Canada Implements New Laws Concerning Corporate Greenwashing

In an effort to combat greenwashing—the practice of businesses making unsubstantiated claims about the environmental advantages of their goods or operations—the Canadian government has enacted a number of new regulations.

The government stated that the new laws would “enhance protections for consumers, workers, and the environment, including by prohibiting misleading “greenwashing” claims.” The proposed changes were first presented in the Government’s Fall Economic Statement in November 2023, and they were passed as part of the amendments made to Canada’s Competition Act.

In addition to representations about 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 are not based on adequate and proper substantiation in accordance with internationally recognized methodology, the recently amended law’s “Deceptive Marketing Practices” section forbids making claims to the public about “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.”

Notably, the law states that the burden of proof for claims about goods, companies, and business activities “lies on the person making the representation,” meaning that rather than depending on the Competition Bureau to establish that a claim is deceptive, the onus is on the businesses making the claim to support it.

For businesses that violate the Act’s provisions on deceptive marketing, there are severe penalties ranging from $10 million to $15 million for repeat infractions, or three times the advantage that resulted from the fraudulent behavior, or 3% of the company’s yearly sales.

Legal experts cautioned that, despite the Competition Act’s new greenwashing regulations’ goal of shielding consumers from deceptive statements, the updated legislation may also pose serious dangers to businesses and could impede their advancement on environmental projects.