm that the Bureau will not seek to enforce against any individual or entity for breaches of the new greenwashing provisions prior to their enactment. This provides some comfort to the stakeholders raising this query in response to the Bureau’s 2024 consultation process.

However, the reassurance that the Bureau will not apply the new provisions retroactively provides no comfort with respect to the other provisions of the deceptive marketing regime. Those provisions, especially the general provisions relating to materially false and misleading statements and the requirement for adequate and proper testing to support performance claims, have been in force for many years, and the Bureau could enforce against claims made prior to June 2024 on that basis; indeed, those provisions were the basis for its greenwashing enforcement activity until Bill C-59 was enacted. While this remains a risk that cannot be discounted, we anticipate that the Bureau’s enforcement priority will be on utilizing its codified powers relating to environmental claims, which would mean a focus on claims made since June 2024. 

Conclusion: Draft Guidelines Are Only A Provisional Statement of Bureau Enforcement Discretion

The Draft Guidelines offer valuable guidance for businesses; however, they represent only the Bureau's interpretation of the new greenwashing provisions. Private applicants seeking redress under the deceptive marketing provisions are not confined by these guidelines, either currently by way of the six-resident complaint process that can compel the Bureau to open an inquiry, or later in 2025 when private parties will have the opportunity to seek leave to bring an action directly in respect of allegedly deceptive environmental claims before the Competition Tribunal.

As the Bureau finalizes its enforcement position on environmental claims in early 2025, companies can expect the heightened greenwashing enforcement climate to continue, even as the ambiguities associated with recent legislative changes are clarified.

For more information, please consult our Competition/Antitrust & Foreign Investment Group.