Competition Bureau Opens Consultations on Anti-Greenwash Rules

Canada’s Competition Bureau says it will speed the development of guidance on the interpretation of new provisions in the Competition Act aimed at greenwashing.

The federal watchdog says it has received a large number of requests and that it will develop guidance “on an accelerated basis”, The Canadian Press reports.

As part of its work, the regulator says it will launch a public consultation in the coming weeks.

The amendments to the Competition Act that became law last month require companies to be able to substantiate environmental claims made to promote a product or business interest.

The Pathways Alliance group of oilsands companies burned its website and social media feeds to the ground last month, citing what it called “uncertainty” over the new anti-greenwashing rules.

Pathways maintained the changes create significant uncertainty for Canadian companies that want to communicate publicly about the work they are doing to improve their environmental performance. But in the Globe and Mail, Julien Beaulieu of the Quebec Environmental Law Centre and Wren Montgomery of the Ivey Business School said the new rules are “much less menacing than opponents make them sound,” with domestic guidelines on the way, international standards available for reference, and restrictions against “frivolous claims” by private plaintiffs already baked into regulations.

On the contrary, if the new rules make “empty net-zero pledges, dubious eco-labels, and vague green claims” a thing of the past in Canada, they’ll amount to “good business based on long-standing economic principles,” Beaulieu and Montgomery wrote.

“Opponents are failing to recognize a fundamental fact: Canada’s green markets are broken and urgently needed fixing,” the two authors stated, with 57% of consumers telling a 2023 Deloitte survey they no longer trust companies’ environmental claims. “Moreover, studies have found that up to 50% of green claims have no supporting evidence and weak or non-existent verification. In short, greenwashing is rampant.”

Those deceptive claims “prevent consumers and investors from making informed decisions, and breed skepticism for all green products,” Beaulieu and Montgomery added. “This, in turn, prevents honest firms from reaping the rewards of their investments in sustainability, and stifles innovation.”

That’s a distortion that even followers of free-market economist Milton Friedman should reject: Given Friedman’s call for “open and free competition without deception and fraud,” the two authors wrote, “the amendments should be considered a win for the Canadian economy.”

After the anti-greenwashing restrictions passed the Senate as part of the omnibus Bill C-59, climate and health organizations said they were surprised at the speed and severity of the industry’s response.

“This is basically a very modest provision in the Competition Act. It simply requires companies to tell the truth and to have an evidence base to back up their claims,” Leah Temper, program director at the Canadian Association of Physicians for the Environment (CAPE), said at the time.

“So I do think this reaction is very telling.”

The main body of this report was first published by The Canadian Press on July 4, 2024.