A decommissioned pumpjack, right, sits idle beside a functioning one drawing out oil and gas from a well head near Carstairs, Alta., Tuesday, April 1, 2025.Jeff McIntosh/The Canadian Press
Federal legislation aimed at combatting greenwashing has prompted companies to delete all kinds of public messaging, raising questions about whether the new rules are doing what they were intended to do or actually hindering environmental progress.
Last week, Royal Bank of Canada dropped its sustainable finance targets, including its goal of directing $500-billion to decarbonization efforts and a range of other environmental and social initiatives, citing the legislation, Bill C-59, as one reason for the move.
That put the bill back in the headlines just when corporate sustainability and climate action are being overshadowed by economic uncertainty brought on by U.S. President Donald Trump’s tariffs and anti-ESG policies.
RBC said legal risks posed by Bill C-59’s anti-greenwashing amendments restrict its ability to report several metrics, partly because there are no established methods for measuring some of them. It also said it may not have measured some factors appropriately.
Supporters of the legislation say corporate decisions to expunge some materials show it is working. Some business groups, notably those tied to natural resource sector, criticize it as overreach.
Two organizations, Alberta Enterprise Group and British Columbia’s Independent Contractors and Businesses Association, launched a constitutional challenge of the new rules, claiming they infringe on corporations’ freedom of speech by quashing debate on environmental issues.
There’s no doubt companies are scrutinizing their communications about sustainability measures far more closely.
“If the intended impact was to force organizations to look very critically at their legal risk relative to these new anti-greenwashing measures, I’d say, yes, so far it has been effective in achieving that objective,” said Conor Chell, the national leader of ESG law for KPMG.
However, companies have been left wondering which materials are at risk of being offside and whom the legislation is ultimately seeking to protect – consumers, investors or other stakeholders, said Mr. Chell, who advises corporate clients on these issues.
When the legislation received royal assent last year, several energy companies scrubbed environmental materials from their websites and social media feeds, citing legal uncertainty. The Alberta government has been vocal in its opposition to the bill.
In a speech to the province on Monday, Alberta Premier Danielle Smith said she will form a negotiating team to demand that Ottawa repeal numerous environmental laws, including any “that purports to regulate industrial carbon emissions, plastics or the commercial free speech of energy companies.”
Under the amendments to the Competition Act that went into force last year, companies are at legal risk for making environmental assertions that do not stand up to scrutiny. Corporate communications must be backed up by international standards. Individuals and companies could face sizable fines if found liable.
Deciding which standards are valid is a top concern, though the Competition Bureau, which is charged with enforcing the legislation, said it will recognize methodologies deemed credible in two or more countries that result in “adequate and proper substantiation.”
It has not offered specific examples, however.
The next steps in the process include finalized guidelines from the bureau after two consultation periods and the beginning of private right of action – the ability of individuals to bring complaints to the Competition Tribunal. That is expected to result in more actions.
Julien Beaulieu, a competition lawyer, said he believes the risks have been exaggerated by opponents. He noted that most companies will be able to keep disclosing environmental information. RBC, for instance, announced its deletions in its own sustainability report, which is 152 pages long.
“That being said, what matters is the perception of legal risk, and now, the Competition Act seems to provide a good excuse for firms to refuse to disclose information, at a time where disclosures are increasingly contentious south of the border,” Mr. Beaulieu said.
Institutional investors, meanwhile, are demanding more environmental data as a key part of their risk management processes for buy-and-sell decisions. Many decried a recent decision by Canadian Securities Administrators, the umbrella group for provincial securities commissions, to halt work on making climate-related reporting mandatory.
The Competition Bureau said it is focused on marketing and promotional claims, not materials aimed at investors. “However, if the information in those materials is then used by a business in promotional materials, the bureau would consider them as marketing claims,” bureau spokesperson Anna Maiorino said in an e-mail.
Mr. Chell said that blurs the line between consumer and investor protection and raises questions about whether some complaints would be better handled by securities regulators.
“We’ll have to see how it all unfolds heading into June – how the Competition Bureau decides to enforce and which of the private right of action complaints they decide to take forward,” he said.