Competition Bureau Launches Public Consultation and Publishes Digest on Greenwashing Provisions

On June 20, 2024, the Government of Canada passed Bill C-59 amending certain provisions in the Competition Act (the “Act”). In particular, in an effort to protect consumers from misleading advertisements related to a product’s or business’ environmental benefits, new provisions were added to target greenwashing. Miller Thomson recently posted a bulletin in their series on amendments to the Act, entitled: Amendments to the Competition Act – Bill C-59 and its impact on “Greenwashing”.

On July 22, 2024, the Competition Bureau (the “Bureau”) published Volume 7 of its Deceptive Marketing Practices Digest (the “Digest”), which outlines its interpretation of certain greenwashing provisions. The Bureau also released a public consultation related to the Act’s new Greenwashing provisions. The stated goal of this public consultation is to provide enforcement guidance in consultation with Canadians to ensure transparency and predictability. The Bureau advised that it is hoping for a wide range of perspectives and will carefully consider the feedback to provide better guidance to businesses and Canadians. Interested parties are invited to provide comments by September 27, 2024.

DIGEST AND GUIDELINES:

A. Environmental Claims Defined: 

Within the Digest, the Bureau defines an environmental claim as “any representation related to the environment that has been made for the purposes of promoting a product or business interest”. Claims may include promoting a positive environmental quality or attribute of a product, service, or business, or to downplay a negative one. These claims can include environmental impacts of a product, such as the sourcing of its materials, to production, packaging and distribution. These claims include services, processes, and business practices as well. 

B. Types of Claims Received by the Bureau: 

The Bureau receives a wide array of claims relating to greenwashing. Those are summarized below: 

1. Composition Claims: 

These involve claims made to the public relating to the composition of products or their packaging. For example, a business claiming that its package is made from 100% recycled paper or recycled bottles must be able to substantiate those claims. 

2. Production Process of Products Claims:

These involve claims made regarding the steps involved in producing a product, including claims about the resources, energy, or material used in that process. Claims that a product is carbon neutral or was made with renewable energy would fit into this category.

3. Disposal of Products After Use: 

These claims relate to the green disposal of products, such as claims that a product is fully compostable or recyclable. 

4. Comparison Claims 

These claims relate to comparative environmental claims - they could compare products or services to those of competitors or be self-referential. For example, products or services being compared to past versions or those of a competitor. 

5. Vague Claims 

When a claim is too vague, it can be misleading to consumers. These claims do not explicitly set out the environmental benefits of a product or service, but instead, allude to them. Common examples involve claims that a product is eco-friendly, with no specification as to its actual environmental benefits. 

6. Claims about the Future 

Aspirational claims are one of the more common complaints received by the Bureau. These are typically claims related to the environmental improvements that the business will accomplish in the future, such as achieving carbon neutrality by a certain date. 

C. Assessing a Claim: 

When assessing a claim, the Bureau must consider the “general impression” that is conveyed by the claim alongside its literal meaning. The general impression is determined by considering the entire advertisement, including the words, graphic elements, and overall layout of the representations [1]. 

PROVISIONS SEEKING FEEDBACK:

With regard to section 74.01(1)(b.1) of the Act, which enforces claims about a product’s environmental benefits, the Bureau is particularly interested in hearing about the following topics:

1. What kinds of claims about environmental benefits are commonly made about products or services in the marketplace? Why are these claims more common than others?
2. Are there certain types of claims about environmental benefits of products or services that are less likely to be based on adequate and proper testing? Is there something about those types of claims that makes them harder to test?
3. What should the Bureau consider when it evaluates whether testing to support claims about the environmental benefits of products or services is “adequate and proper”?
4. What challenges may businesses and advertisers face when complying with this provision?
5. What other information should the Bureau be aware of when thinking about how and when to enforce this provision?

With regard to section 74.01(1)(b.2) of the Act, which enforces claims about a business or  a business’ practices related to environmental benefits, the Bureau is particularly interested in hearing about:

1. What kinds of claims about environmental benefits are commonly made in the marketplace about businesses or business activities? Why are these claims more common than others?
2. Are there certain types of claims about the environmental benefits of businesses or business activities that are less likely to be based on “adequate and proper substantiation in accordance with internationally recognized methodology”? Is there something about those types of claims that makes them harder to substantiate?
3. What internationally recognized methodologies should the Bureau consider when evaluating whether claims about the environmental benefits of the business or business activities have been “adequately and properly substantiated”? Are there limitations to these methodologies that the Bureau should be aware of?
4. What other factors should the Bureau take into consideration when it evaluates whether claims about the environmental benefits of businesses or business activities are based on “adequate and proper substantiation in accordance with internationally recognized methodology”?
5. What challenges may businesses and advertisers face when complying with this new provision of the law?
6. What other information should the Bureau be aware of when thinking about how and when to enforce this new provision of the law? [2]

TIPS FOR BUSINESSES

The Digest also notes that the Bureau encourages environmental claims when they provide truthful and accurate representations, as consumers are able to make more informed decisions based on such representations. To better protect both businesses and consumers, the Bureau has provided tips to consider when making environmental claims: 

1. Be truthful, and not false or misleading: 

Environmental claims must be true, both in their literal meaning and in the general impression they convey. The general impression is determined by examining the entirety of the representation, including words or phrases being used, the manner in which the text is displayed, and any visual elements and their context. A claim can be literally true, but still create a false or misleading general impression about an environmental benefit when all of these aspects are taken together.

2. Ensure claims are properly and adequately tested: 

Many environmental claims are performance claims (relating to performance, efficacy or length of life of a product). For performance claims to be in compliance with the Act, the business must be able to demonstrate that the claim is based on adequate and proper testing. The testing required will be dependent on the claim and must be completed prior to the claim being public. The Bureau will provide further guidance regarding the new provision.

3. Be specific about what is being compared:

When a comparison is made (whether express or implied), businesses should be specific about what is being compared and the extent of the difference between the comparisons. Otherwise, claims can become vague, exaggerated, or misleading. 

4. Avoid exaggeration: 

Businesses should look at all claims very carefully. It is common for environmental claims to exaggerate an environmental benefit.

5. Avoid vague environmental claims; instead, make them clear and specific: 

The more the environmental claim is vague, the more likely that it will convey a general impression about the environmental benefit that is too broad. Broader claims are harder to substantiate properly and as discussed above, claims about environmental benefits should be supported by adequate and proper testing. Representations about its environmental benefits should hold true for the product for its life cycle. More broadly, if the environmental claim concerns the business as a whole, the environmental impact of all business activities must be taken into consideration when making the claim. Be clear about whether the benefit applies to part or to the whole of a product, service, or business. 

6. Avoid aspirational claims about the future:

Businesses should be careful about forward-looking claims, goals, or aspirations to ensure that they are factual rather than aspirational. Before making these claims, businesses should: 

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

The Bureau highlights that even if there is a clear plan by the business to accomplish its environmental benefits, care must be taken to ensure that the claim is not misleading [3]. 

Key Takeaways: 

Environmental claims by businesses regarding their products, service, or practices can run the risk of being considered greenwashing. To avoid such risks, businesses should always be clear, specific and truthful in their environmental claims and assess them in both their literal meaning and general impressions.

Businesses who are seeking clarification on the amendments to the Act with respect to the greenwashing amendments are encouraged to submit their questions and feedback to the Government of Canada. 

[1] Competition Bureau. “The Deceptive Marketing Practices Digest – Volume 7.” Government of Canada, 22 July, 2024, https://competition-bureau.canada.ca/how-we-foster-competition/education-and-outreach/deceptive-marketing-practices-digest-volume-7.

[2] Competition Bureau. “Public Consultation on Competition Act’s New Greenwashing Provisions.” Government of Canada, 22 July, 2024, https://competition-bureau.canada.ca/how-we-foster-competition/education-and-outreach/public-consultation-competition-acts-new-greenwashing-provisions.

[3] Supra note 1.