Canada has amended the Competition Act to combat greenwashing, imposing strict requirements for businesses to substantiate their environmental claims. Effective June 20, these regulations introduce significant penalties for non-compliance, including hefty fines and private litigation starting in June 2025. Companies must urgently review their environmental claims and implement robust compliance programs to mitigate risks. This move aims to ensure transparency and accountability in corporate environmental representations.
Key Amendments Targeting Greenwashing
1. Product Benefit Claims:
Environmental claims regarding products must now be supported by “adequate and proper” testing, with the burden of proof resting on the business. This applies to claims about resource usage, emissions savings, and other environmental benefits.
Example: Claims of reduced emissions must be validated through controlled testing that simulates real-world conditions to avoid external variables and bias.
2. Business Activity Claims:
Statements related to a business’s overall environmental impact must be substantiated using internationally recognized methodologies, which regulators have yet to define explicitly.
Example: Assertions regarding carbon neutrality or emissions reductions must align with recognized best practices to ensure credibility.
These provisions require businesses to conduct rigorous testing and adhere to established standards for all environmental claims, effectively shifting the onus of proof onto the companies making the claims.
Enforcement and Litigation Implications
The amendments introduce severe penalties for greenwashing, including:
- Administrative Monetary Penalties: Up to C$10 million for first-time offenses and C$15 million for repeat violations, or 3% of global gross revenue.
- Private Litigation Rights: Starting in June 2025, private individuals and groups will have the right to initiate lawsuits in cases deemed to serve the public interest.
With a growing number of greenwashing complaints, businesses should anticipate increased scrutiny from regulators and potential private litigants. A thorough review of public representations and a strong compliance framework are essential to avoid these risks.
Learn more here.
