Bulletin
July 22, 2024
Table of contents
Environmental Claims and the Competition Act
Message from the Commissioner of Competition
The Competition Bureau enforces laws that prohibit misleading advertising and deceptive marketing practices. Those laws address all kinds of deception, including those relating to environmental claims.
Recently, new provisions were added to the Competition Act that explicitly target greenwashing. Simply stated, businesses are now required to have testing or substantiation to support certain environmental claims.
We recognize that these new provisions have attracted considerable attention. We know that consumers and businesses want to understand how and when the Bureau will take action under these new provisions.
To facilitate compliance with these new provisions, the Bureau will develop guidance in consultation with Canadians. To inform this process, the Bureau has launched a public consultation and is inviting interested parties to provide feedback by September 27, 2024.
In the interim, this volume of the Digest provides a solid foundation for the issues of environmental claims and greenwashing, including high-level tips to help businesses make sure that, when it comes to environmental claims, they stay on the right side of the law.
Matthew Boswell
Commissioner of Competition
1. Introduction
Consumers are increasingly taking the environment into account when they make decisions. And businesses are responding by portraying themselves and their products or services in the ‘greenest’ light possible. While many advertisers are careful about the environmental claims they make, others are quick to apply a coat of green paint.
This volume of the Digest aims to provide a foundation to understand the issues around greenwashing, and how businesses can avoid engaging in it.
The misleading advertising and deceptive marketing practices provisions of the Competition Act exist to ensure that businesses do not deceive consumersFootnote 1 making decisions in the marketplace. These decisions can include whether to buy a particular product, when to buy it, or if the product is something they want to buy at all.
In an ideal world, we would have all the information we need about each and every buying decision that we make, and we would have the time and the resources to process that information perfectly. In the real world, we have limited information, time and capacity. So we all do the best we can with the information that is presented to us.
When making these decisions, we weigh the various factors that matter the most. They often include price, quality, brand, convenience and suitability. Many people are also considering other factors, such as the impact that the business or its products and services are having or will have on the environment. For some people, these factors can be the most important ones that they will consider when making decisions, while others will balance these against other considerations.
While an ever-increasing number of consumers want to do their part to make sure their decisions benefit the planet, it is apparent that environmental issues can be very complex, and marketing claims relating to these issues can be difficult to understand.
Moreover, consumers who are making decisions often must take environmental claims on faith. For example, if a business claims that it has lowered its greenhouse gas emissions by 40%, most consumers will not be in a position to evaluate the truthfulness of that claim.
All of this makes decision-making very challenging for consumers. But what happens when businessesFootnote 2 make environmental claims that are deceptive? Predictably, consumers are likely to make choices that they would not have made if they had accurate and truthful information. With deception of this kind, it is not just the consumer who is harmed; honest competitors lose out as well.
The Competition Bureau’s role is to stop this kind of practice, so that consumers can make choices between competing products without being deceived by fake green claims. This way, honest competitors don’t lose out, and the market can flourish.
2. Bureau’s perspective on environmental claims
From the Bureau’s perspective, an environmental claim is any representation related to the environment that has been made for the purposes of promoting a product or business interest. Environmental claims are often used by businesses to promote a positive environmental quality or attribute of a product, service or a business, or to downplay a negative one. They may include claims related to the impact on the environment of a product, from the sourcing of its materials to how it is produced, packaged, distributed, used or disposed of. Environmental claims don’t stop at physical products. They can also be about services, processes and business practices. In this article, we will sometimes also refer to these types of claims collectively as claims about environmental benefits.
3. Bureau’s perspective on greenwashing
The concept of environmental claims is broad, consistent with the fact that new kinds of green claims emerge regularly. While many claims are truthful, others make the business or its products sound ‘greener’ than they really are. Many people refer to this as part of the larger problem of ‘greenwashing’, and we at the Bureau sometimes use this term as a short form for environmental claims that are deceptive because they are false, misleading or not adequately and properly tested or substantiated.
At the Bureau, we are not experts in environmental sciences. We are experts at investigating misleading advertising and deceptive marketing practices. However, like any other kinds of marketing claims, the Bureau has learned a lot about environmental claims from a variety of sources over the years, including from research, consultation, international partnerships with other agencies, complaints and investigations.
a. Kind of complaints we receive
People complain to the Competition Bureau about many different kinds of alleged greenwashing in all different shapes and sizes. The majority of complaints fall into the following broad categories:
i. Composition claims
Often, complaints involve claims made to the public about the composition of products or their packaging. For example, a business might claim that a package is made from 100% recycled paper, or that a product is made from recycled bottles. These can also involve claims that a product does not contain certain components that are considered bad for the environment, such as microplastics.
ii. Claims about the production process of products
Complaints also involve claims about the steps involved in producing a product, including claims about the resources, energy or material used in that process. For example, a business might claim that a product was made with renewable energy or that it is a carbon neutral production process, or it might name the renewable energy used, such as claims that a product is made using solar power.
iii. Claims about the disposal of products after use
Claims about the green disposal of products also drive complaints, such as claims that a product is fully compostable or recyclable.
iv. Comparison claims
Some complaints address concerns about comparative environmental claims. These might compare products or services to past versions or to those of a competitor. For example, a business might claim that its product uses 25% less water than their previous model.
v. Vague claims
Oftentimes, we receive complaints about environmental claims that are very vague, creating a feel-good message without exactly spelling out the environmental benefit. The classic example involves claims that a product is eco-friendly, with no specification as to why or how the product is environmentally beneficial. These vague greenwashing claims are often alleged to be accompanied by imagery that doubles down on the feel-good vibe, including nature scenes.
vi. Claims about the future
One of the bigger trends in complaints involves claims about environmental improvements that the business will accomplish in the future, such as claims about being carbon neutral by a certain date. Complainants often allege that some advertisers make bold claims about the future, but lack a credible plan to deliver on the claim.
Some of these complaints also allege that businesses making such claims are making decisions and investments that will actually move the business further away from its stated environmental goals. Such claims often draw attention to environmental projects or other investments that are environmentally positive. But complainants allege that the projects or investments are token in nature, or pale in comparison to operations of the business that are not consistent with claimed objectives.
4. Environmental claims and laws enforced by the Bureau
The Bureau enforces certain laws that prohibit misleading advertising and deceptive marketing practices and encourage the provision of accurate information to consumers.
a. The Competition Act
The first is the Competition Act. It has provisions that apply to any representations made to promote a product or business interest. The provisions that are relevant to environmental claims traditionally fell into two baskets:
- Provisions that prohibit making representations that are false or misleading in a material respect. The term “material” means that it leads a person to take a particular course of action, like buying or using a product or service; and
- A provision that prohibits making claims about the performance, efficacy or length of life of a product unless that claim is based on adequate and proper testing.
Further, new provisions recently enacted by Parliament require that certain types of environmental claims about products be supported by adequate and proper testing and that certain types of environmental claims about businesses or business activities be adequately and properly substantiated.
When assessing a claim, the Bureau must consider the "general impression" conveyed by the claim, as well as its literal meaning. The general impression is determined by considering the entire advertisement, including the words, graphic elements and overall layout of the representations.
Many of the complaints received by the Bureau fall under the provisions of the Competition Act. However, the Bureau administers two other laws that can also play a role when it comes to environmental claims found on labels of prepackaged consumer products and consumer textile articles:
b. The Consumer Packaging and Labelling Act
The Consumer Packaging and Labelling Act (CPLA) requires that prepackaged non-food consumer products bear accurate and meaningful labelling information to help consumers make informed purchasing decisions. The CPLA prohibits anyone from applying a label to a prepackaged product that contains any false or misleading representation relating to that product. It also prohibits a dealer from importing, advertising or selling a product with such a label.
The CPLA says that a false or misleading representation includes anything that implies that a prepackaged product contains any matter not contained in it, or does not contain any matter that is in fact contained in it. It also provides that a false or misleading representation includes any description or illustration of the type, quality, performance, function, origin or method of manufacture or production of a prepackaged product that may reasonably be regarded as likely to deceive a consumer.
c. The Textile Labelling Act
The Textile Labelling Act (TLA) requires that consumer textile articles bear accurate and meaningful labelling information to help consumers make informed purchasing decisions. The TLA prohibits anyone from applying a label to a consumer textile article that contains any false or misleading representation relating to that product. It also prohibits a dealer from importing, advertising or selling a product with such a label.
Similar to the CPLA, the TLA provides that a false or misleading representation includes any description of the type, quality, performance, origin or method of manufacture or production of a textile fibre product that may reasonably be regarded as likely to deceive a consumer.
5. What the Bureau can and cannot do
Consider the overall impression conveyed including the words, images and layout.
The laws that the Bureau enforces do not tell businesses when or how they can make specific environmental claims. For example, none of the laws enforced by the Bureau tell a business when they can claim that a product is recyclable. Instead, the Bureau enforces laws that set out a general framework that allows businesses to make whatever environmental claims they want to, as long as those claims are not false, misleading or not adequately and properly tested or substantiated.
Some businesses would like the Bureau to set out exactly what they can and cannot say when it comes to environmental claims. However, that is not how the Competition Act works. It requires the assessment not only of the literal meaning of the environmental claim, but also the general impression that is conveyed to consumers by the claim.
This means that the general impression conveyed by an environmental claim is usually best understood by considering all of the elements as a whole, including the words, images and layout.
The Bureau does not tell businesses what they can and cannot say, but can offer key tips for them to consider when assessing their environmental claims.
6. Tips for businesses considering making environmental claims
Businesses should ask themselves:
Am I overpromising and underdelivering when it comes to environmental claims?
The Bureau encourages environmental claims that provide truthful information about the environmental attributes of a product, service or business. This allows consumers to be able to make informed choices in the marketplace. However, it is essential that the claims inform consumers, not misinform them.
Businesses are encouraged to carefully consider any environmental claims that they want to make, to ensure that they do not amount to greenwashing.
This involves assessing the claim through the eyes of the consumers who are going to be exposed to it. Businesses should remember that most consumers are not experts in the science behind environmental issues, and may believe whatever general impression is conveyed by the claimFootnote 3.
In considering the literal meaning and general impression conveyed, here are some high-level tips for businesses to consider:
a. Be truthful, and not false or misleading
While this concept seems basic, it is a cornerstone of compliance when it comes to any sort of promotional representations such as environmental claims, and is worth highlighting: businesses should make sure that they tell the truth, and avoid claims that are false or misleading.
As discussed earlier, this means that any environmental claim must be true, both in terms of its literal meaning and the general impression that it conveys. The general impression is determined by examining the entirety of the representation, including the words or phrases used, the way in which the text is displayed, as well as the visual elements and their context.
An environmental claim might be literally true, but still create a false or misleading general impression about an environmental benefit. For example, even if a statement is literally true, the general impression conveyed might be of a larger environmental benefit than is actually the case.
Part of ensuring that an environmental claim is not misleading is making sure that key information necessary for consumers not to be deceived is included as an integral part of the representation in such a way that it will factor into the general impression. Put simply, if an environmental claim is misleading unless important information is included in the claim, advertisers need to include it.
As a reminder, the Bureau’s advice on disclaimers and fine print is that if a claim creates a materially false or misleading general impression in itself, before any reference is made to a disclaimer, then fine print may not help. In other words, do not rely on a disclaimer or fine print to cure an otherwise misleading environmental claim.
b. Ensure claims are properly and adequately tested
Many environmental claims are performance claims, meaning that they are claims about the performance, efficacy or length of life of a product. When Canadians see a performance claim, they expect that the claim is backed up with proof. For these kinds of claims to be in compliance with the Competition Act, the business must be able to show that the claim is based on adequate and proper testing. The testing required to support a claim will depend on the claim and must be completed before the claim is made to the public.
As mentioned at the outset of this Volume, recently enacted changes to the law add additional requirements for adequate and proper testing of certain kinds of environmental claims. The Bureau will provide further guidance regarding this new provision.
c. Comparative claims; be specific about what is being compared
Many environmental claims state or imply some sort of comparison. This might involve a comparison to the way things used to be done, or to similar products or businesses, or even to different kinds of products or businesses. Every time a comparison is made, it is important for the business to be specific about what is being compared, but also the extent of the difference between what is being compared. Otherwise, the result can involve green claims that are vague, exaggerated or misleading.
d. Avoid exaggeration
While small changes can add up, when it comes to the environment, they should never be marketed as big ones.
It is probably obvious that one of the greater risks that even a well-intentioned business faces is the risk that an environmental claim exaggerates an environmental benefit. This should be carefully avoided. While even small changes can add up when it comes to the environment, that doesn’t mean that small changes should be marketed as big ones.
Consistent with this, businesses should look at all claims very carefully. For example, they should consider if focussing on one environmental benefit of a business’s practices conveys the general impression that the business pollutes much less than it actually does?
e. Avoid vague environmental claims in favour of clear and specific ones
Businesses should avoid vague environmental claims in favour of clear and specific ones. The reasons are straightforward: the more that an environmental claim is vague, the more likely it is that it will convey a general impression that the environmental benefit is quite broad.
For example, a claim that a particular product is “eco-friendly” may convey the impression that the product is beneficial for the environment throughout its entire life cycle. The life cycle of the product can involve every aspect of the product, from the materials sourced, to how it is manufactured, packaged and transported, and even how it is used and disposed of.
This can have implications for a business if it has not ensured that the representation is true for the product ‘from cradle to grave’. These implications can become even more significant if the environmental claim is one that the Competition Act requires to be based on adequate and proper testing. If the claim concerns the business as a whole, the environmental impact of all activities of the business must be taken into consideration when making the claim. For all these reasons, vague claims can be difficult to back up.
Businesses are therefore encouraged to be clear and specific about the environmental benefit being advertised. This includes being clear about whether the claim applies to part of or to the whole of a product, service, or business, or applies to a specific part of a production process or practice. The Bureau’s advice is clear: “when in doubt, spell it out!”
f. Avoid aspirational claims about the future
Many businesses want to show strong and meaningful environmental commitments about the future. Often these claims involve representations about greenhouse gas emissions, such as claims about being carbon neutral by a certain date. It is commendable when well-intentioned businesses set aggressive goals and timelines about future environmental performance. However, there is a significant risk that these claims might become greenwashing. Businesses should therefore be careful about their forward-looking claims to ensure that they are factual rather than aspirational.
Before making these kind of claims, businesses should:
- Have a clear understanding of what needs to be done to achieve what is being claimed;
- Make sure to have a concrete, realistic and verifiable plan in place to accomplish the objective, with interim targets; and
- Be sure there are meaningful steps underway to accomplish the plan
If businesses have not considered all these elements, they should either implement changes before making the claim, or change the claim itself.
Again, we note that the new provisions recently enacted by Parliament specifically target greenwashing, and that these include a provision requiring that claims about certain kinds of environmental benefits of a business or business activities be supported by adequate and proper substantiation in accordance with internationally recognized methodology. This new provision may be relevant to many of these kinds of claims about businesses or business activities. The Bureau will also provide further guidance regarding this provision.
It is worth underlining that even if there is a clear plan by the business to accomplish its environmental objectives, care must still be taken to ensure that the claim is not misleading. For example, consider claims that create the general impression that a business will phase out the use of fossil fuels to cut emissions. Such a claim may raise concerns if the plan of the business is to continue fossil fuel consumption at the same or a greater rate, and then purchase carbon credits.
7. Other laws enforcing environmental obligations
This article only talks about environmental claims through the lens of the laws enforced by the Bureau. However, businesses need to stay abreast of any other Federal, Provincial or Municipal laws that can impact their environmental obligations.
8. Conclusion
When it comes to environmental claims, the Bureau does have a role to play in preventing greenwashing from misleading consumers. Making sure that consumers can rely on advertising to make informed decisions is an important principle behind many of the provisions of the Acts enforced by the Bureau.
A key message that we hope businesses take away from the information and tips set out above is this: it is important to determine what meaning your environmental claims are likely to convey to consumers and make sure this aligns with what you will deliver. Be truthful. Be clear. Be specific. And if in doubt, spell it out.
We know that most businesses want to do their part for the environment, and when it comes to environmental claims they want to make sure that they get it right. The Bureau will do its part to ensure that greenwashing does not undermine the good intentions of consumers and businesses who want to drive meaningful change.
How to contact the Competition Bureau
Anyone wishing to obtain additional information about the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act, the Precious Metals Marking Act or the program of written opinions, or to file a complaint under any of these acts should contact the Competition Bureau's Information Centre:
Web site
Address
Information Centre
Competition Bureau
50 Victoria Street
Gatineau, Quebec
K1A 0C9
Telephone
Toll free: 1-800-348-5358
National Capital Region: 819-997-4282
TTY (for hearing impaired) 1-866-694-8389
Facsimile
819-997-0324