Submission to the Competition Bureau regarding new guidelines regarding environmental claims

Competition Bureau
50 Victoria Street
Gatineau, QC Canada
K1A 0C9

Submitted via electronic portal at: https://competition-bureau.canada.ca/guidance-feedback-form

RE: Competition Bureau seeks feedback on its new guidelines regarding environmental claims

The Calgary Chamber of Commerce appreciates the opportunity to provide a submission to Canada’s Competition Bureau in response to the public consultation on the new proposed guidelines regarding environmental claims.

The Calgary Chamber – and our business community – value the importance of combating greenwashing, recognizing accurate reporting is necessary to ensure veracity and clarity on how businesses are impacting the environment. However, the arising unintended consequences must be recognized and managed to ensure businesses have clarity on the rules by which they will be measured, can meet existing reporting requirements and be protected against malintent. Decarbonizing Canada’s economy is one of the greatest challenges – and opportunities – of our time. We need governments to work with businesses to drive the innovation needed to achieve our ambitious climate goals.

Following robust engagement with our member businesses across sizes and sectors – including agriculture, energy, financial, small businesses, transportation and logistics, telecommunications and legal services – we contend that while some of proposed language in the guidelines is directionally helpful, it does little to provide the clarity and certainty businesses need. Guidelines, as stated by the Bureau, are not legal documents – they are intended to provide general information and are not legally binding. As such, they cannot address the inherently flawed language found in the amendments to subsections 74.01(1)(b.2) in the Competition Act. This is duplicative policy that will prevent businesses from being able to attract the capital needed to make investments in decarbonization, stifling innovation and further contributing to Canada’s declining productivity.

While we recognize the Competition Bureau was not responsible for drafting and passing the initial amendments introduced in Bill C-59, we strongly believe this legislation will have significant negative impacts across all business sectors and sizes. As such, we maintain our strong recommendation that the Government of Canada withdraw the amendments to subsections 74.01(1)(b.2) in the Competition Act, recognizing that existing legislation protects against greenwashing, and the unintended consequences resulting from these amendments cannot be meaningfully addressed through guidelines.

Despite the directional information provided by the Competition Bureau in the proposed guidelines released on December 23, 2024, uncertainty surrounding internationally recognized methodologies, promotional representations as compared to representations made to appeal to investors, potential investors or shareholders, and the private right of action persist.

Internationally Recognized Methodologies

The language in Bill C-59 is irresponsibly vague – specifically as it pertains to “internationally recognized methodologies.” Notwithstanding this immense concern, the language provided in the proposed guidelines is also too ambiguous to provide the certainty businesses require. The proposed language states that the Competition Bureau will likely consider methodology to be “internationally recognized” if it is utilized in two countries, this does not specify what body – government or otherwise – must recognize the methodology for it to be considered valid. As it stands, companies wishing to release plans for future climate actions, demonstrate their existing environmental record, or showcase investments in nascent technologies to investors will now be required to comply with the currently undefined internationally recognized methodological standard or standards to prove their statements. Currently, international methodologies for calculating climate related disclosures exist – such as those being developed by the International Sustainability Standards Board, however no such standards currently exist to meet the definition of an internationally recognized methodology found either in the legislation or the proposed guidelines.

Without certainty of which methodologies the Bureau will consider adequate to substantiate claims, it remains impossible to comply with this law, leaving businesses open to targeted, excessive or malicious litigation. Additionally, the lack of clarity will significantly compromise businesses’ ability to access capital through lenders and investors who require disclosure around decarbonization targets and other environmental goals such as net-zero ambitions that may or may not be accepted by the Bureau. In fact, it can be argued these guidelines contravene disclosure requirements for publicly-traded companies that need to comply with securities regulations. It also has the potential to have an outsized negative impact on small and medium-sized businesses, who have less capacity to navigate unclear standards surrounding methodologies and also need to raise capital. Given this, the Bureau must commit to urgently defining internationally recognized methodologies, based on close consultation with organizations such as the Canadian Securities Administrators and businesses.

Recommendations:

• Clarify and define what internationally recognized methodological standards will be accepted to substantiate claims of environmental benefit. Moreover, the Bureau should recognize methodologies that are currently accepted by Canadian governments and regulatory bodies, noting Canada’s stance as a G7 nation at the forefront of climate protection. Additionally, given technologies related to environmental innovation continue to evolve, definitions must provide adequate flexibility in compliance and include regular review periods.
• Delay enforcement of these amendments until such time as international methodological standards have been designated in consultation with the business community. Given the significant financial penalties and the current impracticability of the amendments, businesses cannot comply with these amendments until they know with certainty the standards under which they will be held to. Further, we suggest enforcement be delayed until methodologies are adopted by other countries, ensuring Canada is not at a further competitive disadvantage – and cross-border firms do not have to comply with contradictory disclosure requirements.

Representations

The Bureau shares the following language in the proposed guidelines: “The Bureau’s focus is on marketing and promotional representations made to the public, rather than representations made exclusively for a different purpose, such as to investors and shareholders in the context of securities filings.” Despite this, the guidelines do not provide the certainty needed for businesses for multiple reasons. There is significant ambiguity in this statement – for example, were a business to publicly post their ESG reporting it may be subject to consideration as a promotional representation, despite it being intended to disseminate information to investors and shareholders. Further, as aforementioned, the proposed guidance cannot provide the legal certainty businesses require given that guidance is not legally binding.

Recommendations:

• The Bureau must clarify what statements, claims or representations will be considered under these amendments. As it stands, the language regarding representations is vague, and while the Bureau’s focus may be on marketing and promotional representations, this may implicate several communications targeted to different audiences, including investment attraction, shareholder relations, and stakeholder communications. It remains unclear whether these representations would be subject to the amendments to the Competition Act found in Bill C-59.

Private right of action

With leave of the Tribunal, private actors will be able to challenge companies on the veracity of their commitments or representations, with companies liable for the costs to defend themselves such proceedings, whether allegations are ultimately found to be legitimate or not. If they are unsuccessful in meeting the currently undefined criteria under the Competition Act, businesses could be subject to penalties as high as three per cent of global revenues.

The Bureau must be vigilant, ensuring bad-faith actors are not taking advantage of the ambiguity in the new provisions to bring frivolous proceedings against businesses. Further, this will create massive financial risk for any organization sharing their work to protect or restore the environment or mitigate adverse environmental and ecological effects. Given the potential increase in the administrative burden presented by these changes, small and medium-sized companies may be disproportionately impacted by this amendment as they will not have the necessary resources or internal capacity in legal, regulatory and compliance to adjust their public statements or defend themselves against potential proceedings from the Competition Tribunal.

Recommendations:

• Withdraw the private right of action clauses in relation to section 74.01(1)(b.2), recognizing that the Bureau has the expertise, knowledge and resources to appropriately investigate firms or organizations that are perceived to be greenwashing, rather than individuals who may have ulterior motives for pursuing private rights of action.
• Develop a screening process through future guidance or internal Bureau processes to ensure the reverse onus is not abused by private parties. Noting the severe cost impact to businesses that frivolous litigation poses, The Tribunal must assess claims on a case-by-case basis, ensuring that there is an objective and verifiable need to litigate, prior to bringing proceedings against an organization or firm. Third party claims should only be considered for claims that are legitimate and intentional violations of the Competition Act.
• Delay enforcement through private right of action and the Tribunal system until such time as certainty and clarity can be provided to businesses through directives or further policy as needed. Noting that there is no case law to reference regarding the requirement to satisfy an adequate and proper substantiation for claims of environmental benefit in accordance with internationally recognized methodology.
• Clarify all definitions in the amendments, specifically noting the mention of “public interest”, in reference to the Tribunals capability to grant leave to make an application under section 74.01, if it is satisfied that it is in the “public interest” to do so.
• Engage with provincial securities regulators, the CSA and CSSB to ensure the legislation does not – and will not – contravene existing legislative provisions, which are provincially governed.

Closing

As noted by Environment and Climate Change Canada in their submission regarding the drafting of the proposed guidelines, certain decarbonization technologies are not fully known or fully tested and regulations pertaining to them may be incomplete or nascent, as such, net-zero planning should be seen as an evergreen process. It is not realistic for all businesses and governments to have fail-proof plans today to achieve their full-paths to net-zero emission from all sources by 2050.

The Calgary Chamber, and its members, remain committed to real emissions reduction and value the importance of combatting greenwashing. However, the changes to the Competition Act introduced in Bill C-59 have already had significant unintended consequences that will continue to impact Canadian businesses decarbonization efforts, innovation across sectors of the economy and Canadian productivity writ large.

We again reiterate our recommendation that the Government of Canada withdraw the amendments to subsections 74.01(1)(b.2) in the Competition Act, recognizing existing legislation protects against greenwashing, and the unintended consequences resulting from these amendments cannot be meaningfully addressed through the development of guidelines.

Sincerely,

Deborah Yedlin
President & CEO
Calgary Chamber of Commerce  

ABOUT THE CALGARY CHAMBER OF COMMERCE  

The Calgary Chamber of Commerce exists to help businesses reach their potential. As the convenor and catalyst for a vibrant, inclusive and prosperous business community, the Chamber works to build strength and resilience among its members and position Calgary as a magnet for talent, diversification and opportunity. As an independent, non-profit, non-partisan organization founded in 1891, we build on our history to serve and advocate for businesses of all sizes, in all sectors across the city.