Buckle Up: Latest from the Competition Bureau on Greenwashing Guidance & Enforcement

At the Canadian Bar Association's Competition Law Fall Conference last week, we heard from the Competition Bureau (Bureau) about its approach to the greenwashing provisions in the Competition Act. Four key insights emerged indicating a period of significant change and heightened scrutiny. All of which Matthew Boswell, the Commissioner of Competition, (Commissioner) summarized as a new era of enforcement with one piece of advice: "buckle up".

Below is what we heard from the Bureau as well as our advice on what businesses across all sectors can do to prepare:

1. Understand Existing Guidance and Caselaw on Greenwashing: Firstly, the Bureau emphasized the importance of its existing guidance and caselaw on greenwashing. Both the Commissioner and the Head of Deceptive Marketing reminded that the Bureau has already provided guidance on how to avoid greenwashing and misleading environmental claims. They referred to the guidance available on its website and the latest Deceptive Marketing Practices Digest published in July 2024, which replaced the archived 2008 and 2021 webpages with updated examples and resources. Commissioner Boswell also highlighted a 2022 ruling on misleading claims about recyclability and reminded businesses that adequate testing has been required for product performance claims in Canada for decades. This suggests that businesses should expect future guidance to build on previous resources and jurisprudence on the topic of greenwashing.
2. Securities Disclosures Containing ESG Information are Promotional: Secondly, the Bureau confirmed that Environmental, Social, and Governance (ESG) disclosures are considered promotional material. As ESG disclosures become increasingly standard and mandatory, businesses face a challenge in complying with stricter greenwashing provisions. Recognizing the risk of greenwashing in corporate disclosures, the Canadian Securities Authorities (CSA) issued Staff Notice 51-364 Continuous Disclosure Review Program Activities for fiscal years ended March 31, 2022, and March 31, 2021, concerning ESG or sustainability-related disclosures to guide issuers in improving their continuous disclosure. The guidance states that issues should avoid misleading, unsubstantiated, or otherwise incomplete claims about ESG and sustainability-related aspects of their business that convey false impressions. The Bureau's stance means businesses should apply the same rigor to ESG disclosures as they do to other corporate disclosures to mitigate the risk of misleading statements. This, along with the Bureau's upcoming guidance on the latest amendments, means publicly traded companies face a united front against greenwashing from competition and securities regulators.
3. Expect more Enforcement Action and Fines: Thirdly, businesses should prepare for more enforcement action and higher fines. The number of cases is expected to increase due to the expanded private access regime and the broader scope given to the Bureau through the amendments. The reverse onus requirement will likely contribute to shorter review timelines when the Bureau triages and investigates cases. New protections for whistleblowers, complainants, and industry participants can also speed up investigations and decisions. Notably, these three factors apply not only to greenwashing or deceptive marketing cases and are part of the ‘generational change’ the Commissioner used to describe the impact of the amendments to the Act.  The Commissioner also warned of "real, meaningful, penalties when the law is broken", indicating businesses should be prepared to receive Requests for Information (RFIs) from the Bureau and have substantiation ready for environmental claims. Close monitoring of enforcement activities and decisions should provide insights into the Bureau’s approach to flexibility, referenced cases and standards.
4. Guidance is on the Horizon but will be in Draft: Lastly, After a two-month public consultation window on the new greenwashing provisions, the deadline closed this past Friday, September 27.  Hundreds, if not thousands, of responses to the eleven questions posed by the Bureau are expected to come from businesses, non-governmental organizations, and private individuals, all with a vested interest in the enforcement approach. In response to our team’s email a few weeks ago, the Bureau suggested submissions (excluding those indicated as confidential) will most likely be available by the second week of October on the consultation web page. When asked by a conference attendee on Friday when guidance will be available, the Deputy Commissioner suggested the Bureau will release it before the end of 2024, but in draft form enabling the opportunity for further revisions. Thus, the uncertainty is expected to continue.

Preparing for the New Era of Enforcement: Canadian businesses have entered a new era when it comes to scrutiny of their public representations. The Bureau has a stated commitment to ensuring fairness for all parties and to weed out clearly unmeritorious cases, but businesses should expect more aggressive and active enforcement. Proactively understanding the new ESG legal risk landscape around greenwashing regulations and litigation, involving both regulators and private actors, will be crucial. Now is the time for all ESG disclosures to be thoroughly assessed and vetted by legal counsel and for employees involved in preparing or communicating environmental claims to be aware of greenwashing risk. Practical steps to consider include:

• Identify key sources of ESG disclosures and public commitments, including website content, investor decks, media interviews, sustainability reports and corporate disclosures, social media and LinkedIn posts, etc.
• Assess ESG disclosures from a legal risk perspective, including the credibility of ESG data and goals, as well as whether claims are vague, broad, selective, or potentially misleading. 
• Conduct multidisciplinary reviews of companies’ claims to ensure they are substantiated and, where applicable, aligned with internationally recognized standards.
• Close compliance gaps and strengthen internal controls to withstand the expected additional legal scrutiny from the public.

Reach out to our team at KPMG Law for more insight and advice.