Greenwashing in Canada: The Changes in Law
Greenwashing Solutions
This year, the Secretary-General of the United Nations, António Guterres, prompted “every country to ban advertising from fossil fuel companies.” Guterres’ speech was an impetus to encourage organisations to stop being supported by fossil fuels advertising money because they were “distorting the truth, deceiving the public and sowing doubt” regarding climate change and solutions.
Consequently, this year also saw the Head of the Competition Bureau, Canada’s independent law enforcement agency, compel regulators to increase rules governing greenwashing. Leaders of British Columbia have now proposed anti-greenwashing bills and are pushing for the strengthening of greenwashing regulations in order to protect consumers and increase the veracity of sustainability claims made by Canadian organisations.
What is greenwashing?
There is an increasing demand for sustainable good and ethical practice from investors, particularly from the younger generations. There exists a potential to mislead consumers as a result of product issuers being vague about the standards they may utilise in order to assess products as environmentally sustainable or overstating the ethical credentials in such a way that they are not a true reflection of their operations.
Greenwashing is essentially the misrepresentation or unsupported disclosure of sustainability information that distorts or makes unfounded assertions about an organisation’s sustainability or environmental practices. Greenwashing leads to a lack of transparency about a company’s product, service, activity, or brand.
How is Canada tackling greenwashing?
The Canadian Government has as of November 2023 introduced the Bill C-59 received Royal Assent on June 20, 2024.
This is an piece of legislation which introduces the Fall Economic Statement, which primarily acts to regulate greenwashing through the Competition Act. Some proponents favouring climate action argue that the Bill C-59 is ineffective at protecting Canadian consumers from greenwashing.
In response the Bill C-59 many organisations have sought to remove all content from their websites, and social media platforms which allude to commitments to reduce environmental impact. One such organisation is Pathways Alliance, Canada’s largest fossil fuel producer who contends that the novel provisions in the Competition Act will preclude organisations from making statements about environmental impacts, plans and performance as scrutiny on such claims will be tightened.
As a result of the introductions to the Act some organisations are avoiding statements about climate-related information, a practice referred to as greenhushing rather than engaging with real climate action and mitigating the risks associated with greenwashing. This is due to the detriment that can result to an organisation’s reputation with consumers increasing their awareness when buying goods that claim to be sustainable.
Canadian organisations face added scrutiny
With the introduction of the Bill C-59, there is added unease in the area of sustainability within Canada. Companies which engage in greenwashing are now facing sanctions and litigation for engaging in misleading and false practices. As of now, there are a few organisations which face such allegations below, with the Competition Bureau investigating their assertions.
Lululemon: a complaint has been lodged against the organisation for misleading consumers about their environmental practices and representing themselves as contributing to a “healthier planet”, whilst increasing their overall greenhouse gas (GHG) emissions by 83% between 2019 and 2021.
Royal Bank of Canada: is being investigated over statements pertaining to climate change and achieving net-zero by 2050, even though the financing of the Bank is predominantly reliant on fossil fuels.
Canadian Gas Association: has false and misleading allegations as a result of their “Fuelling Canada” campaign with it being argued that referring to natural gas as “sustainable, clean, budget-friendly, and good for the planet and human health is deceptive”.
It is anticipated that many more greenwashing claims will continue to come to light as future regulation of greenwashing is curtailed.
Image obtained from: U4 Anti-Corruption Resource Centre.
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Sources:
To find out more, please read here:
Anti-Corruption Resource Centre: https://www.u4.no/blog/greenwashing-a-form-of-corruption
Canada Climate Change Initiative: https://ccli.ubc.ca/bill-c-59-anti-greenwashing/