Another phase of Canada’s greenwashing laws goes into effect on June 20, and promotional products companies should take heed.
- Greenwashing is a blanket term for unsupported claims about the environmental benefits of a company’s products or services.
Under Bill C-59, private parties can bring legal action against a company for civil deceptive marketing practices regarding greenwashing claims. They can do so by seeking permission from the Competition Tribunal, the federal adjudicative bodyresponsible for cases regarding competition laws under the Competition Act.
- Notably, applicants under C-59 don’t have to demonstrate harm (which was the previous requirement for civil deceptive marketing claims).
- Applicants only need to demonstrate that allowing the complaint to proceed is in the public interest.
As a result, it could be easy to prove a company is greenwashing a product or service, so even though applicants need permission from the Tribunal, the scope is quite large and far reaching, according to Brianna Mazze, vice president of compliance and sustainability at Ontario-based SRG, PPAI 100’s No. 17 supplier.
“I imagine environmental advocacy groups will now pop up to hunt for greenwashing claims because there’s a financial interest for the complainant,” Mazze says. “It’s very much structured the same as Prop 65 private right of action. And anyone can file action: consumer, stakeholder, environmental group, competitors.”
Brianna Mazze
VP of Compliance & Sustainability, SRG
Back Up Your Claims
Becoming law in June 2024, Bill C-59 requires businesses to substantiate assertions of their products or services’ environmental friendliness with test data or internationally recognized methodologies.
The act specifically outlaws public 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 is not based on an adequate and proper test.”
On June 5, Canada’s Competition Bureau announced the release of its final guidelines on environmental claims.
- Included is a guideline for environmental claims about the future, such as net zero goals, requiring them to be well-founded and substantiated.
- That means companies must have a “concrete, realistic and verifiable plan to accomplish the objective, with interim targets” and meaningful steps underway to accomplish the plan.
“This has the potential to be very impactful for our industry, as it applies to any company operating in or shipping to Canada,” said Elizabeth Wimbush, PPAI’s director of sustainability and responsibility, when the law passed.
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Significant penalties are included in this amendment to enforce the ban of greenwashing.
- Breaching the “deceptive marketing” provision could result in a fine up to the greater of $10 million ($15 million for subsequent orders) or three times the value of the benefit derived from the deceptive conduct, or 3% of the company’s annual revenues.
As soon as a company makes a public claim about the way its practices are environmentally responsible, that company must be able to prove such claims with evidence to avoid facing penalty of the law. This shift means promo companies doing business in Canada need to be certain their claims can be backed up by more than just good intentions.
“When in doubt, measure it out,” advises Wimbush. “Any impact claims you make should be backed by verified data. Rely on your supply chain partners to validate claims like recycled content, reduced carbon footprints or social impact metrics.”
Elizabeth Wimbush
Director of Sustainability & Responsibility, PPAI
The scope and magnitude of the new measures as well as the renewed public attention on greenwashing claims means that companies must remain vigilant in their internal processes, stresses ESG lawyer Conor Chell.
“A failure to adapt could result in costly investigations and enforcement actions, jeopardizing both financial standing and reputation,” Chell wrote in a KPMG blog post. “Given the potential risks, it’s crucial that companies update their internal processes and ensure that their public reporting undergoes regular legal review on an annual basis.”
