Canada’s Competition Act, which governs competition in the national market, is currently undergoing public consultation with a view to modernizing reform. Unfortunately, the consultation does not take into account a threat with serious consequences for the Canadian economy, namely climate change.
In a global economy where polluting industries are increasingly seen as a drag, Canada risks losing a competitive edge if it fails to integrate environmental sustainability into its economic policy.
As public health advocates, environmentalists and legal scholars, we believe that modernizing this law provides a perfect opportunity for innovation. Sustainable business practices must be an integral part of regulating competition in the Canadian marketplace to ensure that businesses here can adapt to the impacts of climate change — and the transition they necessitate — while remain competitive nationally and internationally.
Greenwashing, a scourge to be eradicated
In an economy where sustainability sells, we cannot afford to miss this opportunity. In fact, studies estimate that environmental impacts influence the buying decisions of nearly 60% of consumers.
Greenwashing, however, is a widespread and systemic phenomenon: companies present their services or products in a way that makes it appear as if they are conducive to a sustainable future. A 2021 survey by European consumer protection authorities found that 42% of companies’ environmental claims were exaggerated, false or misleading. A more recent survey by the Australian Competition Authority found this percentage to be higher, with 57% of companies engaging in greenwashing. Not only does this practice mislead consumers and the public, but it also harms truly sustainable businesses and hinders progress towards a healthy and stable climate.
Europe is launching innovative initiatives that integrate sustainability into the application of its competition laws aimed at protecting consumers, stimulating green innovation and safeguarding the environment. Proposed EU legislation will ban the use of generic terms, such as ‘environmentally friendly’, which present a positive image, but are almost always stripped of their meaning.
Another example: France requires advertisements with environmental claims, such as “carbon neutral” or “net zero”, to provide a QR code that links to supporting studies and data. For its part, Austria allows companies to collaborate on issues related to sustainable development, which would allow farmers to work together to reduce pesticides and protect animal welfare beyond existing standards.
And U.S ?
If Canada does not take similar steps to encourage businesses to follow suit, the transition to a sustainable and truly carbon neutral economy will be doomed. Environmental degradation will continue apace. However, companies have little incentive to go green when they can talk rhetorically without taking action.
In fact, a number of Canada’s largest companies (and biggest polluters) actively practice greenwashing. Royal Bank of Canada is loudly claiming to be a climate leader, as it ranks fifth in the world for financing fossil fuel production. The Canadian Gas Association assures us that fracked natural gas is clean and very affordable, even though studies show that using gas in our homes causes asthma in our children and that heat pumps are more cost effective than gas boilers. Canada’s largest oil and gas companies all say they’re “committed” to a net-zero future, but are adamantly opposing necessary climate policies and seeking to increase fossil fuel production. This attitude is in direct contradiction with the recent guidelines of a United Nations working group led by Catherine McKenna, which defined the meaning that a company’s affirmation in favor of a carbon neutral future should take on so that it be authentic.
The Competition Bureau — the federal competition watchdog — has opened investigations into some of these issues, but our current regime offers reactive and piecemeal solutions to a larger problem. In addition, companies do not even have up-to-date guidelines from the Bureau about the environmental claims they can make. Canada therefore needs legislative reform that reflects international best practices. Without reform, the Bureau will face the difficult task of ending rampant corporate greenwashing and misinformation.
like tobacco
It took more than 30 years to restrict tobacco advertising after we realized the health risks of smoking. The urgency of climate change will not give us as much time. Canadian legislation does not provide sufficient incentives or guidance to companies for sustainable mining. It rewards polluters and jeopardizes truly sustainable businesses, including several SMEs. Consumers also pay the price because of the impact on their environment and their health. We have to turn the tide.
Competition law reform is not the only answer to the climate crisis. It is, however, an important lever, as it ensures that competitive pressure incentivizes the efficient use of our planet’s limited resources and complements environmental and climate policies. As the European Union has pointed out, competition law reform is part of a larger effort to achieve “nothing less than a new economic model”.
The biggest challenge facing all levels of society — including business — over the next 30 years is the transformation to a sustainable, truly carbon-neutral economy, in line with the goals of the Paris Agreement. The modernization of the Competition Act must reflect this reality.