Businesses welcome changes to Canada's greenwashing laws, but environmentalists aren't happy

Changes to Canada's anti-greenwashing laws feature been welcomed by businesses but prompted occupy among environmentalists. 

Laws nearly greenwashing — making a sour or misleading financial statement about the environmental benefits of a product — will remain on the books, but the Liberal government says it will be making changes to give businesses more certainty about what runs afoul of the law.

The proposed amendments are contained in Bill C-15, an omnibus bill that seeks to implement certain parts of the 2025 Budget.

The onus will remain on businesses to substantiate that their products do what they claim, but they will no longer need to do that based on international standards.

That global benchmark, businesses claimed, was vague. The worry was that some companies would ditch worthwhile green initiatives because the burden of proof was so high and fuzzy.

"On behalf of the business community, there was a gigantic sigh of relief," said David Pierce, vice-president of government relations at the Canadian Chamber of Commerce.

"There was no description of what that [benchmark] meant. And so it wasn't clear where that environmental standard was going to come from, what was deemed valid or not," said Pierce.

"And it just seemed like this was not ready for prime time when it was announced."

Environmentalists, on the other hand, are now raising the alarm about the lack of standards to judge whether corporations in Canada are living up to their promises to, for example, reduce greenhouse gas emissions that warm the planet. There's also concern about changes to the complaint process.

As consumers have grown more concerned about their environmental footprint in recent years, a range of companies have made claims about how green their products are. 

In 2024 the Trudeau government passed Bill C-59, which included changes to rules on deceptive advertising. The laws could apply to, for example, retailers, energy companies and financial institutions, many of which have been making carbon-neutral claims. 

But as Ottawa and the body that administers the legislation, the Competition Bureau, rolled out the Trudeau-era regulations, a backlash came from the business community.

Some businesses scrapped their plans to achieve net-zero greenhouse gas emissions, making it clear their actions were in response to the law.  

For example, Canada's largest pension investor, the Canada Pension Plan Investment Board (CPPIB), rolled back its commitment to make its portfolio and operations net zero by 2050.  The CPPIB did not state the decision was related to Bill C-59 but analysts suspected it was.

Lululemon under investigation for ’greenwashing’ products

The Liberal government tabled its budget implementation act on Tuesday, which contains the nuts and bolts of implementing its fiscal plan. The government said in a bid to "provide more certainty to the marketplace, Budget 2025 proposed to remove some aspects of the Competition Act, while maintaining protections against false claims."

Advocacy group Environmental Defence says backing away from international standards underscores the need to develop domestic standards for greenhouse gas emissions reporting, such as mandatory disclosures.

"Keeping the greenwashing regulations is as important as moving forward with clear guidance and requirements for climate-related reporting across the board," said Julie Segal, the group's senior manager of climate finance. 

Ottawa's changes would also rely on the independent Competition Bureau to adjudicate complaints, which, some worry, will lead to cases falling through the cracks.

The Competition Bureau "doesn't have the capacity to deal with the greenwashing that is in the marketplace," said Matt Hulse, a lawyer with environmental law charity Ecojustice. 

He also noted from their experience that the bureau takes two to three years to process greenwashing claims.

In a statement, a spokesperson from the Competition Bureau said the agency will update its guidance for businesses once the implementation act passes. 

Hulse also responded to worries from corporate Canada about members of the public filing frivolous claims over greenwashing, saying those concerns are overblown because the tribunal can choose not to hear cases — and claimants could be on the hook for thousands of dollars in legal costs if they lose. 

"That is a serious risk that they have to be aware of that'll make them think twice about bringing a silly claim," Hulse said. 

Senior reporter, Parliamentary Correspondent

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