A False Sense of Security? Navigating Canada's Greenwashing Laws

There are many businesses that want to make a positive contribution to sustainability. At the same time, there are also many that would like to be perceived as doing so but would prefer not to do the required work, such as analyzing processes, collecting and reporting data, and making measurable changes to their sustainability strategies. According to recent research, there is a significant substantiation gap related to sustainability claims, in which more than 60% of CEOs believed they were on track to meet their sustainability goals, despite only 30% of them having allocated the required capital and resources necessary to do so.

The practice of not walking the sustainability talk is known as greenwashing, and Canada’s attempts to tackle it have prompted both support and criticism from businesses and consumers. A highly adversarial political environment in Canada and the United States has made sustainability a sensitive topic, and Canada’s solution is a series of amendments to existing greenwashing laws that have pleased almost no one.

The debate about Canada’s greenwashing rules also highlighted the concept of “greenhushing,” which is the idea that companies afraid of accusations of making inflated sustainability claims might be doing the work behind the scenes without speaking publicly about it.

Canada’s first foray into adopting anti-greenwashing provisions was part of Bill C-59, which received royal assent on June 20, 2024. As part of Prime Minister Justin Trudeau’s sustainability agenda, Bill C-59 amended the Competition Act by requiring companies making environmental or climate-related claims to substantiate them using an “internationally recognized methodology.”

However, to support his efforts to navigate the impact of an ongoing trade war with the United States (U.S.) and foster greater economic independence for Canada, Prime Minister Mark Carney has taken a more conservative approach to Canada’s environmental commitments, including new amendments to the greenwashing rules. The new amendments received royal assent and passed into law as part of Bill C-15 (An Act to Implement Certain Provisions of the Budget Tabled in Parliament on November 4, 2025) on March 26, 2026. The amendments remove the requirement that organizations support claims using internationally recognized standards and provide additional restrictions on private access to the Competition Tribunal in relation to deceptive marketing practices.

On the surface, these changes would seem to be a victory for those who criticize sustainability regulations for the imposition of onerous administrative burdens. However, some experts are concerned that the unexpected outcome could be to create even more risk and uncertainty for Canadian businesses.

Same Party, Different Visions: A Tale of Two Prime Ministers

Bill C-59 was introduced under Prime Minister Justin Trudeau, who was a strong supporter of sustainability and whose government passed several strong environmental laws, including the Canadian Net-Zero Emissions Accountability Act. This act legally binds Canada to several climate-related commitments, including achieving net-zero greenhouse gas (GHG) emissions by 2050, five-year national emissions-reduction targets, and a 2030 GHG target of 40–45% below 2005 levels by 2030 as part of Canada’s Nationally Determined Contribution (NDC) under the Paris Agreement.

The greenwashing rules contained in Bill C-59 were intended to support green marketing practices and prevent greenwashing. However, the business community backlash was swift. A policy paper from the Macdonald-Laurier Institute (MLI) asserted that the requirement for supporting environmental claims using an internationally recognized methodology was undefined and vague, particularly for innovative startups whose products or services might not have an internationally recognized methodology.

The MLI also asserted that a reverse onus of proof could subject companies to frivolous or mischievous complaints from individuals under a private right of action, and that the potential punitive fines of up to $10 million for a first offense or 3% of annual worldwide gross revenues were excessive. According to the MLI policy paper, “the amendment has provided consumers with no concomitant benefits and should be repealed in its entirety.”

MLI also said that greenhushing was a significant concern, in which companies were “declining to speak about their environmental performance or climate strategies because they fear financial and reputational risk if they are reviewed under the Competition Act.” Indeed, some Canadian companies, including the Royal Bank of Canada, backed away from their climate commitments, citing C-59 as a restriction on their ability to publicly report on their sustainability metrics.

However, Wren Montgomery, associate professor at Ivey Business School at Western University and cofounder of the Greenwash Action Lab, said in a commentary article that many critics are blurring the line between greenhushing and greenwashing in their public commentary on Bill C-59.

“Talking very publicly about how you are not going to talk about maybe doing something secretly sustainable is still talking,” she said. “If firms are loudly telling us they are still doing green things, yet providing no evidence, this is not greenhushing. It is just our same old friend greenwashing in a different guise. Vague and unsupported environmental claims are greenwashing.”

Essentially, according to Montgomery, many businesses were effectively saying they were no longer greenwashing, since they often were not engaged in any credible sustainability activities to begin with, and therefore the anti-greenwashing provisions of Bill C-59 were doing exactly as they were intended to do.

When Mark Carney became prime minister in March 2025, he brought in a regime that seemed at first to balance his predecessor’s passionate commitment to sustainability with a more business-friendly strategic outlook. One of his first acts as prime minister was to cancel the controversial consumer carbon tax, which was a federal fuel surcharge that had proved deeply unpopular and had contributed to Trudeau’s low approval ratings before his resignation.

Carney’s 2025 budget report indicated that while sustainability was still on the agenda, he was persuaded by the business community’s concerns about C-59.

“The Competition Act was recently amended to create new enforcement provisions for false claims of environmental benefit,” stated the report. “These ‘greenwashing’ provisions are creating investment uncertainty and having the opposite of the desired effect with some parties slowing or reversing efforts to protect the environment. To provide more certainty to the marketplace, Budget 2025 announces the government’s intention to propose legislative amendments to remove some aspects of these provisions, while maintaining protections against false claims.” Bill C-15 went some way towards addressing the business community’s concerns with two significant amendments.

First, it withdrew the requirement for “adequate and proper substantiation in accordance with internationally recognized methodology” for sustainability claims and replaced it with “adequate and proper substantiation.”

Second, it no longer provided third parties with the ability to bring complaints about deceptive sustainability claims directly to the Competition Tribunal.

Both of these amendments would seem to address the business community’s concerns as summarized in the MLI policy paper. However, experts said that despite their good intentions, the changes could potentially do more harm than good.

Do Amendments Bring Relief or Risk?

Environmental supporters, including some in Carney’s governing Liberal Party, are unhappy with the amendments. In parliamentary debate on November 25, 2025, the Liberal MP for West Vancouver - Sunshine Coast - Sea to Sky Country, Patrick Weiler, expressed his disappointment in the amendments.

“While clearer guidance from the Competition Bureau on the acceptable methodologies would have been helpful, there are countless methodologies out there, such as ISO (International Organization for Standardization), ISSB (International Sustainability Standards Board), the GHG protocol, and many others,” said Weiler. “If this measure is removed, it really puts the onus on government to finally finalize the long-promised sustainable finance measures, such as mandatory climate plans for companies and other climate-related reporting for businesses.”

The Competition Bureau had, in fact, issued guidance on the interpretation of internationally recognized methodology in June 2025 as follows:

“The bureau will likely consider a methodology to be internationally recognized if it is recognized in two or more countries. Further, the bureau is of the view that the act does not necessarily require that the methodology be recognized by the governments of two or more countries.”

An analysis by consulting firm KPMG said that while the amendments seem on the surface to provide flexibility, in reality, they could be a root cause of significant problems and uncertainty for businesses.

Regarding the recognized methodology, the analysis noted that without that requirement in place, organizations will simply fall back on the commonly accepted due-diligence standard in competition law, which is that claims must be adequately and properly represented. However, Canadian regulators and courts have generally held that standard to be very high, and most businesses are not prepared to substantiate sustainability claims to that level without an independently verifiable methodology.

The analysis also noted that the removal of the methodology requirement could erode public trust in corporate sustainability claims, since it will raise questions about the definition of substantiation and whether businesses have met it or are simply defining it according to their own needs.

KPMG also noted that removing the private right of access to the Competition Tribunal will likely do nothing to decrease risk for businesses concerned about being held accountable for greenwashing claims. In the period between Bill C-59 and Bill C-15, there were no private complaints regarding sustainability claims made to the Competition Tribunal, possibly because of the cost and complexity involved in doing so. Instead, enforcement actions against greenwashing allegations are finding other avenues, including through securities commissions in Alberta and Ontario and civil lawsuits.

Overall, KPMG said that the amendments will likely increase, not decrease, risks to Canadian businesses.

“Companies will face higher expectations from the public, stricter scrutiny from regulators, more complex evidentiary standards and a growing substantiation gap between what they say and what they can prove,” it said.

As Canada continues to look for innovative ways to secure economic independence and security, including through its fossil fuel capacity, it seems certain that it will need to recalibrate its sustainability commitments to accord with a new reality. So far, all indications point to a pullback from the former government’s sustainability agenda, as was made evident by the resignation of MP Steven Guilbeault, former Canadian Identity and Culture Minister and former Environment Minister under Justin Trudeau, in protest against the government’s proposed support for a bitumen pipeline from Alberta to British Columbia (BC). In the meantime, the onus will be on Canadian businesses to determine for themselves how to manage public and regulatory scrutiny of their sustainability claims.