A longer version of this article has also been published in the Canadian Competition Law Review.

“Greenwashing” involves making environmental (i.e., “green”) claims which may leave consumers with the false or misleading impression that a product or service is “environmentally friendly” when, in fact, it is not. In Canada, greenwashing – as a form of misleading advertising – is largely governed by the Competition Act (the “Act”). Specifically, section 74.01(1) of the Act sets out the general civil prohibition against making representations to the public for the purposes of promoting a product, service or business interest that are false or misleading in a material respect.[1] Section 52(1) of the Act contains the general criminal prohibition against misleading advertising. This section prohibits a person from knowingly or recklessly engaging in the activities prohibited by section 74.01(1).

Greenwashing is not a new issue for the Canadian Competition Bureau (the “Bureau”), which has investigated many instances of potential greenwashing in the past. Most recently, the Bureau concluded its investigation into Keurig Canada Inc.’s environmental claims made to consumers regarding the recyclability of its single-use coffee pods.[2]

While it is far from a novel issue, greenwashing has become increasingly prevalent in recent years. A global sweep of over 500 websites by the International Consumer Protection Enforcement Network (“ICPEN”)^[3] and the UK Competition and Markets Authority (the “CMA”) found that over 40% of these websites appeared to be using green advertising tactics that could be considered misleading and therefore may be in contravention of applicable consumer protection laws.^[4] A similar website sweep undertaken by the European Commission found that 42% of green claims reviewed were either exaggerated, false or deceptive and could potentially qualify as unfair commercial practices.^[5] Another sweep of sustainability advertisements undertaken by the European Commission found that in almost half of the claims reviewed, there was a reason to believe that the claim may be false or deceptive and potentially an unfair commercial practice under the applicable consumer protection laws.^[6]

In response to the increasing prevalence of environmental advertising, many international jurisdictions are renewing their focus on the regulation of green claims. Various jurisdictions (including the European Union, the United Kingdom and the United States) are revisiting their legislation, policies and guidance relating to the regulation of environmental claims. Various countries are also putting together task forces and undertaking market studies to assess just how big the issue of greenwashing is, and how it can be addressed.

As such, it is not unexpected that Canada is also seeing an increased interest with respect to the regulation of environmental claims, which is likely to also mean increased enforcement through public and private channels alike. Notably, in commenting on the conclusion of the Keurig investigation, the Commissioner of Competition (the “Commissioner”) reiterated the Bureau’s concern over the increase of greenwashing marketing practices and its commitment to consumer protection. Specifically, the Commissioner stated as follows:

Portraying products or services as having more environmental benefits than they truly have is an illegal practice in Canada. False or misleading claims by businesses to promote “greener” products harm consumers who are unable to make informed purchasing decisions, as well as competition and businesses who actually offer products with a lower environmental impact.[7]

On September 20, 2022, the Bureau also hosted its first “Competition and Green Growth Summit”, which focused on the interaction of competition law and sustainability.^[8] Further details regarding the summit can be found in our previous blog post. Additionally, as part of Canada’s presidency of ICPEN for 2020-2021, the Bureau announced that environmental misleading advertising claims would be one of its areas of focus.^[9] Accordingly, it is increasingly important for Canadian companies to carefully consider the environmental claims they are making in the context of applicable laws, both domestically and internationally.

Unfortunately, in Canada there remains a dearth of guidance available to businesses which want to comply with greenwashing laws, particularly those laws under the Act. The only detailed substantive guidance from the Bureau has been archived, and the remaining available guidance provides only high level principles which do not provide much assistance to companies trying to apply the law to specific and complicated environmental scenarios.

In 2008, the Bureau published Environmental Claims: A guide for industry and advertisers (the “Environmental Claims Guide”), which provided guidance with respect to the Bureau’s enforcement of the misleading advertising provisions of the Act in the context of environmental claims.[10] As of November 4, 2021, the Environmental Claims Guide was archived by the Bureau. The Bureau noted that the Environmental Claims Guide may not reflect its current policies or practices and acknowledged that the Environmental Claims Guide does not reflect the latest standards and evolving environmental concerns. Unfortunately, no new substantive guidance has yet been published by the Bureau in place of the Environmental Claims Guide, and there has been no suggestion of when such guidance should be expected. In the meantime, the Bureau offered limited guidance in a bulletin dated November 3, 2021, which provided vague and high-level direction to businesses. [11]  On January 26, 2022, the Bureau also published a short notice advising consumers to “[b]e on the lookout for greenwashing” and highlighting that vague or broad statement such as “eco-friendly” and “safe for the environment” should not be used by companies without further explanation and adequate evidence.[12]

While the Environmental Claims Guide was less than perfect (it was more than 12 years old when it was archived, an as such failed to provide relevant guidance on current key issues, such as sustainability claims and net zero commitments), the Environmental Claims Guide at least provided some substantive guidance to companies. Archiving these guides without providing improved and updated guidance leaves companies in a decidedly worse and more uncertain place than before.

That being said, the Environmental Claims Guide does remain available for reference. While any new guidance (and the Bureau’s current approach) will likely be substantially changed with respect to new and cutting-edge issues (such as sustainability and carbon neutral claims), one would expect that the Bureau’s current approach will incorporate prior positions taken in relation to some of the more well established issues (such as issues with respect to recycling claims). As such, the Environmental Claims Guide may still assist companies in the interim period until new guidance is provided by the Bureau, and it may also assist in predicting what updated guidance from the Bureau can be expected to look like. Companies should, however, be cautious with respect to reliance on these guidelines.

Given the lack of existing guidance, and given the increased interest in environmental claims, it seems clear that new guidance should be anticipated from the Bureau. While it is not possible to predict exactly what this guidance will be, we would hope that it is, among other things, principled, consistent and practical. The Bureau should strive to take a cohesive approach to guidance in this area, taking into consideration, among other things, consistency with other regulatory regimes and environmental disclosure standards – both domestic and international.[13]

While new guidance from the Bureau will be immeasurably helpful to companies moving forward, there are a number of best practices that can be adopted in the meantime. Among other things, prior to making an environmental claim, companies should:

• to the extent that their products are marketed in multiple jurisdictions, take a holistic approach to ensure compliance with the laws of all applicable jurisdictions;
• thoroughly review any available guidance from applicable regulatory agencies, including any applicable CSA/ISO standards;
• ensure that the environmental claims comply with the available guidance, including that such claims:
  • Are not misleading, exaggerated, ambiguous or likely to result in misinterpretation;
  • Are accurate and specific: claims broadly implying that a product is environmentally beneficial or benign (“eco-friendly”) should generally be avoided in favour of specific claims; broad claims must be accompanied by a statement that provides support;
  • Are substantiated and verifiable: claims must be tested, and all tests must be scientifically sound, conducted in good faith and documented;
  • Are meaningful and relevant: claims must be specific to a particular product, and used only in an appropriate context;
  • Do not imply that the product is endorsed by a third-party organization when this is not the case;
  • Take into consideration all aspects of the product (rather than singling out one aspect and ignoring others) and the entire life cycle of a product; and
  • Use appropriate terminology that is not likely to give rise to misinterpretation taking into consideration the context of the representation and expected literacy level of intended viewers;
• use clear and prominent explanatory/qualifying statements to accompany environmental claims, as applicable and appropriate;
• update environmental claims as further testing is done or new information becomes available, such as changes in technology, competitive products or other circumstances that could affect the accuracy of the claim;
• make accurate and easy to understand verification material publicly available;
• consider performing studies on their waste and emission practices to better and more fully understand their environmental impact; and
• consider obtaining third-party certifications to validate environmental metrics.

In many instances, companies should consult their legal counsel prior to making an environmental claim.

For further information in this regard, a longer version of this article has been published in the Canadian Competition Law Review.

If you have questions, you can reach out to any member of Fasken’s Competition, Marketing & Foreign Investment group. Our group has significant experience advising clients on all aspects of Canadian competition law.

The information and guidance provided in this blog post does not constitute legal advice and should not be relied on as such. If legal advice is required, please contact a member Fasken’s Competition, Marketing & Foreign Investment group.

[1]      Sections 74.01(1)(b) and 74.01(1)(c) contain additional provisions against misleading representations in the context of warranties and guarantees. Specifically, section 74.01(1)(b) relates to false or misleading performance claims which provide a warranty or guarantee of the performance, efficacy or length of life of a product that is not based on adequate and proper testing and section 74.01(1)(c) relates more generally to warranties, guarantees or promises to replace, maintain or repair an item. Section 74.01(1)(b) could likely apply in some environmental advertising contexts, including, for example, where a company makes compostability or biodegradability claims without adequate and proper testing.

[2]      Competition Bureau Canada, News Release, “Keurig Canada to pay $3 million penalty to settle Competition Bureau’s concerns over coffee pod recycling claims” (6 January 2022), online: Government of Canada: <canada.ca/en/competition-bureau/news/2022/01/keurig-canada-to-pay-3-million-penalty-to-settle-competition-bureaus-concerns-over-coffee-pod-recycling-claims.html>.

[3]      The International Consumer Protection Enforcement Network is a consumer protection organization focused on developing and maintaining regular contact between consumer protection agencies. ICPEN’s members include consumer protection law enforcement authorities from around the world, including the Bureau. ICPEN encourages cooperation between these agencies with the goal of allowing each agency to more efficiently and effectively promote consumer protection and enforce its consumer protection laws and regulations.

[4]      Competition and Markets Authority, “Global sweep finds 40% of firms’ green claims could be misleading” (28 January 2021), online: GOV.UK <gov.uk/government/news/global-sweep-finds-40-of-firms-green-claims-could-be-misleading>.

[5]      European Commission, “Screening of websites for ‘greenwashing’: half of green claims lack Evidence” (28 January 2021), online: European Union <ec.europa.eu/commission/presscorner/detail/en/ip_21_269>.

[6]      European Commission, “2020 – Sweeps on consumer scams related to the COVID-19 pandemic”, online: European Union <ec.europa.eu/info/live-work-travel-eu/consumer-rights-and-complaints/enforcement-consumer-protection/sweeps_en#2020-sweep-on-misleading-sustainability-claims>.

[7]      Competition Bureau Canada, News Release, “Keurig Canada to pay $3 million penalty to settle Competition Bureau’s concerns over coffee pod recycling claims” (6 January 2022), online: Government of Canada: <canada.ca/en/competition-bureau/news/2022/01/keurig-canada-to-pay-3-million-penalty-to-settle-competition-bureaus-concerns-over-coffee-pod-recycling-claims.html>.

[8]      Competition Bureau Canada, “The Competition and Green Growth Summit” (30 May 2022), online at: < competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04576.html>.

[9]      Competition Bureau Canada, News Release, “Competition Bureau assuming the presidency of the International Consumer Protection and Enforcement Network for 2020-2021” (30 June 2020), online: Government of Canada <canada.ca/en/competition-bureau/news/2020/06/competition-bureau-assuming-the-presidency-of-the-international-consumer-protection-and-enforcement-networkfor-2020-2021.html>.

[10]     Competition Bureau Canada, “Archived — Environmental Claims: A Guide for Industry and Advertisers” (June 2008), online Government of Canada <https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02701.html>.

[11]     Competition Bureau Canada, “Environmental claims and greenwashing” (3 November 2021), online Government of Canada <competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04607.html#sec04>.

[12]     Competition Bureau Canada, “Be on the lookout for greenwashing” (26 January 2022), online Government of Canada < canada.ca/en/competition-bureau/news/2022/01/be-on-the-lookout-for-greenwashing.html>.

[13]     With respect to other domestic regimes, the Bureau should be cognisant of, and strive for consistency with: (i) CAN/ISO standards, (ii) sustainability standards being developed by a number of self-regulatory agencies, including the International Sustainability Standards Board,  the Global Reporting Initiative,  and the Sustainability Accounting Standards Board,  (iii) standards being developed in relation to public company and financial disclosure, including by the Task Force on Climate-related Financial Disclosures, and (iv) general consumer protection laws.