Canadian Government Proposes Changes to Greenwashing Laws

OTTAWA — The government of Prime Minister Mark Carney announced plans to amend laws regulating environmental claims made by companies, specifically proposing to eliminate the requirement for substantiation based on “internationally recognized” policies. This change, highlighted in the federal budget released on November 4, 2023, aims to alleviate “investment uncertainty” as Carney’s administration seeks to attract private sector funding for natural resource development.

Changes to Environmental Claims Regulations

Previously established under former Prime Minister Justin Trudeau, the provisions targeting “greenwashing” were designed to prevent companies from making misleading environmental claims about their products or operations. The proposed changes would revise a section of the Competition Act that addresses statements made by companies regarding their positive environmental impact and contributions to climate change mitigation. Currently, businesses are required to substantiate such claims in line with “adequate and proper substantiation in accordance with internationally recognized methodology.” The new budget bill suggests removing the phrase “internationally recognized methodology,” potentially allowing companies more leeway in how they support their claims.

Additionally, the proposed amendments would reverse a previous change that enabled private parties to bring claims to the Competition Tribunal regarding these environmental statements. Responses from government officials regarding the rationale behind these changes remain limited. Environmental Minister Julie Dabrusin redirected inquiries to Industry Minister Melanie Joly, whose office has not yet provided a comment.

Reactions from Environmental Advocates

Critics of the proposed changes are voicing concerns about the potential dilution of standards. Keith Stewart, a senior energy strategist at Greenpeace Canada, warned that removing the requirement for “internationally recognized methodology” could lead to companies creating their own definitions and standards, which may not meet scientific rigor. He stated, “The risk here is they’re going to let companies make up their own definitions and their own rules, and this is going to result in really weak standards.”

In response to the proposed amendments, Keith Brooks, program director at Environmental Defence, acknowledged the need for further assessment of the impact of these changes. He expressed relief that Carney intends to maintain the core intent of the rules while simplifying compliance for companies. “Does it push companies to back up the claims that they’re making?” he questioned, emphasizing the necessity for accountability.

The Competition Bureau had previously issued guidelines clarifying what constitutes “internationally recognized” methodology, requiring recognition in at least two countries. For example, a company claiming net-zero emissions by 2050 without a clear plan to achieve that goal could face scrutiny under these guidelines.

Kendall Dilling, president of Pathways Alliance, a coalition of oilsands companies, welcomed the amendments, asserting that they are necessary for Canadian businesses to compete globally. “Changes to the Competition Act are necessary and the proposed amendments are directionally positive,” Dilling stated. “The current requirements have put Canadian companies at a disadvantage compared to their global counterparts by limiting their ability to speak freely about environmental work.” The alliance is also advocating for a proposed $16.5 billion carbon capture and storage network, which Carney has identified as a key project for national development.

Ongoing discussions between Carney and Alberta Premier Danielle Smith may influence future federal energy policy, potentially leading to the construction of a new bitumen pipeline from Alberta to British Columbia’s northern coast. Smith’s government and other stakeholders in the oil and gas industry have previously opposed the stricter greenwashing provisions.

Elizabeth May, leader of the Green Party, expressed her disapproval of the initial greenwashing provisions, suggesting that broader truth-in-advertising measures would have been more effective. She noted, “I can tell you the many more things that made it hard to vote for the budget,” highlighting the ongoing debate surrounding environmental regulations and business interests in Canada.

As the proposed changes move through the legislative process, stakeholders from various sectors will be closely monitoring the implications for both environmental accountability and business practices in Canada.