Julien O. Beaulieu is a doctoral candidate at Imperial College London. Wren Montgomery is an associate professor at Ivey Business School at Western University. Jennifer A. Quaid is a professor in the civil law section of the University of Ottawa.
In the 2025 budget, the federal government announced it plans to make changes to new rules added to the Competition Act last year – rules that gave Canadians a private right of action against deceptive marketing and required companies to substantiate their environmental claims.
The move, which follows intense pushback from lobby groups, is being framed as necessary to reduce “investment uncertainty.” In the government’s words, the so-called “greenwashing provisions” are “having the opposite of the desired effect, with some parties slowing or reversing efforts to protect the environment.”
That justification doesn’t add up.
For one, how exactly does Ottawa know that companies are reversing their environmental efforts because of these provisions? All we have seen so far is widely publicized removals of previously made environmental claims. There’s a big difference between companies pulling back on marketing language and companies pulling back on real environmental initiatives. Talk is not action.
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Assuming for the sake of argument there has been some scaling back, where is the evidence that attributes this phenomenon to new rules on greenwashing? How is the government distinguishing the effects of Bill C-59 from other policy changes and incentives, such as the phase-out of the consumer carbon tax or the changes to the U.S. Inflation Reduction Act? It’s a stretch to claim a causal link based on a few months of the rules being in force.
The government’s position assumes that it is a bad thing that companies have dialed back the scope of their environmental claims. But, this might actually mean the law is working as intended, curbing unsubstantiated claims and restoring credibility to the marketplace. It’s far too early to declare the amendments a failure, especially when corporate disclosure trends are still adjusting and shaped by a wider anti-ESG backlash.
The government does have a point on uncertainty – but only regarding one of the two greenwashing rules. Unlike the rules on environmental claims relating to products, which are based on existing law, there is some confusion about what counts as a “substantiated claim” when the claim is about the benefits of business for the environment. The Competition Act requires companies to back their green claims using an “internationally recognized methodology” – a phrase left undefined. That gap, combined with vague initial guidance from the Competition Bureau, made some corporate legal departments nervous.
But the problem is one of communication, not design, and is easily solved: just clarify the rules! The government could drop the word “internationally” or replace the phrase with something clearer, like Switzerland’s requirement that green claims be based on “objective and verifiable criteria” or the U.S. requirement that they rely on “standards generally accepted in the relevant scientific fields.”
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It could also adopt regulations creating safe harbours – explicitly naming the methodologies companies can rely on – and suspend the private right of action until those regulations are in force. That would provide the certainty businesses want while preserving the law’s core purpose, which is to restore the public’s trust in green claims.
As for the private right of action related to greenwashing, the government seems to be acting hastily – no private claim has been filed since the right took effect in June, 2025. The only claim that has been brought in relation to the greenwashing provisions is a constitutional challenge to the provisions as a violation of corporate free speech.
Moreover, the amendments give private plaintiffs little reason to launch class-action-style lawsuits, since they don’t provide for compensation or damages when a company fails to substantiate a green claim. We are a long way from the fear mongering of a flood of greedy and unfounded plaintiff claims.
Repealing these provisions entirely would send the wrong signal. It would tell the marketplace that vague or misleading green claims are once again fair game, hurting the very companies that have invested in credible, verifiable sustainability efforts.
Canada should not back away from holding firms to account for what they say about the environment. If anything, we should be raising the bar – just as our trading partners in Europe and Asia are doing.