New Developments in Greenwashing – Private Right of Action

As of June 20, 2025, legislative provisions allowing for private parties in certain circumstances to bring claims directly against industry operators who have allegedly tried to “greenwash” their businesses will come into force. Although subject to regulatory oversight, the lack of certainty around these private rights of action, along with other aspects of Canadian greenwashing legislation, have caused concerns in Canadian industry, particularly in the resource extraction sector.

“Greenwashing” is the practice of using deceptive marketing tactics to lead consumers to believe they are making environmentally friendly choices when they are not.[1] Effective June 20, 2024, parts of federal Bill C-59 came into force which introduced new greenwashing legislation through amendments to the deceptive marketing practices section of Canada’s Competition Act (the “Act”).[2] Canada’s new legislation aims to combat greenwashing by requiring that certain environmental claims be supported by adequate and proper substantiation in accordance with internationally recognized methodologies.[3]

The penalties for violating these provisions range from $750,000 for a first offence up to $1 million for subsequent offences for individual offenders, while companies can be fined from $10 million to $15 million or an amount equal to three times the value of the benefit derived from the claim, or three percent of the organization's global annual gross revenue, whichever is greater.[4] These and other potentially severe consequences, coupled with uncertainty over how the legislative provisions will be interpreted and enforced by the regulator and the Courts, have led to much comment and concern.

Following Bill C-59’s partial coming into force in June 2024, on December 23, 2024, the Competition Bureau (the “Bureau”) released its guidelines on environmental claims (the “draft guidelines”) and sought public consultation, the period for which expired on February 28, 2025. The draft guidelines include six principles for compliance:

1. Environmental claims should be truthful, and not false or misleading;
2. Environmental benefit of a product and performance claims should be adequately and properly tested;
3. Comparative environmental claims should be specific about what is being compared;
4. Environmental claims should avoid exaggeration;
5. Environmental claims should be clear and specific – not vague; and
6. Environmental claims about the future should be supported by substantiation and a clear plan.

The draft guidelines also contain an FAQ section which provides additional guidance on how the Bureau will apply the new provisions of the Act, such as how a company can utilize the defence of due diligence if they can show that they exercised due diligence to prevent deceptive marketing.[5]

However, as noted perhaps the most prominent feature of Bill C-59 was that it created a private right of action that will allow private parties to bring legal action against businesses based on greenwashing allegations. This provision will be in force as of June 20, 2025. Once this section comes into force, private actions can be commenced based on environmental claims made directly to the Competition Tribunal (the “Tribunal”[6]), which has the discretion to accept and adjudicate an action where it considers it "in the public interest" to allow the action to proceed.[7] In other words, parties seeking to sue must be permitted to do so by the Tribunal (“granted leave to make an application”), unlike in a lawsuit in Court where there is no such gatekeeping process.

If the Bureau, or a private party that is granted leave, brings a successful claim under the greenwashing provisions, then the guilty business may be ordered to:

1. Cease the questionable conduct;
2. Pay a penalty as outlined above;
3. Pay restitution to affected customers; and/or
4. Publish a notice correcting the misinformation used.[8]

While clear enough as a general concept, the practical implementation of these new greenwashing provisions has created confusion among Canadian businesses, particularly in the energy sector where many companies make environmental and climate change information publicly accessible on their websites.  For example, Pathways Alliance, an alliance of six of the largest Canadian oil sands companies, removed a large quantity of its website and social media content due to the uncertainty surrounding the interpretation of Bill C-59 immediately after the bulk of that Bill was enacted last year.[9]

There are numerous specific concerns about the legislation, including allegations that it is silencing Canada’s energy industry,[10] or that the changes pose a significant risk of “greenhushing”, which occurs when a company intentionally omits their genuine sustainability achievements out of fear of backlash[11] (or in this case, breaking the law).  

The public consultation period for the new legislative greenwashing provisions ended on September 27, 2024,[12] with the submissions subsequently being published at the beginning of 2025. The responses largely included criticisms of the legislation such as arguments that it is overreaching, lacks clarity, and may cause unnecessary legal, financial and reputational consequences for Canadian companies. For example, the Alberta New Democratic Party labelled the legislation as unneeded and unjust.[13] Additionally, the federal Department of Environment and Climate Change Canada claimed that the legislation may be counterproductive and potentially hamper the ambition of companies and make them reluctant to announce well-intentioned aspirational commitments out of fear of legal risk.[14] 

In a publication released by the Canadian Chamber of Commerce and the Macdonald Laurier Institute in February 2025, concerns about the legislation were raised surrounding testing and the criteria that will be used to substantiate claims.  The paper alleged that the legislation is vague and the lack of guidance surrounding the “internationally recognized methodology” required to substantiate environmental claims will result in a silencing of parties. Additionally, the fear was raised that the private right of action combined with the reverse onus of proof could create great risk for companies.[15]

At this time, it is difficult to dismiss these concerns, largely due to the significant uncertainty that surrounds many of the key provisions. The Bureau’s guidelines remain in draft, and there is no clarity around what the Tribunal might consider to be “in the public interest” to grant a private party leave to bring an application once the private right of action is in force. Many companies have felt it prudent to simply remove all environmental claims from their website, despite the fact that the legislation does not require this at all – rather, it mandates that the information be substantiated and that due diligence be exercised in that process. Nevertheless, the significant number of open questions undoubtedly remains a tremendous concern for Canadian industry. It is hoped that further regulatory guidance will be issued, and that the federal government may attempt to clarify the legislation, but at present this remains to be seen.

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