(left to right: David Frost, Partner; Thomas Fung, Associate; Rease Mok, Summer Articling Student; McCarthy Tétrault, LLP)
Proposed in November 2025, the Budget 2025 Implementation Act, No. 1 (Bill C-15) received royal assent and came into force in March 2026. These amendments to Canada’s Competition Act (the Amendments) revised the legal standard applicable to particular environmental claims about the benefits of a business or business activity. Additionally, the Amendments eliminated a private party's ability to bring certain greenwashing-related applications before the Competition Tribunal.
Although the Amendments remove one aspect of the previous statutory standard and limit private enforcement, they do not eliminate the risk of greenwashing. Uncertainty surrounding the reduced standard continues to prompt many companies to revisit how they describe sustainability initiatives, climate commitments, and other Environmental, Social, and Governance (ESG) matters in public disclosures. Issuers should remain cautious about broad environmental claims as they reassess the current legal standard and await further guidance from the Competition Bureau.
The Amendments
Initial amendments to the Competition Act were introduced in 2024. Among other changes at the time, subsection 74.01(1)(b.2) was a new deceptive marketing provision that applied to representations made to the public about the environmental benefits of a business or business activity. Further, the provision required that representations of environmental benefits of a business or business activity be supported by evidence based on “adequate and proper substantiation in accordance with internationally recognized methodology.” Since the Competition Act did not define "internationally recognized methodology," businesses were left to determine what evidence or external frameworks would satisfy the requirement.
Since the Amendments in March 2026, the current statute no longer uses the phrase “internationally recognized methodology.” Instead, it only remains that environmental claims must be supported by “adequate and proper substantiation.” In other words, a representation that a company is reducing its environmental footprint, advancing a transition strategy, operating sustainably, or delivering climate-related benefits must be held to a standard of whether the underlying support is sufficient.
Why Issuers Should Still Remain Cautious
Although the Competition Act does not define "adequate and proper substantiation," guidance may be drawn from the Competition Bureau's interpretation of the similar phrase "adequate and proper test" in subsection 74.01(1)(b). This subsection requires that product performance claims be based on adequate and proper testing, and the Bureau has described "adequate and proper" as a flexible standard that depends on the circumstances. Canadian courts have similarly interpreted the phrase to mean testing that is fit, apt, suitable, or appropriate in light of the representation being made.
However, to date, no applications have been brought under subsection 74.01(1)(b.2), which governs claims about the environmental benefits of a business or business activity. As a result, broad or aspirational environmental language may create risk where the legal standard is still evolving, and the evidentiary threshold is not yet fully settled. In practical terms, issuers should continue to exercise caution when making generalized claims of environmental leadership or describing the environmental benefits of corporate strategies or operations.
The Complaint Mechanism
Another significant change introduced by the Amendments is procedural. Private parties may no longer seek leave to bring applications before the Competition Tribunal under subsection 74.01(1)(b.2) concerning claims about the environmental benefits of a business or business activity. However, private parties may still seek leave to bring applications under the product environmental claims provision and the other deceptive marketing provisions of the Competition Act.
The Competition Bureau also continues to receive complaints and investigate potential contraventions of the Competition Act through its existing enforcement process. The distinction is important. A private application is a proceeding initiated by another party that requires the Tribunal's permission before it can proceed. By contrast, an application brought by the Competition Bureau is commenced directly by the Commissioner of Competition and does not depend on a private applicant obtaining leave.
Accordingly, while private parties can no longer pursue this particular Tribunal route for business-level environmental claims, companies continue to face enforcement risk. Complaints may still be submitted to the Competition Bureau, the Bureau may investigate alleged contraventions, and environmental claims remain subject to the deceptive marketing provisions of the Competition Act.
Where Uncertainty Remains
The central challenge for issuers is that uncertainty remains regarding what should be disclosed and how environmental claims should be substantiated. While the removal of the phrase "internationally recognized methodology" arguably lowers the statutory threshold, significant uncertainty remains regarding how "adequate and proper substantiation" will be assessed in practice. Issuers must continue to determine how best to support forward-looking environmental commitments and describe the environmental benefits associated with transition strategies, sustainability initiatives, and broader business operations.
The Competition Bureau's current Environmental Claims Guidance, from June 2025, continues to refer to "internationally recognized methodology" because it predates Bill C-15. The Bureau has indicated that it will revise the guidance to reflect the legislative amendments. In the meantime, many of the guidance's broader compliance principles, including ensuring environmental claims are truthful, specific, not exaggerated, and supported by appropriate evidence, remain useful even though references to internationally recognized methodologies are no longer consistent with the Competition Act.
Until updated guidance is released and courts begin interpreting the amended provision, many Canadian companies are likely to continue taking a conservative approach to ESG-related disclosure.
David Frost is a Partner at McCarthy Tétrault LLP. This article was written by: Thomas Fung, Associate; and Rease Mok, Summer Articling Student; McCarthy-Tétrault LLP.