Reflecting on the conversation that we had during our last class with Professor Joel Bakan and his call for the introduction of more regulations into the corporate sphere, I decided to further investigate the steps that the Canadian government is taking in regulating corporations.
I find it to be very worrisome that large corporations appear to shift the burden on the consumer to, in a way, hold corporations accountable by exercising their purchasing power and ensuring that they consume products from “ethical” corporations. While that is a challenging task by itself, an additional barrier to finding products that provide true environmental, or climate benefits is the marketing tactic of greenwashing. Greenwashing marketing strategy is used to lead consumers to believe that a company or an entity is taking steps to protect the environment or that the product is produced in an environmentally cautious way. It also promotes false solutions to climate issues that delay concrete and tangible actions. [1] This is a direct example of a profit-driven corporate scheme that is taking advantage of the general public’s concern for the environment.
In an attempt to increase regulation of environmental claims, the Federal government enacted Bill C-59, amending the Competition Act (the “Act”). Bill C-59 proposes to address greenwashing by amending s.74.01(1) of the Act, which prohibits using false and misleading claims to promote business interests. [2] The amendments are as follows:
- “(a) In the form of a statement, warranty or guarantee of a product’s benefits for protecting or restoring the environment or mitigating the environmental, social and ecological causes or effects of climate change that is not based on an adequate and proper test, the proof of which lies on the person making the representation (the “Product Benefit” provision), or
- (b) With respect to the benefits of a business or business activity for protecting or restoring the environment or mitigating the environmental and ecological causes or effects of climate change that is not based on adequate and proper substantiation in accordance with internationally recognized methodology, the proof of which lies on the person making the representation (the “Business Activity” provision)” [3]
The hope is that companies will take substantial steps in engaging in real, rather than deceptive, environmental actions. Mitigation of the greenwashing risk could allow companies to avoid costly litigation and regulatory risks as well as improve their reputation in the eyes of the consumers. Companies that continue to engage in greenwashing may face sanctions and litigation for noncompliance with the law. [4]
On the other side, there are a number of concerns regarding the potential negative impact of this amendment to the Act. One of them is that the Act limits businesses’ ability to communicate their initiatives and execute their commitments. [5] Additionally, the Act does not define such wording as “adequate and proper substantiation” and “internationally recognized methodology” and these definitions have not yet been considered by the courts, which brings in additional uncertainties. [6]
The businesses will now need to take steps to update their practices to reflect the new regulations as not only regulators but also stakeholders and competitors are now paying closer attention to the greenwashing practices and businesses might face the risk of a complaint to the Competition Bureau. [7]
I am hopeful that these new measures will incentivize businesses to be more ethical in their practises and pay closer attention to providing real and tangible results towards climate mitigation. At the same time, I worry that the businesses, in the face of potential litigation and claims of non-compliance, will reduce their environmental initiatives.
[1] https://www.un.org/en/climatechange/science/climate-issues/greenwashing
[3] https://www.blakes.com/insights/canada-s-new-greenwashing-laws-enacted/
[4] https://ccli.ubc.ca/bill-c-59-anti-greenwashing/
[5] https://www.blakes.com/insights/canada-s-new-greenwashing-laws-enacted/
[7] ibid.
Hi Dana! Thank you for bringing to light the issue of greenwashing. Stepping up efforts in regulating greenwashing statements is no doubt still an encouraging and promising move in and of itself. I personally am deeply concerned about the issue of environmental degradation as well, and this is what always motivates me to research the ways in which we could hold large corporations accountable. I find your concerns about the lack of definitional clarity to be legitimate, and I hope the draft guidance for business on environmental and sustainability claims published by the Australian Competition and Consumer Commission would help mitigate the problem. The report suggests actual examples of how a claim could be not seen as “making accurate and truthful claims”, if, for example, a printing service claims that the paper they use is “made from recycled materials”, when, in reality, the paper only contains 20% recycled material. The business might as well just advertise the product to be “made from 20% recycled material”. Likewise, the statement could claim to be backed up by scientific evidence while still being misleading, if that scientific basis itself is still under dispute or not conclusive. For example, when a bioplastic box brand claims to “biodegrade faster than the leaves in your backyard”, the experiment that backs this up could have been done under restricted conditions. In that case, they might as well just reveal the truth in their advertisement that specify the circumstances where this will happen. The above examples illustrate that one of the primary objectives of regulations may be to enhance the granularity and encourage substantiation of any green marketing statements made by companies, and with this level of transparency, businesses could be pushed to innovate and make a real effort to promote sustainable practices.
Here is the original report: https://www.accc.gov.au/system/files/Environmental%20and%20sustainability%20claims%20-%20draft%20guidance%20for%20business_web.pdf
Hi Dana! Thank you for bringing to light the issue of greenwashing. Stepping up efforts in regulating greenwashing statements is no doubt still an encouraging and promising move in and of itself. I personally am deeply concerned about the issue of environmental degradation as well, and this is what always motivates me to research the ways in which we could hold large corporations accountable. I find your concerns about the lack of definitional clarity to be legitimate, and I hope the draft guidance for business on environmental and sustainability claims published by the Australian Competition and Consumer Commission would help mitigate the problem. The report suggests actual examples of how a claim could be not seen as “making accurate and truthful claims”, if, for example, a printing service claims that the paper they use is “made from recycled materials”, when, in reality, the paper only contains 20% recycled material. The business might as well just advertise the product to be “made from 20% recycled material”. Likewise, the statement could claim to be backed up by scientific evidence while still being misleading, if that scientific basis itself is still under dispute or not conclusive. For example, when a bioplastic box brand claims to “biodegrade faster than the leaves in your backyard”, the experiment that backs this up could have been done under restricted conditions. In that case, they might as well just reveal the truth in their advertising statement that specifies the circumstances where biodegradation will happen. The above examples illustrate that one of the primary objectives of regulations may be to enhance the granularity and encourage substantiation of any green marketing statements made by companies, and with this level of transparency, businesses could be pushed to innovate and make a real effort to promote sustainable practices.
Here is the original report: https://www.accc.gov.au/system/files/Environmental%20and%20sustainability%20claims%20-%20draft%20guidance%20for%20business_web.pdf
Hi Dana! Thank you for your discussion post, this was a very interesting read. This made me think about how many fast fashion brands come up with “environmentally conscious” or “sustainable” lines. I was thinking about this issue and it made me look up the H&M Conscious line to see if there were any claims against the company using false advertising. Unsurprisingly, there was! In the US, a claim was started against H&M alleging that the marking regarding their “Conscious Choice” line of products violated California and Missouri consumer protection laws, as well as the Federal Trade Commission’s Guides for the Use of Environmental Marketing Claims (see link below). Although the court dismissed the claim, I think this is a good example that there are people who are looking to keep corporations accountable. It also serves as a reminder to all corporations that something similar can happen to them. Although no legal action resulted from the claim, there could be potential side effects such as consumers losing faith in the company or boycotting them because of false advertising. Nevertheless, the textile industry, and particularly fast fashion, will be an interesting industry to watch and see how they navigate new concerns around greenwashing.
https://www.reuters.com/legal/legalindustry/guidance-sustainable-claims-after-dismissal-hm-greenwashing-class-action-2023-06-02/