In 2024, Canada's Competition Act (the "Act") was amended to include specific deceptive marketing provisions on "greenwashing", pursuant to which businesses face the prospect of significant civil penalties in relation to environmental claims that are unsubstantiated.
In view of the risk created by the new provisions, businesses and private members of the bar requested that Canada's Competition Bureau (the "Bureau") provide guidance on their interpretation, following which the Bureau launched a consultation process, with proposed guidelines released in late 2024, and a second consultation process.
On June 5, 2025, the Bureau released its long-awaited final guidelines (the "Guidelines"), providing clarification on the Bureau's approach to environmental claims — both with respect to the Act's general provisions on deceptive marketing, and the new provisions specifically targeting greenwashing.
This bulletin summarizes several key takeaways from the Guidelines. If you have any questions regarding the Guidelines, or how your business may develop new compliance measures to mitigate enforcement risk, please contact the authors.
Guidelines Not Determinative
First, it is important for businesses to understand that the Guidelines are not legally binding. The Guidelines make clear that the Commissioner of Competition retains broad discretion with respect to enforcement actions. Further, the Competition Tribunal — Canada's adjudicative tribunal for competition matters — is not bound by the Guidelines. Nonetheless, the Guidelines provide important context for business decisions that engage environmental claims, and also set out factual examples that are illustrative of the Bureau's approach.
The Tribunal does historically give some weight to Bureau guidelines, and as such, it may take the Guidelines into consideration when adjudicating on environmental claims matters. Interestingly, the Guidelines provide that, in the Bureau's view, the Tribunal "may" consider the Guidelines in considering whether to grant leave to file an application. For deceptive marketing practices (including greenwashing), leave may be granted where the Tribunal is satisfied that "it is in the public interest to do so" — the scope and meaning of "public interest" is currently unknown.
It is also important to note that private rights of action under the Act will come into force on June 20, 2025, and such actions can be based on greenwashing allegations. The Guidelines are only reflective of the Bureau's perspective, and do not reflect the potential positions or interpretations that may be adopted by private parties. As a result, adherence to the Guidelines will not necessarily protect businesses from greenwashing allegations advanced by private parties.
Applicable to Businesses of All Sizes, Including Charitable and Non-Profit Business Activities, and Foreign Businesses Marketing in Canada
For the purposes of the Guidelines, the word "business" is not limited to corporations or other business structures, and includes individuals. Further, the Guidelines do not provide for any exemption for small businesses. In the Bureau's view, in reliance on existing case law, the requirement for adequate and proper substantiation for environmental claims will apply regardless of whether a business is large or small.
Additionally, the Guidelines state that "business activity" refers to "any activity carried on by a business", including "the raising of funds for charitable and non-profit purposes", and also that foreign businesses marketing in Canada must comply with the misleading advertising and deceptive marketing provisions of the Act.
Existing Interpretations Remain Relevant
Businesses can expect that, to the extent phrases in the Act's new greenwashing provisions are used elsewhere in the Act and have been subject to judicial interpretation, the Bureau is likely to adhere to those interpretations in the context of environmental claims.
The new greenwashing provisions in the Act are as follows:
74.01(1) A person engages in reviewable conduct who, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, and business interest, by any means whatever, ...
(b.1) makes a representation to the public in the form of a statement, warranty or guarantee of a product's benefits for protecting or restoring the environment or mitigating the environmental, social and ecological causes or effects of climate change that is not based on an adequate and proper test, the proof of which lies on the person making the representation;
(b.2) makes a representation to the public with respect to the benefits of a business or business activity for protecting or restoring the environment or mitigating the environmental and ecological causes or effects of climate change that is not based on adequate and proper substantiation in accordance with internationally recognized methodology, the proof of which lies on the person making the representation; or ...
Certain phrases used in these provisions also appear elsewhere in the Act and are subject to existing judicial interpretations and considerations. For example, the phrase "adequate and proper test", which appears in s. 74.01(b.1), above, also appears in s. 74.01(1)(b), in the context of statements regarding the performance, efficacy, or length of life of a product. The Guidelines state that the same interpretation and considerations set out by courts in the context of the Act's general deceptive marketing provisions will also apply to the terms "adequate and proper" and "test" in the new greenwashing provisions. This means that testing or substantiation must be "fit, apt, suitable or as required by the circumstances", with regard to the overall impression that a representation creates for consumers. Additionally, the phrase "based on" will be interpreted to mean that adequate and proper testing has taken place before a claim is made.
Where a word or phrase has not been judicially interpreted, the Guidelines indicate that the Bureau will rely on the ordinary meaning of the words in question. The Guidelines provide a list of several words or phrases and their ordinary meaning, such as "ecological", "benefits", and "environment". For example, "climate change" is indicated to mean "[c]hanges in global or regional climate patterns".
Limited Guidance on Key Terms
As set out above, s. 74.01(1)(b.2) contains the phrase "adequate and proper substantiation in accordance with internationally recognized methodology". This phrase was the subject of a significant number of public comments requesting clarification. The proposed guidelines released in 2024 provided some general direction, which have been somewhat expanded in the Guidelines.
- With respect to the phrase "adequate and proper", the Bureau's view is that "businesses should choose substantiation that is suitable, appropriate and relevant to the claim", and which is "sufficiently rigorous". In practical terms, this will "often" "require" "scientific" substantiation, and "third party verification" may be required where called for by the internationally recognized methodology.
- "Substantiation" is described as "[e]stablishing by proof or competent evidence". "Substantiation" does not necessarily involve lab testing, but must be involve a methodology that is "suitable for the claim, having regard to all the relevant circumstances". The Guidelines are clear that substantiation must be "adequate and proper", such that the methodology chosen should be "reputable and robust".
- With respect to the phrase "internationally recognized", the Guidelines state that the Bureau is likely to consider a methodology to be "internationally recognized" where it is recognized in two or more countries, but not necessarily by the governments in those countries. The Guidelines also state that the word "recognized" means "[t]o be acknowledged as valid", but that "recognition" can come from a variety of sources, including standards-setting bodies, regulatory authorities, and industries or other entities using methodologies that are commonly accepted internationally.
Importantly, the Guidelines draw a distinction between "standards" and "methodologies". The new provisions do not require businesses to follow standards — rather, the substantiation of environmental claims must be in accordance with internationally recognized methodologies, which may or may not be reflected in standards.
Additionally, the Guidelines state that the Bureau will "assume" that methodologies required or recommended by a federal, provincial, or territorial government program for the substantiation of environmental claims are consistent with internationally recognized methodologies. An enforcement action under s. 74.01(1)(b.2) is "unlikely" where such a methodology is followed, provided that the methodology nonetheless provides "adequate and proper substantiation". As a result, businesses must continue to give consideration to the Act's requirements, and may or may not be able to rely on methodologies required or recommended by other government programs.
Flexibility is a Double-Edged Sword
Many businesses have expressed concern regarding the rigidity of the Act's greenwashing provisions and the impact of these provisions on marketing practices. However, the Guidelines suggest that there is flexibility with respect to the new provisions. Specific methodologies are not mandated. For example, with respect to claims about plans to reach net-zero, the Guidelines provide that "a number of different standards" can "offer adequate and proper substantiation in accordance with methodologies that are internationally recognized". Additionally, the Guidelines observe that the Act does not expressly require an internationally recognized methodology to be the "best" methodology available — but that the methodology should be "reputable and robust".
These comments suggest that businesses have some flexibility in substantiating environmental claims, but also introduce uncertainty in determining whether the Act's requirements are met in a particular case. These concerns are heightened in the context of new climate technologies. The Guidelines state that, where there is no methodology in respect of testing an exact claim, businesses may be able to rely on two or more internationally recognized methodologies together, or on methodologies used for substantiating similar claims. However, the Guidelines are clear that if there is "no way" to substantiate a claim in respect of a new technology, the claim should be avoided.
The Bureau's Focus is on Marketing and/or Promotional Representations
During the public consultation process, concerns were raised about the application of the Act's greenwashing provisions in other regulatory contexts, such as securities filings. The Guidelines provide that the Bureau "does not concern itself" with representations made under regulatory securities frameworks. However, if an environmental claim is "re-used" for promotional purposes outside of the sale of securities, the Bureau will apply the Act.
Environmental Claims About the Future Must Be Substantiated and Have a Clear Plan
The Guidelines commend businesses for setting goals about future environmental performance, but make clear that such claims can be considered greenwashing where they are "wishful thinking". As a result, where a business makes a claim in respect of a forward looking claim or target, it should have (1) a clear understanding of what needs to be done to achieve what is being claimed; (2) a concrete, realistic and verifiable plan to accomplish the objective, with interim targets; and (3) meaningful steps underway to accomplish the plan.
Conclusion
As set out above, the Guidelines are not legally binding and do not provide definitive guidance. Businesses will be responsible for determining what is required to comply with the Act's new greenwashing provisions. When making environmental claims public, it would be pragmatic for businesses to consider the following:
- Carefully document due diligence undertaken to support environmental claims, including any conclusions about substantiating methodologies. Due diligence is a defence to deceptive marketing practices under the Act.
- Exercise care with respect to environmental claims relating to new or emerging technologies, particularly where no one methodology supports the exact claim.
- Environmental claims relating to future-oriented goals or targets will require substantiation in the form of a concrete, realistic, and verifiable plan, with interim targets. The plan does not necessarily need to be made public, but it must be available if the claim is challenged.
- Under the Act, businesses do not need to make public information substantiating an environmental claim. However, making such materials public may mitigate the risk of enforcement actions being initiated, whether by the Bureau or private parties.
- Exercise caution around representations made in regulatory filings — if such representations are re-used for promotional purposes, they are subject to the Act's deceptive marketing provisions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
