The Competition Act in Canada makes it illegal to advertise or market products or services in a way that is false or misleading. Recent amendments under Bill C-59 have strengthened this law to address a specific issue: greenwashing.

What Is Greenwashing?

Greenwashing occurs when a business, intentionally or inadvertently, makes false or misleading claims about the environmental or sustainability attributes of its products, services, or practices. These claims may exaggerate positive environmental qualities or minimize negative ones, deceiving consumers into believing the product or business is more environmentally friendly than it actually is.

Examples of greenwashing include misleading statements about:

• Products and materials (e.g., recyclability, biodegradability).
• Supply chain elements, including production, packaging, distribution, and disposal.
• General business practices and sustainability efforts.

Greenwashing is a form of false advertising that influences consumers to purchase from "green" businesses or buy "eco-friendly" products, often based on unsupported or exaggerated environmental benefits.

Why the Changes Were Made

Amendments to the Competition Act, which became law on June 20, 2024, were driven by high-profile cases of greenwashing involving Keurig Canada Inc. and Volkswagen Group Canada Inc.

• Keurig Canada Inc.: The company falsely claimed its single-use K-Cup pods were recyclable.
• Volkswagen Group Canada Inc. and Audi Canada Inc.: They marketed vehicles as having clean diesel engines with reduced emissions. However, software installed in the vehicles manipulated emission tests, falsely showing reduced emissions during testing.

These cases highlighted the need for stronger regulations to prevent misleading environmental claims.

New Provisions for Environmental Claims

The recent amendments to the Competition Act include provisions specifically targeting greenwashing. Under the new law:

• Businesses must substantiate their environmental claims with proper testing.
• Claims about a product’s performance, efficiency, or lifespan must be backed by adequate and proper testing.

These changes mean that companies can no longer make unverified environmental claims without facing legal consequences.

Why This Matters for Canadian Businesses

The updated law is a significant development for businesses operating in Canada. Companies must ensure their environmental claims are accurate, substantiated and properly tested. The labeling of products must follow the Consumer Packaging and Labelling Act and the Textile Labelling Act to enable consumers to make well-informed purchasing decisions and for the companies to avoid fines and reputational damages.

What’s Next: Competition Bureau Guidelines

To help businesses comply with the new rules, the Competition Bureau plans to develop green marketing guidelines. These guidelines will clarify what constitutes "adequate and proper testing" for environmental claims in the Canadian context, ensuring companies understand the standards they must meet.

The updated Competition Act is a step forward in holding businesses accountable for their environmental claims, protecting consumers, and fostering genuine sustainability practices in Canada.