Recent amendments to the Competition Act have significantly impacted how businesses can promote their environmental benefits. These changes, aimed at curbing “greenwashing,” empower the Competition Bureau to take stronger enforcement actions against misleading environmental claims. However, the ambiguous language in these new provisions means that nearly any statement about the environmental impact of products or business practices is now subject to scrutiny and potential legal challenges.
Bill C-59: Key Changes and Provisions
On November 30, 2023, Bill C-59 was introduced to the House of Commons. This legislation is part of the Government’s 2023 Fall Economic Statement and includes crucial amendments to the Competition Act. These amendments make businesses liable for unsupported claims about the environmental benefits of their products or practices. Furthermore, it allows private parties to seek permission from the Competition Tribunal to challenge these statements as misleading marketing.
The bill underwent substantial revisions by the House Standing Committee on Finance, particularly the addition of a provision making businesses liable for any public representation about the environmental benefits of their operations. Despite the significance of these changes, they were not subject to extensive debate in the House of Commons.
Passed on June 20, 2024, the new anti-greenwashing provisions took immediate effect. The private right of action for misleading marketing, including greenwashing, will come into force on June 20, 2025.
The Challenge of Greenwashing
Before these amendments, the Commissioner of Competition could challenge misleading environmental statements under the general misleading marketing provisions of the Act. The new provisions, however, reverse the burden of proof, requiring companies to justify their environmental claims rather than requiring the Bureau to prove them false. This shift means that even factually accurate statements about a company’s sustainability efforts could be challenged if they are not substantiated by an “internationally recognized methodology.”
The ambiguity of the term “internationally recognized methodology” complicates compliance, as it is not defined in the Act. The Bureau has announced it will provide guidance, but businesses must navigate these uncertainties in the meantime.
Private Right of Action
The amendments also introduce a private right of action, effective June 20, 2025, allowing private parties to challenge greenwashing. This could potentially apply retrospectively, leading to legal challenges for past conduct. Public interest groups, less concerned with the legal merits and more focused on media impact, are likely to leverage this new right.
Penalties for Greenwashing
The penalties for greenwashing can be severe, including fines up to $10 million or three times the value derived from the conduct, orders to cease misleading representations, and disgorgement remedies. These substantial penalties underscore the importance of compliance.
Implications for mining companies
For mining companies, navigating these new provisions requires careful review and adjustment of public statements about environmental benefits. Key steps include:
- Avoid Ambiguous Terms: Refrain from using vague terms like “clean,” “sustainable,” or “green” without specific metrics or clear comparators.
- Scrutinize Advertising: Ensure all promotional materials accurately reflect the basis for any environmental claims.
- Verify Third-Party Reports: Do not rely on external reports without verifying their accuracy and methodology.
- Be Transparent: Clearly disclose how environmental claims are measured and supported, using reputable data sources
- Document Compliance: Maintain records of how sustainability claims are substantiated to provide evidence in case of challenges.
Moving Forward
As the Competitions Bureau develops guidance, mining companies must stay informed and prepared to adjust their practices accordingly. The fast-tracked public consultation process will offer more clarity, but in the interim, caution and transparency are essential to mitigate risks under the new greenwashing provisions.
In conclusion, the amendments to the Competition Act represent a significant shift in how environmental claims are regulated. Miming companies must adapt quickly to ensure compliance and avoid substantial penalties, making it imperative to review and substantiate all environmental marketing claims meticulously.
Robert Simpson is the President and CEO of PRA Communications, the only global firm exclusively dedicated to helping mining companies and suppliers by showcasing their innovations, workforce opportunities, and positive impacts.
