The Competition Bureau Finalizes “Greenwashing” Guidelines for Competition Act Requirements

Since the June 2024 introduction of two “greenwashing”^[1] provisions to Canada’s Competition Act (the “Act”),^[2] businesses have sought greater certainty as to how these provisions will be interpreted and enforced.

This desire for certainty has been fueled, in-part, by the fact that, as of June 20, 2025, private parties can seek permission to bring claims based on alleged breaches of these “greenwashing” provisions against businesses, and those claims may result in prosecutions where the regulator deems that to be in the “public interest”.^[3]

Following two rounds of consultation with the public, the Competition Bureau (the “Bureau”), the law enforcement agency responsible for enforcing the Act, on June 5, 2025, published its final guidelines on environmental claims (the “Guidelines”). While the Guidelines have been long awaited, draft guidelines have been available since December 2024, and little has been altered between the draft and final versions. However, the final Guidelines do contain information that businesses should be aware of.

The Guidelines are Not Legally Binding

First, it is important to understand that when considering the Guidelines, the Bureau’s interpretation of the Act is not a determination as to what the law is, nor how it will be applied. Rather, the Competition Tribunal and the Courts are responsible for interpreting and applying the Act, and the Guidelines are simply a statement as to the Bureau’s understanding and interpretation of these decisions. It is, for example, possible that a future Court or Competition Tribunal decision will adopt an interpretation at odds with that of the Bureau in these Guidelines. However, at present the Guidelines (which represent the interpretation of the regulator that will decide whether or not to prosecute a business) are the best information that we have to work with.

Historic Interpretation of “Adequate and Proper” Will Apply

The greenwashing provisions of the Act, subsections 74.01(1)(b.1) and (b.2), require that environmental representations to the public be based on an adequate and proper test, or adequate and proper substantiation, respectively. The Guidelines highlight the fact that the Courts have interpreted this requirement to mean that the testing or substantiation must be “fit, apt, suitable or as required by the circumstances”. As such, the Bureau states that they will consider the “adequate and proper” standard to be flexible and dependent upon the context.^[4]

The Need for an Internationally Recognized Methodology

Section 74.01(1)(b.2) of the Act requires that a claim with respect to the environmental benefits of a business or business activity must be “based on adequate and proper substantiation in accordance with internationally recognized methodology”. The draft guidelines stated that the Bureau would “likely consider a methodology to be internationally recognized if it is recognized in two or more countries”, but this definition left open the question of what constitutes “recognized”.

Addressing this uncertainty, the Guidelines now include the following statement about the interpretation of “recognized”:

“Recognized: To be acknowledged as valid. Such recognition can come from a variety of sources, including but not limited to standards-setting bodies, regulatory authorities, or even industries or other entities using methodologies that are commonly accepted internationally.

However, businesses are reminded that the substantiation must be adequate and proper, so the Bureau always recommends choosing a methodology that is reputable and robust having regard to the claim.”^[5]

The Guidelines clarify that the provisions do not require a business to follow any specific standard, and that while a methodology may be reflected in a standard, it is the methodology that matters.^[6] If a methodology is found in a standard, and that standard is internationally recognized, the Bureau will likely consider the methodology to be internationally recognized.^[7] The Guidelines also state that a methodology developed by an industry may be a suitable methodology if the substantiation is adequate and proper, given the environmental claim made.^[8]

The Guidelines provide that where a methodology is required or endorsed by a Canadian governmental program, the Bureau will assume that the methodology is consistent with internationally recognized methodologies, and the Bureau will be unlikely to take enforcement action, so long as that methodology provides adequate and proper substantiation for the environmental claim.^[9]

It is acknowledged, in the Guidelines, that the Act does not require testing or substantiation using the best methodology available, however, the Bureau cautions that the methodology chosen should be “reputable and robust”.^[10] Where a number of different internationally recognized methodologies exist, businesses are free to choose between them as long as the result is substantiation that is adequate and proper.

In the event that a business is dealing with a technology for which there is not yet a recognized methodology for testing, the Guidelines suggest that a business consider whether two or more existing methodologies would together create the necessary substantiation. Where a business concludes that there is no way to substantiate a claim, the Bureau states that the business should avoid making the claim.^[11]

The Bureau, in the Guidelines, provide an example of a claim that would likely be considered a representation with respect to the environmental benefits of a business that is based on adequate and proper substantiation in accordance with internationally recognized methodologies:

“A business in the agriculture sector has been working hard to reduce nitrogen runoff from its farms into nearby water bodies through precision fertilization, cover cropping, and improved soil management practices. It makes the claim, “Over the past five years, we have protected the environment through reduced nitrogen runoff from our farms into nearby rivers and streams by 50%”. Before making the claim, the company ensured it followed ISO 5667-1 and ISO 5667-6 to measure nutrient concentration in streams directly downstream from its managed fields, both before and after the practices were implemented. The measurements showed a 50% decrease in nitrogen runoff from the managed lands.”^[12]

The Bureau provides an additional example of a business using an internationally recognized methodology to substantiate an environmental claim about a business or business activity:

“A delivery company wants to do its part for the environment by reducing its greenhouse gas (GHG) emissions. The company therefore develops a plan to phase out 20% of its gas-powered vehicles on average each year, replacing them with zero-emission vehicles, so that the entire fleet will be made up of zero-emission vehicles by 2030. In 2025, the company starts the process of replacing the oldest 20% of its fleet with new electric vehicles and institutes a schedule to replace the rest of the fleet by 2030. The company makes the claim, “To do our part to protect the environment, we will replace, starting in 2025, our delivery fleet with zero-emission vehicles to reduce greenhouse gas emissions by 100 tons by 2030”. Its calculation follows the GHG Protocol for Project Accounting standard, which protocol would allow the company to assess the baseline GHG emissions of the fleet and calculate the GHG emissions after implementation of the project.”^[13]

Application to All Businesses

The Courts have indicated, and the Guidelines have been updated to reflect the fact that, adequate and proper testing or substantiation is required by all businesses regardless of their size or resources.^[14] Additionally, the Bureau’s interpretation of “business activities” has been altered between the draft and final versions, to expressly include “the raising of funds for charitable and non-profit purposes”.^[15] Also, the Guidelines have also been updated to expressly state that the Act, and the greenwashing provisions within it, apply to “foreign businesses marketing in Canada”.^[16] As such, charities, non-profit organizations, foreign businesses, and businesses of all sizes should be aware that the provisions of the Act apply to them equally.

Representations Not Captured

As securities in Canada are regulated by provincial and territorial authorities, the Bureau does not concern itself with environmental representation made by businesses to current and prospective investors. However, if a business was to reuse such an environmental claim for the purpose of promoting a product or a business interest outside of the sale of securities, the Bureau would consider whether the claim was a contravention of the Act.^[17]

Limited Claims May Not Require Testing and Substantiation

The Bureau recognizes that claims of a very limited nature may not be captured by the “greenwashing” provisions of the Act and may not require testing or substantiation. As an example of this, the Bureau considers the statement that “20% recycled content is used in a product”.^[18] As this is not a claim about the performance or efficacy of a product, it would not require testing under section 74.01(1)(b) of the Act, and as it is not a statement about the product’s benefits for protecting or restoring the environment it would not require testing under 74.01(1)(b.1). Lastly, it is not a claim about a business or business activity and so does not engage 74.01(1)(b.2). The Bureau states, that in their view, such a claim only needs to not be materially false or misleading, as do all representations made to the public.

Conclusion

While the Guidelines are not legally binding, as noted earlier, they are useful to a business that is seeking guidance on how to best comply with the Act.

If you would like more information, or have any questions regarding the Guidelines and their application to your business, please contact the authors.

[1] “Greenwashing” is defined as the practice of using deceptive marketing tactics to lead consumers to believe they are making environmentally friendly choices when they are not.