36. What Canada’s new greenwashing legislation means for your business

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Canada has introduced new legislation to counter greenwashing, which is already in effect. The legislation, called Bill C-59, is a significant amendment to Canada's Competition Act and aims to address false or misleading environmental and social claims. The penalties for greenwashing can be severe, ranging up to $10 million or 3% of the company's global annual gross revenue. The legislation applies to every business operating in Canada, regardless of size or industry. Organizations can take steps to counter greenwashing, such as educating themselves, reviewing their communications, and using existing standards and certifications.


Takeaways

Canada has introduced new legislation, Bill C-59, to address greenwashing
The penalties for greenwashing can be severe, up to $10 million or 3% of global annual gross revenue
The legislation applies to all businesses operating in Canada
Organizations can counter greenwashing by educating themselves, reviewing their communications, and using existing standards and certifications

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Episode Transcript

Speaker 1 (00:00):
Canada just announced new legislation to counter
greenwashing that is already ineffect.
Is your business ready for it?
Welcome to the circular future,your access to thought leaders
and innovations.
To help you be a businesssustainability champion, even if
it's not your core job, I'myour host, stephanie McLarty,

(00:23):
head of Sustainability atQuantum Lifecycle Partners.
This new legislation ongreenwashing represents a
significant shift in Canada'sregulatory landscape, and I've
heard folks reference it as themost significant change for
businesses in two decades.
I have to admit, when I saw theannouncement of the greenwashing

(00:45):
legislation, I thought great.
And I honestly didn't think awhole lot about it, since we're
mindful at Quantum to reallywalk our talk and, after all,
courageous integrity is one ofour core values.
And it was a few weeks later,when I really dove into the
details of this legislation,that I was really astounded by

(01:07):
the weight and the implicationsof it.
I immediately shared the infowith our senior leaders and
thought every business reallyneeds to know this.
So hence we're here on thepodcast.
So let's dive into what thelegislation is, who it's for,
why it's important and what youcan do at a high level to manage

(01:29):
the risk associated with it.
And hey, of course I'm not alawyer, so always consult your
own legal counsel for yourspecific business.
Okay, bill C-59, that's whatit's called is a significant
amendment to Canada'sCompetition Act and it's aimed
at addressing greenwashing,which is the practice of making

(01:52):
false or misleadingenvironmental and social claims
to promote your products,services and or business
interests.
And there's really two keyaspects to this legislation.
Firstly, regardingenvironmental and social claims
for products and services Okay,we're talking products and

(02:15):
services here.
Proof must be provided by thecompany making the claim based
on an adequate and proper test.
Secondly, regarding theenvironmental claims for
companies and brands so this iscompanies and brands we're
talking about now the companymust prove the claim is based on

(02:36):
an internationally recognizedmethodology.
This legislation came intoeffect on June 20th 24 and is
effective immediately.
So anything you say or put outinto the market on or after June
20th 2024 is applicable.
There is no waiting period forthis to prepare, but anything

(03:00):
previous to June 20th is notapplicable.
Okay, so why is this important?
Why should businesses reallycare?
First of all, let's talk aboutthe penalties.
They are severe.
Penalties for greenwashing canrange up to $10 million or three

(03:21):
times the value of the benefitderived from the claim, or 3% of
the company's global annualgross revenue, whichever of
these numbers is greater.
So let me say that again up to$10 million, or three times the
value of the benefit, or threetimes of global revenues,

(03:43):
whichever is the biggest number.
And of course, that doesn'tinclude long lasting impacts,
such as harm done to your brand,which may be difficult to
quantify.
Another important factor isthis bill is characterized by
reverse onus.
The onus is on you to proveyour claims.

(04:07):
In other words, the burden ison you, the advertiser, to
ensure everything you say issubstantiated, and if there's a
complaint, it's almost as ifyou're guilty until you prove
you're innocent.
And before you go thinking thatyour organization may be exempt

(04:27):
, know this the legislationapplies to every business
operating in Canada, regardlessof size or industry, and really
that includes any internationalbusiness that does business in
Canada or advertises in Canada.
So what should you be carefulof?

(04:48):
There are several types ofgreenwashing and as I've been
learning more about thislegislation and the implications
, I'm going to point to KPMG,who I think has done a great job
of summarizing them into fivecommon types of greenwashing.
Firstly, empty or exaggeratedclaims, saying something which

(05:09):
is usually aspirational withoutthe proof to back it up.
Number two selective disclosureor hidden trade-offs, so
choosing to only share data orpractices that look good rather
than a complete picture.
Number three omitting data orhaving outdated info, so that

(05:34):
could be not referencingmethodology or pointing to
limitations that a data set mayhave.
Number four irrelevant ormisleading graphics or visuals,
so this could be suggestiveimages without the substance to
back it up.
The example I heard was showingwomen in hard hats to show

(05:57):
diversity in the trades, butwithout having actual data or
substance to go with the image.
This could be seen asgreenwashing.
And finally, number five, vaguewording or unspecific goals or
targets.
What are some of the key wordsto be cautious around here?
Think about the words likeclean, sustainable, green, low

(06:22):
carbon climate leader, carbonneutral, climate friendly or net
zero.
So the words themselves are notso much the issue, but when you
say them without definition orsubstance to back them up.
That's when it's problematic.
So, for example, what does itmean when you say your product

(06:44):
is quote unquote sustainable?
Or what does it mean when yousay your product is
quote-unquote sustainable?
Or what does it mean when yousay you're on the path to net
zero?
Explain it and substantiate it.
So how have organizationsreacted to this legislation.
Well, like most things, therehave been mixed reactions.

(07:05):
There are many companies andorganizations who celebrate a
move like this.
This is needed in the marketand it will separate the
companies doing the right thingversus those who pay lip service
to it.
There are other organizationswho have been very critical, and
one of the biggest criticismsis that the legislation does not
define certain key terms.

(07:27):
Criticisms is that thelegislation does not define
certain key terms, such as whatadequate and proper evidence
really means or what areinternationally recognized
standards, and this all leads togreat uncertainty.
Regardless of whatorganizations may think, know
that this legislation is heretoday and there are significant
potential risks for yourbusiness.

(07:49):
It is worth looking into.
I've already hinted to some ofthe things you can do to counter
greenwashing, but here arethree simple steps.
Number one educate yourself.
Hey, you're listening to thispodcast, so you're already on
your way there.
Keep educating yourself, andit's not even just about this

(08:11):
whole greenwashing legislationIn general.
The whole space of ESG,environmental, social governance
and circularity as a whole isconstantly evolving.
Number two review your currentcommunications to ensure
everything you say issubstantiated.
If you can't prove it or if youare uncomfortable with it, then

(08:35):
take it down.
Number three use existingstandards, frameworks and
certifications where possible.
For example, quantum uses theGlobal Reporting Initiative
framework for our sustainabilityreporting, the GHG protocol for
reporting on greenhouse gasemissions and the US EPA's WARM

(08:56):
model as the basis forcalculating avoided emissions.
The biggest thing pay attentionto this legislation.
And, hey, ensuring you're notgreenwashing is the right thing
to do, and there are nowsignificant, tangible risks for
every business if you doparticipate in greenwashing.

(09:20):
And remember, if you're lookingfor a leader in electronics
reuse and recycling, we'd loveto chat.
Head on over toquantumlifecyclecom and contact
us.
This is a Quantum Lifecyclepodcast and the producer is
Sanjay Trivedi.
Thank you for being a CircularFuture champion in your company

(09:41):
and beyond Vlogging off.