A regulatory crackdown on unproven or misleading environmental claims is causing uncertainty for some businesses selling their products and services in the Canadian market. A coalition of 25 industry associations has responded to the Competition Bureau’s consultation on new greenwashing provisions that were enacted through amendments to the Competition Act earlier this year.
The legislation now states that organizations or individuals may be subject to Competition Bureau review if they do not have adequate proof to back up claims about a product or service’s environmental benefits or contribution to reducing or reversing the causes and effects of climate change. The Bureau is seeking input on the enforcement of those provisions and interpretation of the key concepts:
- “adequate and proper test”; and
- “adequate and proper substantiation in accordance with internationally recognized methodology”;
Resource-based organizations are prominent among the 25 organizations making the joint statement, including seven related to fossil fuels, five related to agriculture and food or forestry, and two related to mining. Major manufacturers and materials (cement, steel, aluminum) producers are also represented. As well, signatories include the Canadian Roofing Contractors Association, the Canadian Chamber of Commerce and the Business Council of British Columbia.
Their submission to the consultation maintains there has been no clear guidance since the Competition Bureau first raised the issue in an advisory to industry and advertisers in the fall of 2021. They also question the “novel terminology” in the new amendments that calls for adherence with internationally recognized methodology in establishing proof of claims — arguing that there is currently no single set of international standards and that a range of methodologies that have been recognized by credible government and research bodies should be acceptable.
“The definition should recognize that scientific methodologies can be contested and so evidence should not be discredited simply because it faces scholarly debate, or if other methodologies produce different results, or if they were not published recently,” the industry submission states. “Addressing large environmental issues like climate change requires significant innovation. Communication regarding that innovation should not be stifled by a narrow list of acceptable methodologies.”
The associations are also wary of the reverse onus that requires parties under Competition Bureau review to prove the validity of their environmental claims. They suggest this could potentially be subverted to harass or undermine accused parties, and call for diligent screening of the complaints process to guard against abuse.
“The reverse onus creates an incentive for private parties to make claims with little risk to themselves if their complaints are deemed baseless as they do not have to prove those claims are substantive in any way aside from being “in the public interest”. This could create significant costs and reputational risk, especially for Canada’s small and medium enterprises who cannot afford costly litigation,” the submission states.
