Companies operating in Canada now run the risk of running afoul of the Competition Act if they publicize plans to reduce or achieve net-zero greenhouse gas (GHG) emissions without properly mapping out how they will reach those targets. Marketers of products or services that purport to protect or restore the environment or mitigate the effects of climate change could be in similar hot water if they can’t produce adequate evidence to back their claims.
New legislative provisions that came into force in June 2024 expand the Competition Bureau’s authority to investigate and pursue judgements against two additional types of deceptive marketing practices. False or misleading statements and unrealistic claims of product performance continue to be faux pas, but now the verifiability of claims that products or business activities have environmental benefits will also be under scrutiny.
Recently released draft guidelines outline how the Competition Bureau proposes to interpret these new responsibilities. Public feedback is welcomed until Feb. 28, 2025 and will be considered before the guidelines are finalized. The Act’s new provisions have not yet been tested in the Courts, but it’s expected that future legal decisions will also influence how the Bureau approaches investigations.
“The proposed guidelines aim to help businesses assess whether their environmental claims comply with the provisions of the Competition Act,” the Competition Bureau stated as it launched the consultation late last month. “The guidelines do not prescribe when or how businesses can make environmental claims. Companies are free to make environmental claims, as long as they are not false or misleading, and have been adequately and properly tested or substantiated as required.”
Substantiation — meaning proof or competent evidence — will be key for demonstrating the integrity of claims related to emissions reduction. The guidelines advise businesses to have a “clear plan” before such intentions are announced publicly or incorporated into marketing material.
That includes: an understanding of the baseline emissions; a “concrete, realistic and verifiable” strategy for achieving reductions that incorporates interim targets; and evidence that “meaningful steps” have been undertaken to accomplish the plan. This is also expected to align with an “internationally recognized methodology” that is recognized in at least two countries and deemed to be appropriate for a Canadian context.
Under the new provision related to claims that a product can protect or restore the environment or mitigate climate change effects, the Bureau will look for “adequate and proper testing” — similar to guidelines already in place for claims about product performance in general. The proposed guidelines also highlight some high-level principles meant to keep companies in line with acceptable marketing practices, including tips for avoiding exaggeration and vagueness and making appropriate comparisons.
On June 20, 2025, another new Competition Act provision will come into force, giving private individuals and entities leeway to challenge what they perceive to be deceptive marketing practices. That will occur through a direct petition to the Competition Tribunal, sidestepping the Competition Bureau’s preliminary investigatory stage.
However, it’s suggested that the Tribunal may consider the Bureau’s guidelines as it makes decisions about granting leave to private individuals and entities. As well, the Competition Bureau would have the right to intervene in any privately triggered case. Further guidance on private cases is promised for this year.
