A quiet shift is underway in how Canadian companies can talk about their environmental efforts. Recent federal budget changes signal a scaling back of regulations designed to prevent “greenwashing”—the practice of misleading consumers about a product’s or company’s environmental benefits.
Last year, new laws were introduced as part of the Competition Act, aiming to hold businesses accountable for the claims they made about sustainability. Now, the government argues these very rules are creating uncertainty, potentially hindering genuine environmental progress.
One key change proposed involves the requirement for internationally recognized methodology to back up environmental claims. This standard, critics argued, was too vague and lacked clear legal definition, leaving companies unsure of how to comply. The government also intends to remove the ability for third parties, like environmental groups, to directly challenge potentially misleading statements.
Legal experts are carefully dissecting the implications. While the core principle of prohibiting false or misleading environmental claims remains, the level of proof required may be lowered. The question isn’t whether companies can lie about being green, but what evidence they’ll need to support their assertions.
University of Ottawa law professor Jennifer Quaid points out the uncertainty surrounding the extent of these changes. Will the entire rule regarding business claims be scrapped, or simply the specific requirement for a certain type of evidence? The answer will significantly impact how companies navigate this evolving landscape.
Other nations are forging their own paths. Switzerland, for example, demands green claims be based on “objective and verifiable criteria”—a standard that, while not perfect, offers a clearer framework. Quaid emphasizes the importance of maintaining some level of regulation to reward companies genuinely investing in sustainability.
The current situation has already prompted a cautious response from the corporate world. Some companies have removed environmental disclosures altogether, fearing potential scrutiny. Others are meticulously reviewing all public statements, searching for anything that could trigger an investigation.
A recent KPMG assessment revealed a concerning trend: an average of one to two potential misrepresentations per page of sustainability disclosures, often stemming from overly broad or unsubstantiated language. This suggests many companies were already struggling to meet the existing standards.
Even with the proposed changes, experts like Conor Chell of KPMG believe the fundamental legal risk of greenwashing will remain. After all, making false claims has always been illegal. The new law simply shifted the burden of proof, requiring companies to substantiate their claims rather than forcing regulators to prove them false—a change now potentially on the verge of being reversed.
The coming months will be crucial as the details of the amended regulations emerge. The precise wording will determine how companies balance the desire to promote their environmental efforts with the need to avoid legal challenges. The “devil’s in the details,” as Chell puts it, and businesses will be forced to adapt to whatever form the final law takes.
Meanwhile, scrutiny from watchdog groups and the potential for legal challenges will likely continue, ensuring that companies remain accountable for the environmental narratives they present to the public.
