Following a push in the EU and Britain, Ottawa is targeting greenwashing. The basic idea is that when companies make environmental claims, they should be able to back them up.
But the wording of the Canadian legislation is so vague, and at the same time heavy-handed, that critics – including the oil industry – have a leg to stand on when they argue it creates much uncertainty.
The new rules, part of a much larger Bill C-59, came into force in June. False or misleading advertising was already covered by the Competition Act. But the bill amended the Competition Act so that companies must be able to prove their environmental claims about specific products – for example, a car manufacturer must back assertions about low emissions. But weeks before the bill was passed, an anti-greenwashing provision regarding statements about protecting or restoring the environment, or mitigating climate change, was also added.
In response, some webpages were taken down by the Canadian Association of Petroleum Producers, an industry lobby group. And most notably, the Pathways Alliance, the group representing big oil-sands producers and their net-zero-by-2050 commitments, scrubbed their website.
Natural Resources Minister Jonathan Wilkinson said that it was an overreaction. Environmental leaders said it proved the Canadian oil industry’s environmental claims don’t hold up to scrutiny.
But expecting any entity to risk millions of dollars in penalties and thousands in legal defence fees, all based on the potential for claims that they had erred against undefined international standards, is a stretch.
While companies are being told they have nothing to fear if they’re upfront about their work, the Competition Bureau – the overseer of C-59′s stipulations – is accelerating its process for consulting on and providing detailed guidelines around this new law. It’s a move that suggests corporate types are not alone in their concern that the wording is open to many interpretations.
“These guidelines are critical, given the uncertainty of the application and standards of the new environmental claims provisions,” and “the lack of transition period after the date of Royal Assent to allow businesses to consider how best to adapt to this new law,” the firm McMillan LLP said in a statement.
This is the language of the new law: Making claims about the environmental benefits of a business or business activity must be based “on adequate and proper substantiation in accordance with an internationally recognized methodology.” Nobody knows what methodologies will be considered legit.
As McMillan notes, these new terms are not defined and have not been considered by the courts. “Hence, their meanings are uncertain at this time.”
And the penalties are substantial. Under the law, individuals could be fined up to $750,000, or three times the amount of any financial benefit gained, whichever is greater. Companies could face fines of $10-million or three times the financial benefit. If that figure is unknown, a company may have to pay 3 per cent of worldwide revenues.
This all comes at a time when we’re asking companies to disclose more about their environmental endeavours to the public, and to attract investment to reduce their emissions.
The law also follows an as yet unsuccessful private member’s bill from NDP MP Charlie Angus, where he has sought to ban advertising from fossil-fuel producers. Most believed that was a stunt that wouldn’t actually become law or government policy.
Still, Mr. Angus has to be pretty happy at this point. The new law doesn’t target one sector or entity, as his bill did. Clothing or cosmetic retailers, vehicle manufacturers, airlines, utilities or renewable energy firms could all be subject to the vagaries of this anti-greenwashing law.
But net-zero claims of oil producers are particularly in the crosshairs. Energy and environmental economist Andrew Leach has said the situation for oil producers is especially complicated because it’s not only their assertions about emissions from production that could be subject to challenge, but also the emissions down the line from consumption.
Alberta Premier Danielle Smith, always a strong supporter of the industry, called Bill C-59 “draconian” and said it will “prevent private entities from sharing truthful and evidence-based information that happens to oppose the extreme and untruthful oil and gas narrative of the federal NDP and Liberals.”
Beyond those political fighting words, the breadth of this law and the lack of clarity gives the biggest oil players reasonable grounds – at this point – to not engage or talk about their environmental progress, or the work that needs to be done to move forward with carbon-capture commitments.
There is space for anti-greenwashing legislation, but it doesn’t have to be this. The uncertainty is counterproductive, even for those who would like to see big companies held to account.
Editor’s note: This article has been updated to indicate that the private member's bill from NDP MP Charlie Angus is still under consideration.