Governance Insights 2026 A Preview of 2026: 10 Legal Updates GCs, Boards and Investors Need to Know
Greenwashing and Climate-Related Disclosure
GREENWASHING RULES UNDER THE COMPETITION ACT
In June 2024, significant amendments to the Competition Act came into force. Among these changes were new civil greenwashing provisions that prohibit representations to the public that (i) are statements, warranties or guarantees “of a product’s benefits for protecting or restoring the environment or mitigating the environmental, social and ecological causes or effects of climate change” that are not based on an adequate and proper test (“ product claims ”); or (ii) relate to the “benefits of a business or business activity for protecting or restoring the environment or mitigating the environmental and ecological causes or effects of climate change,” unless such claims are based on “adequate and proper substantiation in accordance with internationally recognized methodology” (“ business claims ”). These provisions, along with the general civil prohibitions on false or misleading advertising, were initially under the exclusive purview of Canada’s Commissioner of Competition. However, as of June 2025, private parties can also challenge representations before the Competition Tribunal, subject to receiving leave on the basis of “public interest” considerations. Both the Commissioner and a private party (with leave) may seek a variety (or combination) of remedies, including (i) administrative monetary penalties up to the greater of C$10 million (C$15 million for repeat conduct) and three times the value of the benefit derived from the deceptive conduct (or, if that amount cannot be reasonably determined, 3% of annual worldwide gross revenues); and (ii) restitution up to the total amounts paid for the products in respect of which the impugned conduct was engaged, to be distributed among the persons to whom the products were sold. In June 2025, the Bureau issued final guidance under the title Environmental claims and the Competition Act , which sets out the Bureau’s approach to enforcement of the greenwashing provisions. Notably, the guidance clarified that the “Bureau is concerned with representations made to the public for the purposes of marketing and promotion, rather than representations made solely for other purposes or that are regulated by other government agencies.” Examples of representations falling outside the Bureau’s enforcement focus include communications to current and prospective securities investors in both voluntary and mandatory disclosures. However, two significant caveats should be noted: (i) if environmental claims are repeated in other materials for the purposes of promoting a product or business, the Bureau may seek to challenge them under the Competition Act ; and (ii) the Bureau’s guidance will not bind private parties who, if leave is obtained, could challenge environmental claims in investor materials under the greenwashing provisions of the Competition Act . Although no private actions regarding alleged greenwashing have been filed with the Competition Tribunal since the June 2025 amendments came into force, businesses have reacted to the uncertainty generated by the greenwashing provisions – in particular, the uncertainty associated with the “business claims” provision and the meaning of “proper substantiation in accordance with internationally recognized methodology.” For example, Pathways Alliance, a group formed by six of Canada’s largest
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