Changes to law draw praise from environmental advocates — and outrage from oil companies
This article was written by Mark Ramzy and was published in the Toronto Star on June 28, 2024.
A new set of federal rules meant to crack down on misleading environmental claims is setting off a clash between climate advocates and fossil fuel groups.
To some, it’s a “watershed” moment for corporate accountability over the climate crisis. To others, it’s an overreach that will “silence” an energy industry that claims it’s cleaning up its act.
At issue are incoming changes to Canada’s competition law that can penalize businesses that don’t provide evidence for claims they make about the environmental impact of any products or business practices — an attempt to deter a rise in what’s been dubbed “greenwashing.”
But what do these new rules actually do? Here’s what you need to know.
Current law too ambiguous
Existing laws on deceptive marketing have given the Competition Bureau the power to tackle unsupported environmental claims about specific products or services. That has resulted in penalties against three companies since 2016: Keurig over coffee pod recycling claims and Volkswagen and Audi over claims about their diesel engines’ emissions.
But as concerns about the climate crisis drive demand for “green” products, complaints about misleading environmental claims are also increasing. However, there was no law specific to cracking down on dubious environmental claims and critics warned existing rules didn’t have enough teeth to tackle the issue.
Those critics included commissioner of competition Matthew Boswell. After the Trudeau government introduced in a wide-ranging omnibus bill new rules that would focus on environmental claims about specific products, Boswell pushed for a broader mandate that would also tackle “forward-looking environmental claims about a business or brand as a whole,” like claims to be “net-zero” or “carbon neutral by 2030.”
“Under the old law, there was a substantial amount of ambiguity whether the law would touch claims about not just a product or service, but, you know, a business or business activities in general,” said Keldon Bester, the executive director of the Canadian Anti-Monopoly Project.
In the last stages of passing the bill, parliamentarians made changes to strengthen the new rules, so that environmental claims about business activities must be “based on adequate and proper substantiation in accordance with internationally recognized methodology.”
Cue the outrage.
Oil and gas groups worry
Several fossil fuel industry groups immediately raised alarm over the new changes, arguing the burden of proof was too vague and could be abused. Pathways Alliance, a consortium of the largest oilsands companies in Canada, wiped its entire website, calling for clarity from the Competition Bureau. The Canadian Association of Petroleum Producers said it was a “radical” change that “effectively muzzles Canadian businesses,” claims echoed by Danielle Smith’s Alberta government.
“Creating a public disclosure standard that is so vague as to lack meaning and that relies on undefined ‘internationally recognized methodology’ opens the door for frivolous litigation, particularly by private entities who will now be empowered to directly enforce this new provision of the Competition Act,” said a statement from Pathways Alliance. “This represents a serious threat to freedom of communication.”
Neither group accepted an interview request.
The oil and gas groups, which are under heavy scrutiny for their role in driving the climate crisis, insisted they would not back down on their environmental commitments, but other groups made the argument the changes could deter investment in clean energy from companies afraid they wouldn’t be able to communicate their business practices. In 2022, the oil and gas sector was Canada’s largest source of emissions, accounting for 31 per cent of total national emissions.
Environmental advocates, meanwhile, claimed the negative reaction from the oil and gas groups was evidence they knew their claims to take climate change seriously were “bogus.”
“It doesn’t shut down production, or hold them accountable for oil leaks, or tell them their emissions are too high,” said New Democrat MP Charlie Angus, who has proposed even stricter rules to ban fossil fuel advertising.
Experts in competition law say the bureau needs to give guidance to businesses as to how they will be impacted by the new rules. In the meantime, businesses have the right to be concerned, said Robin Spillette, a lawyer at Fasken.
“There’s a lot of new words in here, and it’s just I think, right now, not clear to companies what exactly this is going to capture and what they need to do to ensure they’re onside these provisions,” Spillette said.
A spokesperson for Industry Minister François-Philippe Champagne said the government understands those concerns. The Competition Bureau, in response, is “assessing the impact of these requirements and expects to provide guidance, in due course, that will offer transparency and predictability for the business and the legal communities in the enforcement of the law,” it said.
More frequent enforcement
Spillette said part of what needs to be clarified is to what standards businesses’ environmental claims will have to adhere.
“It could be hard for a business to say, you know, what’s internationally accepted today or what is not, and then what might change tomorrow,” she said.
But the biggest impact of the changes, she said, will be more frequent enforcement. The Competition Vureau is currently investigating at least four claims of “greenwashing” against Pathways Alliance, the Canadian Gas Association, RBC and Lululemon.
Punishments for non-compliance can include being forced to stop the marketing in question, publishing a notice and significant financial penalties.
Bester said the bureau should also present examples in its guidance of the kinds of claims it is hoping to crack down on.
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