Bill C-59 Explained: Canada’s New Greenwashing Law
How to Achieve Compliance and Promote Genuine Sustainability
The Canadian government recently amended the Competition Act to tackle greenwashing, which refers to the misleading portrayal of environmental practices. This includes unsubstantiated claims about products or a company’s sustainability efforts.
Passed in June 2024, Bill C-59 classifies environmental claims as deceptive marketing practices. This means companies must now have solid evidence, such as proper tests or methodologies based on international standards; to support any claims they make about their environmental benefits or ‘green’ actions.
Why the Change?
There has been a surge in greenwashing complaints to the Canadian Competition Bureau, with consumers and other stakeholders demanding transparency and businesses facing legal action for misleading claims.
What You Need to Know
Here are three key takeaways from the new Canadian greenwashing law (Bill C-59):
Prohibitions on Misleading Environmental Claims:
- Product Claims: Any statements, warranties, or guarantees about a product’s environmental benefits must be based on adequate and proper tests.
- Business Activity Claims: Claims about the environmental benefits of a business or its activities must be substantiated according to internationally recognized methodologies.
- Beyond Advertising: The new greenwashing provisions apply to all communication materials, including social media and reporting.
Burden of Proof: The responsibility for proving the validity of environmental claims now falls on the company making them. This requires being prepared to demonstrate the methods used and the results achieved.
Significant Penalties: Violations of these provisions can result in hefty fines, potentially reaching $15 million or a percentage of annual revenue. Starting in June 2025, private entities can also file legal challenges against companies suspected of greenwashing, increasing legal and reputational risks for companies making unsubstantiated environmental claims.
The Future of Environmental Claims
- Heightened Scrutiny: Stricter regulations and reporting requirements are expected for companies as ESG (Environmental, Social, and Governance) factors gain greater importance. Companies doing business in Canada must prepare now to avoid non-compliance with new Canadian laws on greenwashing.
- Global Movement: Canada’s new greenwashing law is part of a broader trend towards stricter regulations on greenwashing. Expect similar legislation to emerge in other countries, with the EU potentially setting the global standard.
- Alignment with International Standards: Complying with leading international frameworks is becoming the norm. Therefore, aligning environmental claims with key frameworks such as the Science Based Targets initiative (SBTi), the Greenhouse Gas (GHG) Protocol, and the International Sustainability Standards Board (ISSB) will be essential. Additionally, the Competition Bureau may release further details and guidelines to help companies navigate these new requirements.
