[co-author: Rhiannon Szewczyk - Summer Student]
On June 5, 2025, the Competition Bureau (the Bureau) published its final Guidelines for environmental claims under the Competition Act (the Act). The Guidelines were created to help businesses and the public understand the Bureau's approach to deceptive marketing provisions under the Act as they relate to environmental claims, including with respect to the new environment-specific provisions that were enacted in 2024. While not binding on the Commissioner of Competition nor the Competition Tribunal, the Guidelines provide visibility into the Bureau's interpretation and approach to environmental claims.
The finalization of the Guidelines coincides with the June 20, 2025 coming into force of a private right of action allowing individuals and organizations to bring cases, with leave, for deceptive advertising practices directly before the Competition Tribunal. Previously, only the Commissioner of Competition could initiate such proceedings. The Competition Tribunal has the authority to impose significant penalties for violations, as well as to order parties to stop engaging in specific conduct and/or to publish notices correcting information. As such, businesses may face a material risk of enforcement in relation to environmental claims that are found to be misleading or deceptive.
Deceptive Marketing Practices, Section 74.01
The Act prohibits businesses from making false or misleading representations to promote a product, service, or business interest. This includes environmental claims that are not based on adequate and proper testing or substantiation:
- False or Misleading Representations: Section 74.01(1)(a) prohibits making representations to the public that are false or misleading in a material respect when promoting a product or business interest.
- Performance Claims: Section 74.01(1)(b) prohibits making representations about the performance, efficacy, or length of life of a product that are not based on adequate and proper testing.
- Environmental Benefit Claims: Sections 74.01(b.1) and (b.2), which came into effect on June 20, 2024, specifically target so-called "greenwashing". These provisions require that claims about the environmental benefits of a product be based on adequate and proper testing and claims about the environmental benefits of a business or business activity be based on adequate and proper substantiation in accordance with an internationally recognized methodology.
The Guidelines provide some context for what constitutes adequate and proper substantiation in accordance with an internationally recognized methodology. Substantiation requires establishing by proof or competent evidence and does not necessarily involve testing. With respect to the meaning of an "internationally recognized methodology", the Bureau states that it will likely consider a methodology to be internationally recognized if it is recognized in two or more countries (which does not necessarily require recognition by the governments of two or more countries), and that the method must be acknowledged as valid, with recognition coming from a possible variety of sources such as standard setting bodies, regulatory authorities or industries or other entities using methodologies that are commonly accepted internationally. The Guidelines provide some examples of internationally recognized methodologies for different types of environmental claims. The Guidelines also state that the Bureau will assume that that methodologies required or recommended by a federal, provincial or territorial government program in Canada for the substantiation of environmental claims are consistent with internationally recognized methodologies.
Principles for Businesses Outlined in the Guidelines
The Guidelines provide six key principles to guide businesses in complying with these provisions:
- Truthfulness: Environmental claims should be truthful and not false or misleading. Businesses should ensure that their claims accurately reflect the environmental attributes of their products or services.
- Adequate Testing: Claims about the environmental benefits of a product should be based on adequate and proper testing. This means that businesses should have reliable and scientifically valid evidence to support their claims.
- Specific Comparisons: Comparative environmental claims should clearly specify what is being compared and the extent of the difference between what is being compared. Businesses should avoid vague or ambiguous comparisons and ensure that any comparisons are meaningful and substantiated.
- Avoid Exaggeration: Claims should not exaggerate the environmental benefits of a product or business. Businesses should ensure that their claims are reasonable and not likely to mislead consumers, taking into consideration the general impression that the claim conveys.
- Clarity and Specificity: Environmental claims should be clear and specific, avoiding vague or ambiguous language. Businesses should provide consumers with clear and understandable information about the environmental attributes of their products or services.
- Future Claims: Claims about future environmental benefits or performance should be supported by substantiation and a clear plan. Businesses should have a concrete, realistic, and verifiable plan in place to achieve the claimed environmental benefits, and meaningful steps should already be underway.
Key Takeaways
The Guidelines reinforce that demonstrating due diligence can serve as a valid defence against certain consequences in cases of deceptive marketing. While a business may still be directed to stop specific marketing practices, a documented and credible due diligence process can shield it from significant fines. Best practices would therefore include implementing and maintaining internal compliance programs to ensure that marketing claims are properly vetted, substantiated, and documented.
Ultimately, environmental claims must be supported by suitable and reliable evidence. Businesses must assess, in each context, the type and level of substantiation or testing that is appropriate and credible to support the specific claim being made.
Finally, although the Guidelines clarify that the Bureau does not intend to oversee environmental claims made exclusively within legally required disclosures—such as securities filings—companies should carefully assess how these statements are repurposed in promotional materials, where they may fall within the scope of the Act and attract scrutiny from the Competition Bureau or interested third parties.
