Canada has just imposed restrictions against false or misleading statements made in marketing or other materials regarding the environmental impacts and benefits of goods and services -- “greenwashing.” These provisions were adopted as amendments to the Competition Act, enacted as part of the Government’s omnibus “Fall Economic Statement Implementation Act, 2023” (Bill C-59), which received royal Assent on June 20.
How does Canada prohibit deceptive marketing practices, including misrepresentations?
The Competition Act prohibits “deceptive marketing practices.” These can include “misrepresentations to the public.” (s. 74.01(1)). Prior to the amendments made by Bill C-59, the Act defined these consist of “… promoting, directly or indirectly, the supply or use of a product” in a “representation to the public” that includes any of following ways:
(a) is false or misleading in a material respect;
(b) is “in the form of a statement, warranty or guarantee of the performance, efficacy or length of life of a product that is not based on an adequate and proper test thereof, the proof of which lies on the person making the representation;” or
(c) “purports to be a warranty or guarantee of a product, or a promise to replace, maintain or repair an article or any part thereof or to repeat or continue a service until it has achieved a specified result,” if that guarantee or promise “is materially misleading or if there is no reasonable prospect that it will be carried out.”
These prohibitions are administered by the Competition Bureau Canada, which is an independent law enforcement agency led by the Commission of Competition.
What anti-greenwashing provisions have Bill C-59 added?
Bill C-59 amends the misrepresentations targeted by Section 74.01(1), by adding the following to subsection (b):
(b.1) makes a representation to the public in the form of a statement, warranty or guarantee of a product’s benefits for protecting or restoring the environment or mitigating the environmental, social and ecological causes or effects of climate change that is not based on an adequate and proper test, the proof of which lies on the person making the representation;
(b.2) makes a representation to the public with respect to the benefits of a business or business activity for protecting or restoring the environment or mitigating the environmental and ecological causes or effects of climate change that is not based on adequate and proper substantiation in accordance with internationally recognized methodology, the proof of which lies on the person making the representation; or
These changes amplify and make more specific the existing targeting of misrepresentations.
What enforcement is taken against misrepresentations?
As of this writing the latest changes are new, and the Bureau not issued any administrative or enforcement guidance. However, the Bureau has provided guidance and enforcement of the pre-existing version of section 74.01(1). As the Bureau explains on its website:
- “adequate and proper test”:
“To be considered adequate and proper, the testing must:
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- be conducted before the performance claims are made
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- be done under controlled circumstances to eliminate external variables
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- eliminate subjectivity as much as possible
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- reflect the real-world usage of a product (such as in-home or outdoor use)
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- support the general impression created by the marketing claims
“Marketers should avoid:
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- making broad or vague claims based on testing that is only partially relevant (for example, an advertisement claims that a heat pump provides a specific level of energy savings. However, the test was conducted only in Southern Ontario, where winters tend to be much milder. Therefore, the results of the test should not be generalized to all areas of the country.)
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- basing performance claims on test results that are insignificant or based on mere chance or one-time effect
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- basing performance claims on studies or sales of similar products
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- basing performance claims on technical books, bulletins and manuals, or anecdotal stories
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- misleading representations and deceptive marketing practices”
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- “adequate and proper substantiation”
The Bureau generally finds properly designed and executed tests to be the most likely to be reliable. Short of testing, however, the new anti-greenwashing provisions also recognize “adequate a proper substantiation.” These standards are likely to be more subjective than testing, but the Bureau website does state (specifically in its discussion of claims about weight loss products):
- “To determine the substantiation required to make certain claims, advertisers must consider the general impression that the proposed representation is likely to create. Testing will then need to substantiate every performance and efficacy claim made about the product.”
What happens now?
The Bureau has stated that it will develop guidance covering these new provisions. To inform this process, the Bureau has launched a public consultation and is inviting public comments by September 27, 2024.
While awaiting these additional developments, organizations should consider whether they make claims about their products or services that include claims about environmental benefits. Canadian organizations should also consider anti-greenwashing provisions in other jurisdictions, most notably the so-called “Green Guides” issued by the US Federal Trade Commission (FTC) (I wrote about FTC’s latest actions to revise the Green Guides HERE).
Self-Assessment Checklist
Does the organization include claims about environmental impacts in marketing or advertising for any of its goods or services?
Does the organization consider the claimed environmental impacts of any goods or services it purchases?
If so, has the organization reviewed any environmental claims to ensure that they are not misleading or deceptive (including by the standards of the US FTC’s Green Guides)?
Will the organization provide comments to Competition Bureau Canada responding to its request?
Where can I go for more information?
- Canada –
- Competition Bureau, Public consultation on Competition Act’s new greenwashing provisions
About the Author
Jon Elliott is President of Touchstone Environmental and has been a major contributor to STP’s product range for over 30 years.
Mr. Elliott has a diverse educational background. In addition to his Juris Doctor (University of California, Boalt Hall School of Law, 1981), he holds a Master of Public Policy (Goldman School of Public Policy [GSPP], UC Berkeley, 1980), and a Bachelor of Science in Mechanical Engineering (Princeton University, 1977).
Mr. Elliott is active in professional and community organizations. In addition, he is a past chairman of the Board of Directors of the GSPP Alumni Association, and past member of the Executive Committee of the State Bar of California's Environmental Law Section (including past chair of its Legislative Committee).
You may contact Mr. Elliott directly at: tei@ix.netcom.com