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The federal government has just released its Federal Budget 2025 and it's a major update for brands, advertisers, and companies of all sizes, with potential implications for how businesses communicate claims about their environmental practices, sustainability initiatives (yes, we know... time to retire the old catch-all eco term!), or efforts to mitigate climate change. Understanding this ever-shifting landscape is essential for adjusting strategies and ensuring compliance.
As part of the Federal Budget released on November 4, 2025 ("Budget 2025"), the Canadian government is moving to scale back certain recently enacted provisions in the Competition Act that target greenwashing. These provisions require businesses to base environmental claims about a business or business activity on adequate and proper substantiation in accordance with internationally recognized methodology. As of June 20, 2025, non-compliance with this provision can be prosecuted under an expanded private right of action.
In Budget 2025, the government proposes to amend these greenwashing provisions by:
- Removing the requirement for businesses to substantiate their environmental benefit claims based on internationally recognised methodology standards.
- Repealing the ability for third parties, such as environmental organizations, to prosecute greenwashing non-compliance directly before the Competition Tribunal via the expanded private right of action.
At this time, it does not appear as though Ottawa plans to tinker with the rule that environmental claims about a product's "green" benefits (for protecting or restoring the environment, or for mitigating the environmental, social and ecological causes or effects of climate change) must be backed by adequate and proper testing. Instead, the next wave of amendments is presumably intended to make life a little easier for businesses, focusing on lowering the evidentiary burden for substantiating those claims.
The rollback of these greenwashing provisions is part of a broader shift in climate policy aimed at stimulating private investment and boosting the country's clean tech competitiveness. According to the federal government, the recently enacted greenwashing rules, originally intended to promote transparency, have had the "opposite" effect, by "creating investment uncertainty" and causing some companies to pause or even pull back their environmental initiatives.
The likely result? A wave of "greenhushing" where companies elect to say less, not more, about their sustainability efforts to avoid regulatory scrutiny. In short, what was meant to encourage open conversation about climate impact may have ended up silencing it.
If adopted, these changes would limit who can bring environmental-claim complaints to the Competition Tribunal and would likely ease the burden on businesses making "green" environmental or climate-related representations; though the details will matter.
Our team will continue to monitor these proposals and provide updates as they evolve.
To learn more, please visit our Environmental Claims and Greenwashing Hub.
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