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.

The post Australia’s anti-greenwashing law offers a model for Canada appeared first on Corporate Knights.

As temperatures climbed and our forests and communities burned over the last year, several Canadian companies abandoned their sustainability commitments. These companies joined the global ranks of Amazon, Walmart, FedEx, Delta, PepsiCo and numerous banks and fossil fuel companies in weakening their climate promises.

While one might think fear of the U.S. regime had brought this on, the Royal Bank of Canada, Maple Leaf Foods, the Canada Pension Plan and many others instead pointed to a homegrown enemy: Canada’s relatively new anti-greenwashing law, Bill C-59. This outcry became particularly virulent when a new private right of action came into effect in June 2024, a year after the law itself, allowing private plaintiffs to sue for deceptive marketing before the Competition Tribunal.

Greenwashing is communication that misleads people into overly positive beliefs about an organization’s environmental activities. Basically, companies aren’t walking the talk. Canadian lawmakers saw this as impeding fair competition and harming Canadian consumers, so Bill C-59 required evidence to back up environmental claims. Simple.

Or not. Several large Canadian businesses have been arguing loudly against the bill since it was passed. Rather than simply offering evidence to back up their environmental claims, many stated that the law was too complex and risky and that they were instead doing sustainability in secret by “greenhushing.”

As one of the leading global scholars studying greenwashing and greenhushing, let me offer some clarity. In short, I don’t think that word means what they think it means. Greenhushing refers to companies taking genuine actions to reduce their environmental impacts but choosing to downplay or stay silent about their actions publicly. Firms that are truly greenhushing are walking but not talking.

You may see where I’m going here, but let me expand.

Greenhushing means a firm is walking the walk

A firm that is greenhushing is taking genuine action to decrease its environmental impact. Those doing so seriously are likely using at least one of the standards, measures and metrics devised by scientists and international bodies to aid firms in these reductions. This is well-established territory. We know how to measure most environmental impacts, and we know how to measure reductions in those impacts.

In a recently published paper, the first of its kind, colleagues and I interviewed more than 50 firms in the wine industry that truly are greenhushing. It turned out that even though they weren’t public about it, all but two were certified to at least one known standard (Organic, Biodynamic, LEED, Fair Trade, etc.). These certifications cost time and money. Yet firms told us they were certifying to learn from experts, have a plan and metrics to follow, compare themselves to competitors, and keep themselves honest. Greenhushing is not “choose your own adventure,” and it certainly does not mean you use either no metrics or your own more favourable metrics.

If any of us wants to buy a car with better gas mileage, for example, we are very unlikely to simply take the word of the salesperson. We want a number verified by someone credible who is not selling us the car, and we want that to be a number we can compare across cars and companies. Whether they put that number in the ad for the car is a different matter, but we still want some good solid evidence.

Greenhushing means a firm is not talking the talk

Talking very publicly about how you are not going to talk about maybe doing something secretly sustainable is still talking. Of course, many of the greenhushing firms I studied do tell select audiences what they are doing. But when I hear these vague yet very public claims of secret “greenhushed” sustainability, I am deeply suspicious. When we now hear how actively they were talking to politicians in backrooms about their supposed greenhushing? Well, let’s just say my greenwash-meter is on overdrive.

If we are concerned about honest and innovative green Canadian firms greenhushing, as we should be, the best way we can support them is by stopping greenwashing.

– Wren Montgomery, cofounder, Greenwash Action Lab.

If not greenhushing, what are these firms doing?

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.

With research showing that upwards of 50% of green claims are greenwashing, many of the firms who were being silent had taken Bill C-59 seriously and had stopped making unverifiable claims. But, if they weren’t doing anything credible to begin with, they weren’t greenhushing. They had merely stopped greenwashing.

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All that being said, some firms do legitimately greenhush, like the ones I research. But my research found something fascinating: the primary reason honest green businesses weren’t willing to talk about sustainability was not stringent legislation or fear of backlash. Instead, they thought there was too much greenwashing in the market and they would be lumped in with all the other greenwashers if they did more talking.

To summarize the research, if we are concerned about honest and innovative green Canadian firms greenhushing, as we should be, the best way we can support them is by stopping greenwashing. Luckily, that’s what Bill C-59 and the Competition Bureau had set out to do.

If we want to permit climate disinformation to continue to disrupt markets, inhibit sustainable innovation and drive out genuine green companies? Unfortunately, that’s what Carney’s budget has set out to do.

Wren Montgomery is an associate professor at Ivey Business School at Western University and cofounder of the Greenwash Action Lab.

The post Are corporate claims of ‘greenhushing’ just more greenwashing? appeared first on Corporate Knights.