Australia’s anti-greenwashing law offers a model for Canada

Has Canada’s anti-greenwashing legislation got your legal team feeling like they’re ready to “go walkabout”?

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.