With the passage of Bill C-59 last month by the federal Parliament, corporate misleading environmental claims — greenwashing — will be made much more difficult. Businesses have expressed concerns about the new law, and the Alberta government is threatening to challenge it in court. Despite these protests, Canadian companies will have to be careful about bragging about their contributions to environmental protection from now on.
The Competition Act already allowed Canada’s Competition Bureau to investigate companies’ claims about the environmental benefits of their products. It was following such an investigation that Keurig agreed with the Bureau to pay a $3 million penalty for “false or misleading” claims made about the recyclability of its coffee capsules.
The change to the Act significantly broadens the scope of the Bureau’s environmental reporting mandate. Investigations will now be able to focus not only on specific products, but also on the company itself or one of its activities. In addition, environmental claims will have to be based “on sufficient and appropriate corroborative evidence obtained using an internationally recognized methodology.” The private sector deplores the fact that this formula has not been clearly defined. According to Rich Kruger, CEO of oil company Suncor, “Bill C-59 introduces ambiguity and uncertainty.” […]. We are asked to measure ourselves against unknown or undefined international standards.”
The federal government responds that it is up to the Competition Bureau to clarify the meaning of this new text, after consultation with stakeholders.
Another innovation brought by C-59: until now, complaints filed under the Competition Act were initiated by the Competition Bureau. Starting next year, “any person” will be able to bring an action before the Competition Tribunal, particularly if the matter concerns “the public interest.”
In short, companies will have to think twice before boasting about the environmental virtues of their products or activities. Such claims can no longer be just communication tools: they will have to be authentic and measurable against recognized standards.
Some may worry that these changes will discourage companies from engaging openly on environmental issues (“eco-silence”). Canada’s major oil sands producers, grouped under the banner of the New Pathways Alliance, have removed almost all content from the coalition’s website, claiming that they want to avoid exposing themselves to litigation. However, this form of resistance may be untenable; the pressure from investors, supply chains and consumers is simply too great.
In its analysis of the amendments to the Competition Act, the law firm Gowling rightly points out: “Ensuring the credibility and transparency of environmental claims will be essential to maintaining consumer confidence, in addition to complying with the new sections of the law concerning greenwashing.” To reduce reputational and legal risks, Gowling’s lawyers continue, companies will need to have a “robust strategy” and “pay careful attention to detail.”
Mr. Kruger, Suncor’s CEO, is right that a company cannot afford to underperform. Without profitability, the company will quickly find itself in trouble, and employees and the community will be the first victims.
That said, if they are well understood, profitability and respect for the environment are not contradictory. In any case, in the medium and long term, the survival of industries depends on a healthy environment. Entrepreneurs and managers must therefore seek a balance that will allow businesses to be profitable while reducing as much as possible, in a determined, credible and measurable manner, the harmful effects of their activities on the environment. The changes made to the Competition Act on greenwashing will contribute to achieving this objective.