Business PickupIn June 2024, Canada’s Bill C-59 received Royal Assent and became law. Known as the Fall Economic Statement Implementation Act, the bill makes significant changes to the Canadian Competition Act and will impact businesses across virtually all sectors. In an effort to prevent greenwashing, the amendments feature new provisions regarding claims made by businesses about their products and services. While the bill won’t take effect until 2025, businesses can begin preparing for the compliance date now.
What is Canada’s new greenwashing law?
Bill C-59 was based on a greenwashing investigation performed by the Competition Bureau, Canada’s federal enforcement agency. Greenwashing is defined as the misrepresentation of products or services as having better environmental benefits than they actually do, which has become an ongoing issue not only in Canada but across the globe.
In an attempt to confront greenwashing, Bill C-59 prohibits false or misleading representations and requires businesses to substantiate their claims. Specifically, if businesses make claims about the performance, life, or efficiency of a product, they must be backed by proper testing. Under the new legislation, two types of conduct can be reviewed:
- Statements, guarantees, or warranties about a product’s benefits regarding how it protects, restores, or mitigates ESG causes or effects of climate change.
- Representations about a business or its activities related to climate change impacts.
What are the concerns about Canada’s new greenwashing law?
Virtually all business activity is covered by the new law, and repercussions are severe. Violators of Bill C-59 will face penalties of whichever is greater:
- up to $10 million,
- three times the benefit derived from the misrepresentation,
- or up to three percent of the company’s gross revenues.
While proponents of the bill assert that the new legislation is a step forward for sustainability, some businesses have expressed concerns. In some instances, it may be challenging to determine if a test or substantiation provides adequate or proper support for a statement. It may also be possible that there is currently no adequate test or universally recognized standard to support a specific representation, especially when considering the complexities of the supply chain, various states of production, and ways in which consumers might use different products. Critics of the new greenwashing law also theorize that the bill might unintentionally prevent businesses from pursuing environmental initiatives.
When does Bill C-59 take effect and how can businesses prepare?
Regardless of how the amendment is received among Canadian business owners, preparations should be made soon: the bill will take effect on June 20, 2025. Thereafter, private parties who suffer loss or damages from violation of the act may sue to recover losses or damages.
Although Canada’s new greenwashing bill has yet to take effect, businesses can begin preparing for compliance now by carefully reviewing current and future claims about the sustainability and impact of their practices, products, and plans pertaining to climate change and other environmental matters. If any such claims are made, make sure they are accurate, and consider how your business can substantiate them. Avoid any vague wording, such as “green” or “eco-friendly,” and instead let your business’s factual data regarding sustainability initiatives speak for itself.
For years, Quantum has been committed to helping companies avoid greenwashing using tools such as our GHG reduction calculator and providing reports to back up all emissions claims with credible data. Learn more here.