Authors: Ava Torkaman & Annabelle MacRae
Last November, Budget 2025 Implementation Act, No. 1 (“Bill C-15”) was introduced to the House of Commons. The purpose of Bill C-15 is to implement certain provisions of Budget 2025: Canada Strong. The Bill is currently being studied by the Standing Committee on Finance. Most significantly for those interested in environmental protection, Bill C-15 proposes two notable amendments to the current “greenwashing” provisions in the Competition Act (“the Act”). Greenwashing occurs when a company makes vague, deceptive, or false claims about their positive impact on the environment.
The changes seek to address a corporate backlash while preserving some integrity for the anti-greenwashing rules that had been introduced by the Trudeau government only one year before. At the time, the government had stated that these changes would tackle unsupported environmental claims. However, companies have begun to refrain from making any environmental claims, otherwise called “green-hushing,” citing litigation risk arising from the provisions as justification. While the proposed amendments aim to reduce regulatory uncertainty and encourage investment, they risk weakening the enforcement architecture necessary to meaningfully deter deceptive environmental claims.
The Proposed New Rules:
- Internationally Recognized Methodology
The first change is that businesses will no longer need to abide by “internationally recognized methodology” (“IRM”) to support their environmental or sustainability claims in relation to their business activities. Currently, under section 74.01(b.2) of the Act, businesses must conduct “adequate and proper substantiation” of environmental claims in accordance with “internationally recognized methodology” and carry the burden of proof. Under the new rules, businesses will need to meet the less onerous standard of “adequate and proper substantiation.”
- The Private Right to Report Greenwashing
The second possible change is the removal of the right that individuals currently have, to bring a complaint over greenwashing claims. Currently, under section 103.1(1) of the Act, any person may make an application to the Competition Bureau (the “Bureau”) reporting greenwashing as it is defined in section 74.01. Greenwashing falls under this section’s definition of reviewable conduct and includes representations made to the public regarding the environmental benefits of a product or practice, or its contribution to climate change mitigation.
Reasons for the Changes
First, the government argues that the Bureau of Competition does not currently possess the capacity to respond to the volume of greenwashing reports being made, as the average time needed to process ranges from two to three years. For example, in 2019 Keurig Canada was reported to the Competition Bureau for misleading consumers about the recyclability of their “K-cup pods.” Three years later, the Competition Bureau ordered the company to pay $3 million penalty.
Secondly, the government is concerned that companies are pulling-back from the use of environmental language in response to the provisionswhich is causing a reduction in investment. The increase in “green-hushing” has been attributed to the IRM requirement and caused widespread frustration amongst corporations. Criticisms have focused on the lack of guidance on which methodologies would be accepted and by whom, the inconsistency with other Canadian regulatory regimes, and the significant obstacles and risks created for companies seeking to disclose their environmental efforts.
While the Bureau interpreted the methodology as an “intentionally flexible standard,” companies argued that the IRM left too much room for interpretation, exposing them to potential legal action and prompting many to scale back their public environmental disclosures. For example, RBC retracted some sustainability disclosures in 2024, and ceased their $500 billion sustainable finance target, attributing it to the IRM requirement. Additionally, the Canada Pension Plan’s (“CPP”) investment department withdrew its 2050 net zero investment commitment, citing “recent legal developments.”
Although critics of the greenwashing provisions point to corporate decisions to cut sustainability disclosures and goals as proof of ineffective regulations, environmental advocates say this illustrates the legislation’s success. In other words, companies were forced to stop making false promises. But the government is concerned that the situation is now disincentivizing investors, specifically those looking for projects entailing “green innovation.” As such, the changes introduced are designed to remove some sources of uncertainty for investors and risk for businesses.
Probable Impact of the Proposed Amendments
If the changes come into effect as written, they will remove the right of individuals to report greenwashing, but allow the Commissioner of Competition to retain this ability in accordance with the updated provisions.
As such, the new rules will not remove all options for individuals wishing to report companies for making false claims or misrepresenting the extent of their environmental achievements. In the past, sections 74.01(1)(a) and 52(1) of the Act have been used to bring forward “misleading representations”. Greenpeace Canada filed a complaint under both sections in 2021 over Shell’s “Drive Carbon Neutral” campaign, and another complaint under section 74.01(1)(a) in 2023 against the Pathways Alliance, which is a coalition of the six largest oil sands producers in Canada.
Although many in the corporate sector supported the removal of the IRM standard, the impact of the new rules might eventually foster more confusion. Without a clear standard to tie environmental claims to, uncertainty will persist regarding how corporations should defend their actions. Additionally, the standard requirement is necessary for an effective greenwashing provision; requiring claims to abide by a recognized standard restricts companies from making unsubstantiated claims that could deceive the public.
Moving Forward
With the impending end of the IRM requirement, some environmental groups say that the real concern is the lack of domestic standards governing a company’s sustainability disclosures. According to the Bureau, approximately 40% of sustainability claims made online misleading consumers. At this crossroad, the government should take advantage of this opportunity and outline a clear and concise standard for companies to refer to.
