Canada's Competition Bureau v. Greenwashing: How The Bureau's New Guidelines Tackle Greenwashing And How Businesses Should Respond

On June 5, 2025, Canada's Competition Bureau (the "Bureau") published its highly anticipated final guidance on greenwashing and environmental claims: "Environmental claims and the Competition Act" (the "Guidelines").

The finalized Guidelines refine and expand on the draft issued for public consultation on June 20^th, 2024. We outlined more information on the consultation in our article here: Competition Bureau launches public consultation and publishes digest on greenwashing provisions.

The Guidelines should help businesses ensure compliance with the existing and new provisions of the Competition Act (the "Act") that relate to environmental claims.

In an era where sustainability continues to be a critical consideration for businesses and consumers, the Bureau's guidance strengthens its approach to the enforcement of greenwashing.

Greenwashing refers to deceptive and false environmental claims related to a product or a business. The Bureau has stated that these claims can be misleading and deceptive because there is often a lack of substantiation or evidence supporting the claims. Greenwashing has been a top political and enforcement priority of the Federal government who view the practice as a threat not only to the environment, but also to consumer confidence.

Amendments to the Act

The new Guidelines follow the June 2024 enactment of Bill C-59, and its corresponding amendments to the Act. The purpose of introducing the greenwashing amendments was to strengthen enforcement against greenwashing by adding new provisions that directly place more accountability on businesses which make environmental claims under paragraph 74.01(1).

Paragraph 74.01(1)(b.1) requires that claims about a product's environmental benefits be supported by adequate and proper testing.
Paragraph 74.0(1)(b.2) requires that claims about the environmental benefits of a business or its activities be adequately substantiated by adequate and proper testing using an internationally recognized methodology.

We previously posted about these amendments in our series on amendments to the Act, titled: Amendments to the Competition Act – Bill C-59 and its impact on "Greenwashing".

Defining Environmental Claims

Following the enactment of Bill C-59, in July of 2024, the Bureau published Volume 7 of its Deceptive Marketing Practices Digest (the "Digest"). In the Digest, the Bureau announced its plan to engage the public in a consultation to ensure predictability and transparency in its greenwashing enforcement Guidelines.

The Bureau defined an environmental claim as "any representation related to the environment that has been made for the purposes of promoting a product or business interest."

The following examples provided by the Bureau illustrate the broad scope of environmental claims that may give rise to greenwashing concerns.

Composition claims related to the composition of products or their packaging.
Claims about the production process of products related to the process of making a product, involving the resources, energy and materials used.
Claims about the disposal of products after use.
Comparison claims that involve comparing the environmental benefit of one product or service to another.
Claims that are misleading due to their vague nature, such as describing a product or service as "environmentally friendly."
Claims about the future.

In the Digest, the Bureau also clarified how claims are assessed. In this process, the Bureau takes into consideration the literal meaning of the claim and the "general impression" that it leaves on consumers. The general impression is assessed by considering the advertisement as a whole, including the words, graphics and layout used.

Public Consultation and Changes

As part of the public consultation regarding the Guidance, the Bureau had a particular interest in hearing public opinion relating to two new sections of the Act. The Bureau received 400 submissions as part of this process. The new Guidelines introduce several important clarifications as a result of these submissions, which include the following:

First, the Competition Bureau has broadened the interpretation of "internationally recognized methodology" for substantiating environmental performance claims, such as "carbon neutral" or "net zero." While the draft required such methodologies to be recognized in "two or more countries" without further detail, the final version accepts validation from a range of sources, including Canadian governments, regulatory bodies, and industry-standard organizations, significantly easing compliance for Canadian-based businesses.

Second, the guidelines clarify that although regulatory disclosures (e.g., securities filings) are generally outside the Bureau's scope, they may still fall under scrutiny if repurposed for promotional or marketing purposes. This nuanced distinction was not present in the draft.

Third, the final version introduces a new carve-out for narrow factual claims, for example, statements such as "20% recycled content," which are not considered environmental performance claims unless they imply a broader environmental benefit.

Additionally, the Bureau has explicitly confirmed that the Guidelines apply to non-profits and charities engaging in fundraising and to foreign businesses marketing to Canadian consumers, a point that was not addressed in the draft. Finally, the Bureau has now clarified its ability to intervene in connection with any post-June 20th, 2025 private proceedings related to the new private right of action for deceptive marketing practices.

Key Takeaways from the New Guidelines

In response to the public perspectives gained, the Bureau released information that will assist companies in ensuring their environmental claims are compliant with the Act by clarifying certain elements of the amendments to the Act, which are summarized below.

1. The Guideline's Authority

It is first important to note that the Guidelines are not legally binding. Ultimately, the discretion lies with the Commissioner of Competition in regard to greenwashing enforcement. The Competition Tribunal is also not bound by the Guidelines. However, the Tribunal may consider the Guidelines in determining whether leave for an application should be granted if it is also in the public interest to do so.

2. How a Private Action can be Brought

The Guidelines clarify that the provisions are only applicable to representations made in pursuit of promoting a product or a business interest. This prevents claims made in different situations, such as statements in securities disclosures, from being overly scrutinized.¹

The Bureau clarified how an environmental claim under paragraph 74.(1)(b.1) or 74(1)(b.2) could be proven in court and where the onus lies on the parties to prove parts of the claim.

For the Bureau to challenge an environmental claim pursuant to paragraph 74.01(1)(b.1) or 74.01(1)(b.2), the following conditions must have been satisfied:

A representation was made to the public by the business;
The representation was a claim about the environmental benefits of a business or product; and
The representation was made to promote a product or any business interest.

If these requirements have been met, the responsibility shifts to the business to demonstrate that the environmental claim about the product is backed by adequate and proper testing under paragraph 74.01(1)(b.1), or that the claim is adequately and properly supported by internationally recognized methodology under paragraph 74.01(1)(b.2).

Private rights of action based on greenwashing allegations under the Act came into force on June 20^th, 2025. Although the Guidelines discuss the Bureau's perspective, this is not determinative of the perspectives of private parties. Compliance with the Act would not necessarily prevent a private party from bringing a greenwashing claim. On June 20^th, 2025 the Bureau published a revamped "Bulletin on Private Access to the Competition Tribunal" that explains the Bureau's views on private access to the Tribunal and clarifies when it may take certain actions that impact proceedings.

3. Clarifying Terminology

The Guidelines provide clarity to help businesses comply with the Act by defining terms referenced in the Act.

The Bureau clarifies that in reference to the Act, a "business" includes individuals, corporations, and other business structures. The Act can require claims to be "adequately and properly" substantiated. This requires that the substantiation is relevant and suitable to the claim and sufficiently rigorous. This could require a business to receive verification from a third party. Furthermore, this substantiation must be established before the claim is made.

Certain claims require testing with "internationally recognized" methodologies. These methodologies meet the threshold if they are recognized as valid by entities such as standard-setting bodies, industries or regulatory authorities in greater than two countries. The Guidelines also require the adherence to methodologies, and not standards. As a general guideline, adopting methodologies used by governments is likely to meet this standard.

Green-Hushing Concerns

An unintended effect of strengthened greenwashing policies is that "green-hushing" may occur. "Green-hushing" means that companies do not disclose or publicize their legitimate and bona-fide environmental efforts because they may be afraid of potential greenwashing accusations or claims surrounding their environmental efforts. Green-hushing can be harmful to environmental efforts because companies may be deterred from a practice of transparency with regards to innovation in sustainability efforts. It remains to be seen whether or not the new Guidelines will inadvertently create a practice of green-hushing.

Departure from Other Jurisdictions Worldwide

The Bureau's continued pursuit and implementation of greenwashing enforcement demonstrates a departure from other jurisdictions worldwide, particularly in the European Union ("EU"). In March of 2023, the European Commission ("EC") announced a proposal for a directive on environmental claims (the "Green Claims Directive") that would require voluntarily disclosed green claims in the business-to-consumer context to be substantiated by meeting minimum requirements.² This action may have been influenced by a 2020 Impact Assessment Report authored by the EC which discusses a study that found that 53% of examined environmental claims in the EU were either vague, misleading or unfounded.³

However, on June 20^th, 2025, the EC announced that it intended to withdraw the Proposal for the Green Claims Directive. The EC later clarified that it had not yet formally withdrawn the Proposal.⁴ The future of the Green Claims Directive is uncertain, leaving companies and consumers to wonder whether it will be delayed, reworked, or abandoned. Shortly before it was announced that the Proposal was to be withdrawn, the European People's Party, the largest political group in the European Parliament, reportedly voiced concerns about the Green Claims Directive. The European People's Party was concerned that the Green Claims Directive's requirements could be too expensive, complex or burdensome on companies.⁵ Many of the submissions that formed part of the Guideline's public consultation expressed similar concerns.

Footnotes

1. In question 8 of the "Frequently Asked Questions" section of the Guidelines, the Bureau says the following about environmental representations made in securities filings: "In Canada, the provinces and territories are responsible for the regulation of securities. These regulations can include evolving frameworks for the voluntary and mandatory communication of certain environmental information to current and prospective securities investors. The Bureau does not concern itself with these representations.However, if the business reuses any of the environmental claims for the purposes of promoting a product or business interest outside of the sale of securities, the Bureau will apply the Act as appropriate."

2. Guillaume Ragonnaud and David Ashton, Proposal for a directive of the European Parliament and of the Council on substantiation and communication of explicit environmental claims (green claims directive), EPRS, European Parliament, October 2024.

3. Commission Staff Working Document Impact Assessment Report Accompanying the document Proposal for a Directive Of The European Parliament and of the Council amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transition through better protection against unfair practices and better information, COM (2022) 143 final (March 30, 2025).

4. Lathan & Watkins LLP, "European Commission Announces Intention to Withdraw EU Green Claims Directive Proposal, Although the Status Remains Unclear" (24 June 2024), online.

5. Mason Hayes & Curran LLP, "Greenwashing: Update on the Green Claims Directive" (10 July 2025), online.

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