Environmental Claims And The Competition Act: Competition Bureau Releases Final Greenwashing Enforcement Guidelines

On June 5, 2025, the Competition Bureau (the "Bureau") released final enforcement guidelines, ("Guidelines"), that set out the Bureau's approach to the interpretation and enforcement of environment and climate change related representations under the Competition Act.

These Guidelines are the culmination of a significant consultation process conducted by the Bureau. They are intended to provide guidance in relation to the two new greenwashing provisions introduced in June 20, 2024, that require a business to have adequate and proper substantiation/testing prior to making certain environmental and climate-change related representations.¹

The Guidelines seek to provide tools to businesses to allow them to make environmental claims in compliance with the Competition Act and address concerns raised in respect of the new greenwashing provisions.² While some argue that compliance with the greenwashing provisions is relatively straightforward, this position ignores the issues and risks facing businesses seeking to be transparent about their environmental actions and goals arising from the greenwashing provisions enacted under the June 20, 2024 amendments. Key factors that will influence the decision of a business to make environmental claims under the new greenwashing provisions include:

• The breadth and uncertainty of the language included in the greenwashing provisions, including using terminology that does not have a defined meaning and that has not been considered by the courts, with the result that businesses arguably do not have the tools to comply with the new greenwashing provisions;
• The absence of any transition period to allow businesses to develop policies and practices to comply prior, meaning that the public disclosure of businesses as at June 20, 2024 was subject to the new substantiation provisions, which provisions are broader than simply making truthful claims and require a business to conduct substantiation prior to making the disclosure.
• The significant penalties possible under the Competition Act.
• The new right of private enforcement, effective June 20, 2025 (for disclosure made as early as June 20, 2024), meaning that the Bureau will no longer the gatekeeper of challenges alleging greenwashing.

These concerns have resulted in reduced disclosure by businesses regarding actions to benefit the environment and commitments to achieve certain environment goals and address climate change.

The final Guidelines provide a focused and practical approach to the interpretation of the new greenwashing provisions (as well as the potential application of the core misleading representation provisions), albeit with a continuing degree of uncertainty of the application of the new greenwashing provisions. Whether the Bureau's attempted pragmatism and guidance limiting the scope of these greenwashing provisions will encourage companies to disclose environmental actions, results and commitments, and whether its interpretation will ultimately be supported by the Competition Tribunal or courts, remains to be determined. Strictly, the Guidelines will not be binding on the Bureau, the Competition Tribunal or the courts, and cannot restrict private parties seeking to take action against businesses under the greenwashing provisions. Accordingly, an element of uncertainty will remain until case law has been developed.

Final Guidelines – Update to the Draft Guidelines

The final Guidelines are substantially little changed from the draft Guidelines issued on December 23, 2024, with updates that reinforce the theme that the Bureau is seeking to take a focused and practical approach to the interpretation of the new greenwashing provisions (as well as the potential application of the core misleading representation provisions), in addition to including additional practical examples to provide additional guidance. The following differences are notable

Consumer protection mandate.

• The updated Guidelines now state that the "Bureau is concerned with representations made to the public for the purposes of marketing and promotion, rather than representations made solely for other purposes or that are regulated by other government agencies".
  • This interpretation aligns with the purpose of the Competition Act, which is to maintain and encourage competition in Canada in order to, among other things, provide consumers with competitive prices and product choices. As recently noted by the Competition Tribunal, although the goals of the Competition Act are broader than just consumer protection, "[t]he focus of the deceptive marketing provisions [which include the new greenwashing provisions] is the consumer".³
  • The final Guidelines also specifically include an example of a public company that provides voluntary and obligatory information to current and potential investors. The Bureau attempts to provide comfort to public companies, advising that they are not concerned with the communication of "certain environmental representations" to investors that are subject to securities regulation by Canadian provinces and territories (e.g., securities commissions). This statement appears to limit the Bureau's approach, but questions remain if the communication is directly broadly to other stakeholders, in addition to securities investors, for example, or if the securities commissions determine to not assert jurisdiction over such disclosure, especially in light of the April 23, 2025 announcement by the Canadian Securities Administrators, that they are pausing their efforts to develop new and enhanced climate and diversity-related disclosure rules for public companies in Canada.
  • Notwithstanding the Bureau's approach to limit its role policing environmental communications, the Guidelines now caution that if the "business reuses any of the environmental claims for the purposes of promoting a product or business interest outside of the sale of securities, the Bureau will apply the Act as appropriate." In this case, while the original disclosure may not be subject to review by the Bureau, the subsequent re-use (e.g., potentially, posting such information on the business's website or subsequently disclosing the information in a news release) may be subject to review (and the substantiation requirement) under the greenwashing provisions. It may be difficult, in practice, to limit the use of 'green' claims to that narrow scope of securities law. Any public company that deals with consumers directly will likely struggle to separate securities-related publicity from general promotional activity. Finally, the ability of private parties to enforce these provisions of the Competition Act as of June 20, 2025 means that the Bureau's intent to narrow its focus is much less determinative of the risk assessment for business.

Limit the scope of claims subject to the greenwashing provisions

• The final Guidelines include a new example of how the Bureau will characterize a representation, which characterization involves a narrow interpretation, with the result that the environmental represents would not be subject to the new greenwashing provisions. The example includes a claim by a business about the percentage of recycled content in a product. The Bureau takes the position that this claim does not relate to either:
  
  • a claim about the "performance or efficacy of a product" nor "a product's benefits for protecting or restoring the environment or addressing climate change", which are elements of the greenwashing provision that applies to environmental claims about products, nor
  • a claim about a "business or business activity". which is an element of the greenwashing provision that applies to environmental claims about businesses or business activities,
  with the result that the claim would not be reviewed under the new greenwashing provisions.
  
  While this level of clarity is to be welcomed, it is not obvious that private parties or the Tribunal will necessarily agree that such a claim is not within the scope of the new greenwashing provisions.

Additional Guidance re: meaning of "internationally recognized methodology" necessary to support a substantiation of a claim

• The final Guidelines provide additional guidance on the meaning of the 'internationally recognized methodology" required to support a substantiation of environmental claim, and importantly clarify that a 'recognition' can come from a variety of sources, including but not limited to standards-setting bodies, regulatory authorities, or even industries or other entities using methodologies that are commonly accepted internationally.
• The final Guidelines also confirm that the Bureau will assume that methodologies required or recommended by federal, provincial or territorial government programs in Canada are consistent with internationally recognized methodologies. While it seems appropriate that the Competition Bureau should assume that the federal and provincial governments' requirements (or recommendation) should not be undermined by their enforcement actions, private parties are unlikely to feel bound by such concern. The wording of the statute does not give great comfort to businesses who rely on Canadian-only methodologies, even if endorsed by government officials. The final guidelines also remind businesses that having a green claim properly substantiated is not the entirety of compliance: the general impression must not be false or misleading in a material respect.
• The final Guidelines also include additional examples of methodologies (GHG protocol to measure emissions and ISO 5667-1 and ISO 5667-6 to measure nutrient concentration).

The greenwashing provisions apply to all businesses

• The final Guidelines expand the concept of "business activity" to correspond to the definition of "business" in the Competition Act, with the result that the Guidelines now specifically state that the new greenwashing provisions would apply to businesses engaged in the raising of funds for charitable / non-profit purposes, thus explicitly recognizing that all businesses making environmental claims, not simply a typical business, will be subject to accountability under the greenwashing provisions.
• The final Guidelines clarify that the greenwashing provisions apply to a foreign business "marketing in Canada". The question will be – in the age of the internet – what does "marketing in Canada mean."

Key Elements of the Guidelines

General Principles: Environmental Claims

The Guidelines set out six principles for compliance to help businesses assess whether their environmental claims comply with the requirements of the Competition Act. These principles are largely standard tenants of advertising substantiation, and are nearly identical to the guidance provided by the Bureau in the Deceptive Marketing Practices Digest – Volume 7 dated July 22, 2024,⁴ other than the expansion of Principle 6 (noted below) in the Digest relating to "aspirational claims", by moving away from the term "aspirational claims" in favour of the broader phrase "environmental claims about the future". The six principles are as follows:

1. Environmental claims should be truthful, and not false or misleading.
2. Environmental benefits of product and performance claims should be adequately and properly tested.
3. Comparative environmental claims should be specific about what is being compared.
4. Environmental claims should avoid exaggeration.
5. Environmental claims should be clear and specific – not vague.
6. Environmental claims about the future should be supported by substantiation and a clear plan.

• The Bureau advises that forward-looking claims should be properly substantiated using an "internationally recognized methodology" as required by the new greenwashing provisions of the Competition Act. See below "Guidance re: Substantiation of claims environmental benefits of a business".
• The environmental goal should be well-defined, with a clear understanding of the requirements to meet the goal including a concrete, realistic and verifiable plan with interim targets coupled with meaningful steps and progress toward the goal.

Guidance re: Substantiation of environmental claims of a business

The Guidelines include guidance on the meaning of "adequate and proper" substantiation in accordance with "internationally recognized methodology" for environmental claims of a business or business activities, with the key concepts including:

• A business is not required to follow any (particular) standards, but rather focuses on the methodology used (that may or may not be reflected in one or more standard).
• A business is not required to rely on the "best" methodology.
• The updated Guidelines also confirm that the Bureau will "assume" that methodologies required or recommended by federal, provincial or territorial government programs in Canada are consistent with internationally recognized methodologies. While it seems appropriate that the Competition Bureau should assume that the federal and provincial governments' requirements (or recommendation) should not be undermined by their enforcement actions, private parties are unlikely to feel bound by such concern. The wording of the statute does not give great comfort to businesses who rely on Canadian-only methodologies, even if endorsed by government officials. The final guidelines also remind businesses that having a green claim properly substantiated is not the entirety of compliance: the general impression must not be false or misleading in a material respect.
• Recognition of a methodology can come from a variety of sources, including but not limited to standards-setting bodies, regulatory authorities, or even industries or other entities using methodologies.
• A methodology would be "internationally recognized" if it is recognized in two or more countries (not necessarily recognized by the governments of two or more countries).
• A methodology must be adequate and proper in the circumstances, including with regard to the Canadian context as appropriate (e.g., geography. climate, etc.).
• A methodology should be reputable and robust (which would increase the likelihood of the methodology being adequate and proper).
• Third-party verification is not necessary, unless the internationally recognized methodology used to substantiate a claim requires third-party verification, noting, however, that third-party verification "may improve the credibility" of claims from a consumer's perspective.
• A business may rely on data used in a business's operations to substantiate a claim, provided that such data has been collected and evaluated in accordance with an internationally recognized methodology that is adequate and proper.
  • The standard of substantiation does not necessarily require "testing".
  • With regard to "net zero" claims in particular, the Bureau recognizes there are many standards that can offer adequate and proper substantiation in accordance with methodologies that are internationally recognized. These claims should be supported by concrete, realistic and verifiable plans (as with all claims about the future).
  • With regard to the "new technologies" for which an internationally recognized methodology has not been recognized, a business may be able to rely on multiple, differing internationally recognized methodologies that, when taken together, can create substantiation for the claim, or that are used for substantiating similar claims, subject to the caveat that if a business cannot substantiate a claim, it should not make such claim until an internationally recognized methodology is developed. Business should be alert to developments in methodologies that may require updates to claims.
• Even where compliance with the new substantiation requirements has arguably been achieved, businesses should remain mindful of the Bureau's six general overarching principles to ensure the claim does not otherwise contravene the general misleading representations provisions in the Competition Act (e.g., the literal meaning and general impression of the representation should not be misleading or false in any material respect). (See "General Principles: Environmental Claims").

Due Diligence Defence

The Guidelines explicitly confirm that the due diligence defence set out in Section 74.1(3) of the Competition Act continues to be available to businesses in respect of claims under the new greenwashing provisions, meaning that it is important that businesses develop, adopt, and maintain the currency of credible and effective compliance programs in order to demonstrate that they exercised all reasonable care to prevent the contravention.⁵

The Competition Act greenwashing provisions are complex and uncertain, and failure to comply with these provisions may have a significant impact on businesses. Accordingly, to identify potential concerns and mitigate liability under these new provisions, businesses should assess and potentially modify their existing environmental statements and establish processes to be followed when making new environmental statements.

Footnotes

1. If the business fails to conduct such mandated substantiation/testing prior to making the representation, it could be vulnerable under these new greenwashing provisions, even if the particular representation is not false or misleading, i.e., it is not a defence that the environmental representation is truthful and not misleading.

2. These Guidelines are the culmination of a significant consultation process conducted by the Bureau, which resulted in more than 200 submissions, and the publication for consultation of draft guidelines on December 23, 2024 See McMillan's providing an overview of the greenwashing provisions at Competition Bureau Releases Draft Greenwashing Enforcement Guidelines: A Pragmatic Approach – McMillan LLP and Bill C-59's Expansion of the Competition Act's Deceptive Marketing Practices: "Greenwashing" and Steering Clear of Environmental Misrepresentation – McMillan LLP, Bill C-59's Expansion of the Competition Act's Deceptive Marketing Practices: "Greenwashing" and Steering Clear of Environmental Misrepresentation – McMillan LLP.

3. See Canada (Commissioner of Competition) v Cineplex Inc., 20 24 Comp Trib 5 at para. 233.

4. See The Deceptive Marketing Practices Digest — Volume 7.

5. The Guidelines updated the draft guidelines to recognize that a business that is able to establish diligence defence will not be required to pay an AMP or restitution or be required to publish a corrective notice but may be ordered to stop making such representation.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2025