This opinion was written by Grant Bishop, a Calgary-based founder of KnightFork, which builds data-driven tools for carbon pricing and the energy transition, and was published in the Globe & Mail on June 27, 2024.
A new “greenwashing” rule hastily crammed into the Competition Act last week has cast a chill over communications by Canadian companies – many of which have scrubbed content from their websites in response. The fallout has been rapid, and commentators have emphasized potentially crippling constraints on Canadian cleantech.
This new “greenwashing” legislation enacted under the omnibus Bill C -59 is vague, over broad and an inappropriate departure from the established aims of Canadian competition law. The clumsy, poorly tailored new provision targets not just false commercial marketing but also imposes a sweeping “reverse onus” on representations concerning environmental benefits for an informational or political purpose.
The consequent chilling effect inhibits the flow of information essential to public debate on critical environmental policy questions. The new provision therefore represents an unjustified infringement of the freedom of expression guaranteed under Canada’s Charter of Rights and Freedoms.
This limit on free speech must be urgently challenged. To this end, provincial governments should immediately initiate references to their courts of appeal.
To be clear, this is not an argument against combatting “greenwashing” by companies. At the 2022 Green Growth Summit organized by the Competition Bureau, I argued fervently for enforcing the existing provisions of the Competition Act against false and misleading environmental claims. I share concerns about “net zero” or “carbon-neutral” branding based on flimsy voluntary offsets – particularly for GHG reductions, rather than actual carbon removals. Like other product attributes, misleading statements about environmental performance impede vigorous market competition by seeding distrust and interfering with consumers’ quality comparisons.
However, the Competition Act already included provisions that address such false or misleading representations and that require an “adequate and proper test” for claims about a product’s performance. In contrast, a new provision (subsection 74.01(1)(b.2) under the revised statute) requires “substantiation in accordance with internationally recognized methodology” for any representation about “the benefits of a business or business activity.”
Unlike the Competition Act’s pre-existing “adequate and proper test” requirement, the new rule is not about ascertaining the truth of a product-specific claim in a particular context. Rather, this provision outsources the standard for what is acceptable speech (regardless of ordinary understanding or objective scientific testing) to some nebulous official or semi-official “internationally recognized methodology.”
Notably, this new clause was not included in the original legislation presented to Parliament under Bill C-59. Indeed, after first reading, the standing committee on finance stuffed the new rule into an already jam-packed omnibus bill against the express recommendation of the Competition Bureau.
In his testimony before the committee, Competition Commissioner Matthew Boswell specifically recommended “further study on expanding [the Competition Act] to include business general claims, environmental claims or brand general environmental claims.” Mr. Boswell stated that “the Competition Act probably isn’t the right vehicle” for “very prescriptive rules about what a company can and can’t say when it comes to environmental claims.”
Despite its cautions regarding the legislation, the Competition Bureau now must scramble to provide guidance on how it will enforce it. However, the bureau will face a quandary in trying to interpret a provision that so markedly departs from the Competition Act’s general framework, includes other information that a company provides to the public beyond product-related claims, and uses ambiguous terms that are not otherwise defined.
Such a vague, poorly tailored provision does not just minimally impair freedom of expression. To be constitutionally justifiable, legislation must be carefully crafted to infringe a Charter-protected right only so far as necessary to achieve a pressing and substantial objective.
Moreover, under additional reforms to the Competition Act, private parties other than the bureau can now seek monetary penalties against businesses for contravening the new subsection of the legislation. This means that any guidance from the bureau will not provide protection from such private actions. Companies understandably fear this “open season” since they face sanctions for speech that lacks blessing from whatever counts as an “internationally recognized methodology.”
This impairs companies’ contributions to vital public debate. Indeed, as exhibited by its widespread chilling effects across Canadian businesses, the new subsection infringes upon the very core of the Charter guarantee of freedom of expression. It goes far beyond protecting the competitive dynamics of product markets. It attempts to regulate “the marketplace of ideas.”
Such informational or political speech – even if from an industry or by a company that certain activists may dislike or consider “dirty” – is the essence of what our freedom of expression must protect. The chilling of speech by such vague legislation is so concerning because it hinders citizens’ ability to read and listen and decide for themselves.
This is why courts should find this new provision is an unjustified infringement upon Charterprotected expressive freedoms. Such overbroad legislation, which chills the flow of information to the public on environmental benefits and climate change, should not be permitted to stand.
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