Canada’s New Greenwashing Law Stands to Impact US Brands
With the emphasis on sustainability growing alongside consumer awareness, greenwashing—or making false or misleading claims about the positive environmental impact of a product—has become rampant.
According to recent data compiled by Zippia, 72 percent of North American and 58 percent of global companies admit to embellishing their ecological performance for commercial gain.
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Now, the Canadian government is looking to put an end to the deceptive practice with new legislation targeting greenwashing. An update to the country’s Competition Act via Bill C-59 enacted on in late June includes a provision regulating environmental claims in product marketing.
According to the amended law’s section on deceptive marketing practices now stipulates that companies are no longer allowed to make environmental claims without solid data or certifications to prove their validity. Brands will be found in violation if they claim “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.”
A number of certifications and standards pertaining to sustainability exist in the textile and apparel space, including Oeko-Tex, Forest Stewardship Council (FSC), Global Organic Textile Standard (GOTS), and the Organic Content Standard.
Notably, the Competition Act applies not only to Canadian companies, but to those based in other countries that do business in Canada. Penalties for greenwashing under the law are steep, and can include fines of $10 million to $15 million, three times the value of the profit from the deceptive practices, or three percent of the company’s annual revenue depending on the offense.
The Competition Act amendment comes just a month after Canada’s Competition Bureau opened an inquiry into activewear giant Lululemon after an environmental non-profit accused the Vancouver-based company of making misleading statements about its environmental impact.
Stand.earth filed the anti-competition complaint, claiming Lululemon is “pouring gas on a burning planet” by “creating more planet-harming emissions each year than half a million cars” while simultaneously touting its “Be Planet” pillar for sustainable investment.
Lululemon isn’t the only apparel brand accused of greenwashing in recent years. In March, Asos, Boohoo and George at Asda signed formal agreements to be truthful in their sustainability claims following an investigation by the U.K. Competition and Markets Authority. A number of European brands such as H&M, Primark and Zara have dropped supposedly eco-conscious labels over the past year in the wake of the European Union’s decision to tighten regulations surrounding greenwashing.
In mid-June, the EU’s European Council recommended the use of the Product Environmental Footprint to measure the environmental impact of apparel and footwear as part of its position on the green claims directive. According to the directive, “[C]ompanies should use clear criteria and the latest scientific evidence to substantiate their claims and labels. Moreover, according to the general approach, environmental claims and labels should be clear and easy to understand, with a specific reference to the environmental characteristics they cover (such as durability, recyclability or biodiversity).”
Canada’s Competition Bureau, which operates similarly to the U.S. Federal Trade Commission, will enforce its newly amended law. And with environmental groups growing increasingly savvy at uncovering falsified claims by brands, regulators likely will have their hands full fielding complaints.
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