They wouldn’t be alone. But that’s no reason to throw these new competition rules in the “dunny” just yet. We can take a lesson from our mates in Australia who are swiftly adding sustainable finance as a claim to fame along with sensational natural beauty and colourful idioms.

In last week’s federal budget, the government committed to reforming its anti-greenwashing legislation, which has created uncertainty in the market and inhibited reporting that investors rely on. Bill C-59, passed in 2024, created a significant shift in Canada’s regulatory landscape by amending the Competition Act with the intention of restoring trust in environmental communications following widespread evidence of consumer skepticism of corporate sustainability claims.

High stakes for firms

It’s certainly true that greenwashing is bad for consumers and bad for the environment. Government action to address it in competition law is entirely appropriate. However, C-59 has created significant concern over litigation risk across corporate Canada. Why?

First, we can expect that private disputes will surge since private parties – such as competitors, consumer groups or nongovernmental organizations – can bring claims before the Competition Tribunal, provided the cases are deemed to be in the public’s interest.

Australian regulators have developed clear guidance, backed by enforcement actions and cross-agency coordination.

 – Thomas Walker and Maya Saryyeva, Institute for Sustainable Finance

Second, there is a “reverse onus” requiring anyone making environmental claims to prove that the claims are based on “adequate and proper tests” or “internationally recognized methodology” – a vague standard open to interpretation despite attempts by the Competition Bureau to provide guidance. Moreover, the Competition Tribunal may order companies to pay back the profits derived from greenwashing and give the money to people who were affected, essentially mirroring a class action system outside the civil court framework.

Finally, there is the scale of potential penalties: up to $10 million for a first violation, triple the benefit derived, or 3% of worldwide revenue if the value of the benefit cannot be reasonably determined. That’s “big bikkies” for any firm.

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Of particular concern for financial institutions is that the law does not clearly distinguish between marketing claims aimed at consumers and ESG (environmental, social and governance) disclosures intended for investors. Consumer-facing information is directed at the public with the purpose of influencing purchasing behaviour or enhancing brand reputation, while disclosures for investors are directed at shareholders, analysts and financial markets. Their purpose is to inform investment decisions by showing how ESG issues and risks affect a company’s financial performance or long-term strategy. This blurring of categories in the law could inadvertently chill legitimate sustainability reporting, potentially making it harder for Canadian firms to attract capital from global investors who are increasingly focused on climate risk.

In June, the Competition Bureau released updated guidance to address stakeholder feedback. While it provided some helpful clarification, many questions remain. The definitions are not legally binding, and without clear, industry-specific examples, many firms are still unsure how to comply. The bureau’s view that consumer protection rules take priority over securities regulation has also not eased worries about overlapping regulations.

The Australian model

Australia’s approach is more mature and robust than Canada’s. Australian regulators – including the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC) – have developed clear guidance, backed by enforcement actions and cross-agency coordination.

The Australian framework offers specific substantiation standards for ESG claims; detailed examples of compliant versus non-compliant statements; strong alignment between financial and competition regulators; and a track record of proactive enforcement, especially in superannuation fund and investment marketing, in contrast to C-59’s private right of action.

While Australia shares Canada’s intent to curb greenwashing, its detailed, regulator-coordinated framework, its sector-specific examples, and its phased mandatory climate-reporting requirements provide greater legal certainty and reduce the risk of discouraging voluntary ESG disclosures, a crucial factor for any country seeking to align its capital with net-zero goals.

Improving the regulation

Bill C-59 is an important step toward strengthening consumer protection and restoring integrity in corporate environmental claims. However, its ultimate success will depend on whether the federal government and regulators can resolve remaining uncertainties and avoid unintended consequences. From examining the Australian example and public feedback in Canada, the following recommendations emerge:

The Competition Bureau should issue clearer guidance, including sector-specific examples. Note, however, that questions will remain about whether following guidance would reduce a firm’s litigation risk. It is ultimately up to the courts to interpret the legislation.

As well, there should be stronger coordination between the Competition Bureau and financial regulators to ensure that policy goals are aligned. Additionally, Canadian Securities Administrators should restart its long-delayed process to make corporate climate-related reporting mandatory and aligned with standards set out by the Canadian Sustainability Standards Board. Compulsory disclosures would enhance clarity for both businesses and investors.

At least while the legislation is being reviewed, the federal government should suspend the private right of action to reduce the risk of litigation. Plus, the federal government should amend the legislation to implement safe-harbour provisions for forward-looking disclosures, which would offer legal protection to companies that are attempting to make crucial projections about the future that might inform capital allocation decisions but are dependent on subjective assumptions.

With these improvements, Canada can move closer to a regulatory environment that promotes both accountability and climate-aligned capital flows, without deterring corporate transparency. That would be a “cracker” outcome for everyone.

Thomas Walker is executive director (academic) of the Institute for Sustainable Finance (ISF) at Smith School of Business, Queen’s University. Maya Saryyeva is director of ISF.

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While opinions may diverge on the best policy approaches, one truth remains: achieving these goals demands substantial financial investment. And while government action is crucial, relying solely on public spending will not suffice.

At the Sustainable Finance Forum this week in Ottawa, we are bridging the gap between the capital providers, the policymakers and the people with innovative ideas to scale investments that address these urgent priorities.

Canada has made significant strides recently, but we have merely scratched the surface of our potential. Other jurisdictions around the world are advancing rapidly by establishing sustainable finance policies to support investment in environmental and social priorities, including Europe, Australia, Asia, and even U.S. states like California, the world’s fifth-biggest economy.

So, can Canada seize this opportunity for the benefit of Canadians? We think so. Here are five transformational strategies we’re exploring during our time in Ottawa.

Adopt a green and transition taxonomy

In October, the federal government announced its plan to develop a green and transition “taxonomy” to provide a clear definition for a green or transition investment, helping eliminate confusion and prevent misleading claims about environmental benefits. Supported by Canada’s 25 largest financial institutions, this initiative is crucial for accelerating capital flows to climate solutions.

An important next step will be for the taxonomy governance structure to be announced and decarbonization strategies established for major industrial sectors identified by the Sustainable Finance Action Council. More than 40 global jurisdictions have taxonomies or will soon, with Australia drawing directly from Canada’s Taxonomy Roadmap Report. And they are already seeing the benefits. The European Union, for example, has had a considerable boost in taxonomy-aligned investments.

Make climate disclosures mandatory

Investors need the full picture to make climate-smart choices. That means companies must come clean about their climate risks and carbon footprints, particularly large, heavy emitters. While some do this voluntarily, quicker progress is needed.

Some Canadian companies will also be subject to reporting based on existing international regulations. But it’s time to make disclosures mandatory in Canada. Without decisive Canadian leadership, our companies will be at a disadvantage trying to navigate international reporting on their own.

Additionally, we expect the forthcoming Canadian Sustainability Standards Board reporting standards to be closely aligned with the International Sustainability Standards Board in terms of rigour, scope and timelines. Canada is a small market competing for global climate capital; we need to level the playing field.

Work with social innovators 

Canada’s social innovators are poised to tackle pressing challenges. Deploying repayable capital among social purpose organizations – a core focus of the Social Finance Fund program – is vital in empowering those who are addressing some of our toughest grassroots challenges.

But capital alone is not enough. An ecosystem approach is needed to improve market access, improve data and reduce regulatory barriers. As a first step, ensuring that social purpose organizations are eligible for business support programs and expanding existing programs to incorporate social and environmental objectives will support non-profits and co-operatives in addressing issues like housing and food security.

Strengthen social finance intermediaries and capital supply

Investing in social finance intermediaries like the Canadian Co-operative Investment Fund or Raven Indigenous Capital Partners is critical for building capacity and developing infrastructure. Introducing legislation like the U.S.’s Community Reinvestment Act could create durable support to seed Canadian community-development financial institutions, leveraging Canada’s strengths in credit unions. Additionally, tax incentives for qualified impact investments can increase supply and lower capital costs. The use of the federal balance sheet to de-risk larger impact-bond issuances is an urgent need and obvious opportunity for growth.

Update charities regulations and legislation

Canada’s endowment disbursement quota (DQ) could be modified to incentivize the deployment of endowed capital by philanthropic foundations into impactful ventures. Strengthening guidance for program-related investments will align Canada’s regulatory framework more closely with that of the United States, which allows those investments to offset DQ requirements effectively.

The time to act is now

To achieve these priorities and more, Canada must act decisively. By adopting the right regulations and creating supports such as tools, data and education, we can position ourselves for success. Without these measures, we risk falling behind in a fast-evolving market. The upcoming federal budget is an unmissable opportunity to build a financial system that is resilient, forward-looking and sustainable. This is our moment to step up and join world leaders in sustainable finance.

Maya Saryyeva is interim executive director at the Institute for Sustainable Finance at the Smith School of Business at Queen’s University. Graham Singh is CEO of Relèven and vice chair of the Table of Impact Investment Practitioners. Michael Toye is executive director of the Canadian Community Economic Development Network. The authors’ organizations are presenting partners of the Sustainable Finance Forum, working in the fields of sustainable finance, social finance and impact investing, respectively.

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