By Grady Semmens
Also added to the mix was the ability for private citizens to lodge complaints with the Competition Bureau (starting June 20, 2025) and placing the onus on companies to prove their claims – effectively making defendants guilty of greenwashing until they can prove their information is valid.
The Government of Canada’s new rules to crack down on greenwashing will likely hamper new energy projects, including those designed to cut greenhouse gas emissions, according to experts who say they pose significant legal risk and create uncertainty for how industries across the country can communicate their plans for reaching net-zero emissions by 2050.
The legislation came into effect on June 20 as part of an omnibus package of economic policies known as Bill C-59. The package contained long-awaited tax credits for carbon capture and storage (CCS) development, sparking positive investment decisions for several new CCS projects over the summer. However, C-59 also included significant amendments to the Competition Act that require companies to more fully substantiate statements about their management of environmental and social issues – with a particular focus on claims related to climate change activity.
The crux of the concern about the anti-greenwashing laws lies in the call for companies to use an ‘internationally recognized methodology’ to report on business interests such as their decarbonization efforts. The government failed to provide guidance for what methodologies meet this standard. At the same time, massive penalties (up to three per cent of a firm’s annual gross global revenues) were introduced for companies found to be making misleading claims. Also added to the mix was the ability for private citizens to lodge complaints with the Competition Bureau (starting June 20, 2025) and placing the onus on companies to prove their claims – effectively making defendants guilty of greenwashing until they can prove their information is valid.
Response to the amendments by Canada’s energy sector was swift and dramatic. Almost immediately, the Pathways Alliance – a partnership of Canada’s largest oil sands producers that are pursuing one of the world’s largest CCS projects – gutted its website and its social media channels have gone quiet. Many energy, mining and other resource-based companies have followed suit, resulting it what some are now calling a ‘greenhushing’ that goes counter to years of admirable progress in corporate transparency and reporting on the management of environmental, social and governance (ESG) issues.
“The federal government implementing a law, without consultation, which intrinsically infringes on the ability to participate in open discussions on some of the most important issues facing the country today should be a serious concern for all Canadians,” says Lisa Baiton, president and CEO of the Canadian Association of Petroleum Producers.
Looking beyond its impact on public discourse, Baiton says the legislation also creates new roadblocks for developing critical infrastructure to help meet Canada’s climate change commitments.
“The federal government’s approach to these amendments has introduced a new level of complexity and risk for those looking to invest in Canada. The amendments to the Competition Act will make it more difficult for proponents to speak to Canadians and gain public support for their projects, particularly for those focused on reducing emissions.”
One of the country’s top environmental lawyers agrees, adding that Competition Bureau rules apply far beyond websites and sustainability reports, also encompassing the detailed plans and evidence required in regulatory applications for projects.
“Canadian regulatory processes are already protracted, and I think there will be more delays and complications for project approvals as environmental impact assessments will face an additional layer of scrutiny,” said Conor Chell, a partner and national leader of ESG legal risk and disclosure with KPMG, at a recent seminar on the impacts of C-59 on Canadian industry.
The Competition Bureau was gathering public feedback until September 27 on the new greenwashing provisions that it says will be used to provide further guidance for how the rules will be enforced. Industry players hope the consultation will result in greater clarity on what methodologies for environmental reporting the government prefers, along with details on how the bureau’s complaints tribunal will determine which complaints are in the public interest to investigate.
“Companies face a high risk of being unfairly and unnecessarily targeted and pulled into long, drawn out legal proceedings in defence of reasonable statements. Without clear guidance as to how the Competition Bureau plans to handle such frivolous and vexatious claims, this will have a chilling effect on companies’ disclosure and participation in climate and environmental policy discussions,” Baiton wrote in CAPP’s Sept. 5 feedback submission.
In the meantime, Canadian companies are figuring out how to continue reporting on their ESG performance without placing themselves at undue risk of legal action. In its latest corporate social responsibility report published earlier this month, Cenovus Energy chose to omit information on greenhouse gas emissions and other environmental subjects, while continuing to report on topics including workplace safety, engagement with Indigenous communities, and its progress on meeting equity, diversity and inclusion targets in its workforce.
“Given this uncertainty, we made the difficult decision to defer publication of information about our recent environmental performance and plans. I’d like to be very clear that this does not change our commitment to advancing our environmental work. We firmly stand by the actions we’re taking, the accuracy of our reporting and the information we’ve shared to date about our environmental performance. And, to the extent the Competition Bureau can provide clarity through specific guidance about how these changes to the Competition Act will be interpreted and applied, that will help guide our future communications about the environmental work we are doing,” Cenovus’ CEO Jon McKenzie states in his opening message to the report.
With anti-greenwashing regulations being adopted and/or strengthened in many countries, KPMG’s Conor Chell recommends companies revisit their targets and performance metrics for key environmental issues to ensure they are realistic and are backed up by accurate and consistent data.
“Canada now has some of the strongest anti-greenwashing legislation, but it is something that is growing globally, and companies will face it in other jurisdictions,” Chell said. “Going forward, as important as it will be for the good work to continue, it will be equally important to ensure that companies are thoroughly assessing and substantiating their environmental and social claims, so they can withstand the additional scrutiny that is now required.”
Grady Semmens is a writer and communications consultant specializing in energy, sustainability and ESG reporting.
