Western Canadian business groups have launched a constitutional challenge against Ottawa’s anti-greenwashing provisions, claiming they infringe on corporations’ freedom of speech by quashing debate on environmental issues.
Alberta Enterprise Group and British Columbia’s Independent Contractors and Businesses Association say the federal government’s contentious changes to the Competition Act have already created a chilling effect on corporate communications, including assertions about environmental performance that may be true and verifiable.
“This significant breach of freedom of expression – including the public’s right to hear, consider, and assess the expression in question – cannot be justified on the basis of an alleged need to shield the public from false or misleading statements,” the plaintiffs said in their statement of claim, filed in a Calgary court this week.
They said businesses are already prohibited from making false or misleading statements about the benefits or impacts of their products and activities under other laws, but that the rules put in place earlier this year are too sweeping. The provisions will prevent “valuable expression” that would help Canadians form their own views on important policy issues, the plaintiffs said.
The court action is seeking to have the anti-greenwashing provisions deemed in breach of the Freedom of Expression section of the Charter of Rights and Freedoms and declared null and void.
The challenge follows a flood of criticism over the anti-greenwashing moves that are part of Bill C-59, especially from the energy sector, other Western Canadian businesses and the Alberta government, which called it a “gag order.”
Under the provision, enacted this summer, companies face legal risk for making assertions about their environmental records that do not stand up to scientific scrutiny. The government said corporate communications must be backed up by international standards, but those remain unspecified. Individuals and companies could face sizable fines if found liable.
In response, several oil and gas companies and industry associations added disclaimers to their websites and social-media feeds, or deleted content, citing legal uncertainty.
“This is a direct attack on free expression and an egregious overreach by the Trudeau government – it’s a slippery slope when we start to rely on a government department to police legitimate debate and dialogue on important public policy matters,” ICBA chief executive officer Chris Gardner said in a statement.
Environmental advocates say the legislation helps protect consumers and investors alike by demanding rigour in green claims as regulators drag their feet implementing mandatory climate-related disclosures.
The government says Canadians expect honesty and transparency from all industries. “The amendments made by Parliament to C-59 were introduced to hold all businesses to the same high standard – ensuring that sustainability claims are not only credible, but verifiable,” Audrey Champoux, spokesperson for Innovation, Science and Economic Development Canada, said Friday.
The Competition Bureau has yet to issue final guidance on the provisions. In July, it offered initial guidelines to help companies navigate the new rules. For example, goals and timelines for achieving environmental objectives, such as reducing carbon emissions, must be supported by clear and specific plans, and not just be aspirational.
Julien Beaulieu, a law lecturer at the University of Sherbrooke, said it will be a difficult case to prove, as there have been unsuccessful challenges to the rules under the Competition Act – made before this year’s amendments – governing performance claims for such things as weight-loss products, pharmaceuticals and hockey helmets.
“It’s still a little uncertain how much specific evidence that you need to have, but it was the same when these other requirements were adopted in the 1980s, and eventually in the courts the guidelines were interpreted and the meaning and the terms got more certainty down the road,” Mr. Beaulieu said.
However, this case is fundamentally different, said Peter Gall, the Vancouver-based lawyer representing the plaintiffs. Rather than judging a company’s claims about its product, the amended legislation could result in one side of public debate being “muzzled,” he said.
“It really goes to the heart of free speech, because it’s about an important public policy issue and the right of the public to hear all sides,” he said.
Meanwhile, the provisions remain in force, and companies will have to comply as the case works its way through the courts – a process that could take years, said Conor Chell, national leader of ESG legal risk & disclosure, at KPMG.