Canada’s Competition Bureau issues updated guidelines to environmental claims: what brand owners need to know to avoid “greenwashing”

This article was prepared with our summer student Rachel Chen.

Last week, on June 5, 2025, the Competition Bureau (the “Bureau”) released its updated guidelines relating to environmental claims, titled “Environmental claims and the Competition Act” (the “Environmental Guidelines”), which outline its approach to environmental claims following the June 20, 2024 amendments to the Competition Act targeting greenwashing. 

The updated Environmental Guidelines were developed on an expedited basis after a public consultation with a broad range of stakeholders, with the aim of helping businesses and brand owners comply with the new provisions. 

Sustainability has long been on the public radar, but with rising consumer expectations, brands are increasingly eager to showcase their “green” initiatives through environmental claims about their products, services, or operations. While green initiatives can offer market benefits, misleading or unsubstantiated environmental claims (also known as “greenwashing”) can cause reputational harm and lead to serious legal consequences when found to contravene the Act. This article breaks down the updated legal framework relating to environmental claims under the Competition Act (the “Act”), in light of the June 20, 2024, amendments and provides a brief overview on penalties for greenwashing. 

There are four provisions in the Act relevant to deceptive marketing practices and environmental claims made to promote a product, service, or business interest, as set out below. Canadian courts have determined that, when assessing whether a claim is false or misleading, both the literal meaning and the general impression conveyed to the public must be considered. 

The following representations constitute reviewable matters under the Act, when made for the purposes of directly or indirectly promoting the supply or use of a product, or any business interest: 

1. False or Misleading Representations – s. 74.01(1)(a) 

This provision prohibits any materially false or misleading representation.

2. Product Performance Claims – s. 74.01(1)(b)

This provision prohibits representations about the performance, efficacy, or length of life of a product that are not based on adequate and proper testing. 

Any testing used to support a claim must be conducted before the claim is made. The Act does not define what constitutes an “adequate and proper test”, but the Bureau has indicated that it interprets this requirement as a flexible standard (one that can mean “fit, apt, suitable, or as required by the circumstances”). Additionally, courts have found that the assessment will depend on the nature of the representation and the general impression it conveys to consumers. 

3. Environmental Benefits of a Product – s. 74.01(1)(b.1) (New)

This new provision prohibits claims about a product’s benefits for protecting or restoring the environment or mitigating the environmental, social, and ecological causes or effects of climate change that are not based on an adequate and proper test. For example, claims such as being “plastic-free” or “carbon-neutral” require proper and adequate testing.  

4. Environmental Benefits of a Business or Business Activity – s. 74.01(1)(b.2) (New)

This new provision prohibits claims about the benefits of a business or business activity for protecting or restoring the environment or mitigating the environmental, social, and ecological causes or effects of climate change that are not based on adequate and proper substantiation in accordance with internationally recognized methodology. For example, claims such as “net-zero operations” or “green supply chain” require substantiation in accordance with internationally recognized methodology. 

According to the Bureau, “substantiation” is not necessarily the same as “testing”. It means having evidence to support the truth of a claim. While third-party verification is not mandatory, it is often expected as part of internationally recognized standards. Importantly, methodologies should also be relevant in the Canadian context, including when they incorporate factors related to geography and climate.

To help businesses and brands from engaging inadvertently in deceptive marketing practices, the Bureau provides the following Principles for Compliance: 

1. Environmental claims should be truthful, and not false or misleading: Claims must be true in both their literal meaning and the general impression they convey. The general impression considers the entirety of the representation (i.e., the words or phrases used, the manner of display, visual elements, and the overall context). Literal truth is not necessarily a full answer, as the general impression may nevertheless be false or misleading about an environmental benefit. If key information is needed to avoid an environmental claim from being misleading, it must be included as part of the claim.

2. Environmental benefits of a product and performance claims should be adequately and properly tested: All claims relating to the environmental benefits of a product should be based on adequate and proper testing, and those related to the environmental benefits of a business or business activity should be based on adequate and proper substantiation in accordance with internationally recognized methodology. As noted above, tests used to support a claim must be done before making the claim. Businesses should also consider the general impression conveyed to the public by a claim when deciding whether testing or substantiation is adequate and proper.

3. Comparative environmental claims should be specific about what is being compared: Comparative advertising tends to be innately higher risk and may elicit complaints from competitors. In addition to the Bureau’s Environmental Guidelines, it is important to consider possible trademark related claims, as well as Ad Standards Guidelines for the Use of Comparative Advertising, and Guidelines for the Use of Research and Survey Data to Support Comparative Advertising Claims.Comparative environmental claims include comparisons between a company’s current and past products, as well as comparisons between a company’s products or business and those of a competitor. Businesses should clearly identify what is being compared and specify the degree of the claimed difference. 

4. Environmental claims should avoid exaggeration: Exaggerating an otherwise accurate environmental benefit may mislead consumers. As previously noted, it is prudent for businesses to consider the general impression conveyed by any environmental claim. 

5. Environmental claims should be clear and specific – not vague: Businesses should avoid vague environmental claims, particularly when such claims require adequate and proper testing or substantiation. They should ensure clarity and specificity in all environmental representations, including by identifying whether a claim pertains to a part or the entirety of a product and its lifecycle, a business, or business practice (for example, specifying whether a claim that a product is “eco-friendly” applies to its entire life cycle). 

6. Environmental claims about the future should be supported by substantiation and a clear plan: Aspirational environmental claims about the future can be considered greenwashing. Businesses should ensure that claims about the future are supported by a reasonable plan for implementation and that they are adequately and properly substantiated in accordance with internationally recognized methodology. At minimum, businesses should have the following before making such claims:

• a clear understanding of what needs to be done to achieve the objective being claimed;
• a concrete, realistic and verifiable plan to accomplish the objective, with interim targets; and
• meaningful steps underway.

Penalties

If a corporation is found to have violated the Act, it may face administrative monetary penalties (up to the greater of (A) $10 million, or (B) three times the value of the benefit derived from the deceptive conduct, or, if that amount cannot be reasonably determined, 3% of the corporation’s annual worldwide gross revenues), restitution orders, or injunction orders (i.e. cease-and-desist orders). 

The Bureau has historically followed a Conformity Continuum, with penalties such as the foregoing being less common, particularly at first instance. Generally, the Bureau has aimed to facilitate conformity through education (publications, communication and advocacy), and monitoring (including prenotification, targeted inspections, and consultations). In more specific cases, the Bureau strives for conformity through advisory opinions, pre-market assessments, advance ruling certificates, supporting corporate compliance programs, and through voluntary codes. In response to non-conformity, the Bureau has often taken a staged approach, beginning with suasion by sending information and warning letters and holding compliance meetings. The next stage may be to achieve conformity by way of consent, through negotiated settlements, consent orders, undertakings, corrective notices, and voluntary product recalls. With final escalation being adversarial prosecutions, tribunal applications, product seizures and contested prohibition orders, and injunctions. As we await enforcement of the new Environmental Guidelines, it will be interesting to see the extent to which there may be escalated enforcement, and whether there may be a departure from the historic conformity continuum approach in more egregious cases.

As of June 20, 2025, private parties may also apply to the Competition Tribunal for leave to bring claims for alleged violations of the deceptive marketing practices provisions of the Act, including competitors and consumer groups. 

Businesses should be aware that they may mitigate liability if they demonstrate that they exercised due diligence to prevent the deceptive marketing practices from occurring, be it through verifying claims, using substantiated data, or applying internationally recognized testing. Furthermore, while businesses must retain proper evidence to support their claims, they are not required to publicly disclose that evidence unless asked by regulators.

Looking forward

Businesses and brand owners operating in Canada are well advised to ensure all “green” claims comply with the new Environmental Guidelines. It is increasingly important to carefully assess environmental branding practices and ensure all claims are supported by adequate and proper testing and substantiation, where necessary, and clearly communicated.