From ‘greenwashing’ to ‘green hushing’ — companies complain new law stifles environmental efforts

Some corporate leaders say new anti-greenwashing legislation has had the unintended effect of dissuading companies from taking climate action. But environmental organizations and others say that’s a cop out. 

Bill C-59’s changes to the Competition Act were meant to prevent companies from misrepresenting the environmental benefits of their products or practices — known as “greenwashing.” The bill also gave the Competition Bureau more power to penalize companies that can’t back up their claims with detailed evidence.

But critics say requiring all such claims conform to “internationally recognized methodology” leaves too much room for interpretation and makes companies vulnerable to legal action.

Michael McCain, the executive chair and former CEO of Maple Leaf Foods, calls this “green hushing.”

It’s “the opposite of encouragement for companies to do the right thing,” McCain told Laura Lynch, host of CBC Radio’s What on Earth. The changes create so many “obstacles and consequences” to touting a company’s environmental efforts, that the companies stop doing them.  

Royal Bank has “retired” its commitment to facilitate $500 billion in sustainable finance by this year, pointing to changes in the Competition Act. 

Likewise, the investment arm of the Canada Pension Plan dropped its promise to invest in line with Canada’s target to reach net zero by 2050, because of “recent legal developments,” said CEO John Graham.

Tyson Dyck, a lawyer who consults on environmental and climate matters for corporate clients, including many in the energy sector, says clients across the country have been “very concerned” about the changes, which took effect last June. 

He says the business community expected clarity about how to make environmental or climate-related claims. 

Instead, they got “confusion,” he said. “And I think they struggled interpreting the new provisions.”

But environmental groups say no one is forcing companies to talk about their climate efforts, and that corporations should behave sustainably because it’s the right thing to do, not for the boost to public image.

Matt Hulse, a lawyer with Ecojustice, an environmental law charity headquartered in Vancouver, says many companies complaining about the changes were previously alleged to be greenwashing.

They “made ambitious claims around climate and environmental action and have been accused of not following through on those things,” said Hulse.

That suggests, to him, that the “legislation is actually working.’

But McCain says businesses have a legitimate concern that the legislation isn’t written effectively.

“This is a case of very good intentions in the underlying policy with a very grossly negative unintended consequence, which by definition makes it bad policy.” 

The problem, he said, is requiring a company’s claims to be backed up by “internationally recognized methodologies.” 

There aren’t enough internationally recognized organizations or standards, he said, or they are not “scientifically credible, in our judgment.”

Lululemon under investigation for ’greenwashing’ products

What about the standards for measuring emissions in agriculture? And for carbon offsets?

McCain says those don’t recognize the use of offsets in a way that’s viable for Maple Leaf Foods.

“We achieve carbon neutrality,” he said, but “there’s no body today that we know of that would certify that.”

He says it’s “patently unreasonable” to expect a company to spend tens of millions of dollars on environmental works “and not be able to shout from the mountaintop the good things that we’re doing.”

Emilia Belliveau, energy transition program manager for the advocacy group Environmental Defence in Vancouver, says there was good reason for keeping the language in the act flexible — keeping the law itself flexible as best practices change across various industries.

Also, holding companies to internationally recognized methodologies prevents them from doing their own analyses “that can skew the data,” she said.

“It creates a fair playing field across companies so that we’re measuring the same things, and we’re able to make sure that the quality of the data, the evidence that’s being used as proof for these green claims, holds up to rigour.”

Former MP Charlie Angus worked on a number of green initiatives over the years, and voted in favour of the changes. He stands by them.

“You can’t sell a car and say it’s the safest on the road when you know there’s serious problems with it. You can’t sell cigarettes and say, the way they used to, ‘This is the lighter brand of cigarettes,’ when all cigarettes make you sick,” he said.

The changes “make sure that when companies are talking about net zero and reducing emissions, that they actually were telling the truth and not lying.”

The Competition Bureau released its final guidance on the anti-greenwashing legislation on June 5, which both corporations and some environmental groups had hoped would provide more specifics.

Hulse, at Ecojustice, said “there was room for improvement,” but that overall, it’s not that hard for a corporation to establish a basis for their claims, looking to other jurisdictions abroad, and applying well-established principles from accounting and the scientific method.

They can also pay a $5,000 fee to seek an opinion from the bureau about any claim they intend to make — “a trivial amount” for a large corporation, he says.