Expand Canada’s greenwashing rules, but nix an under-studied move to advance environmental protections using competition law, the country’s head consumer watchdog is telling policy-makers reviewing amendments to the Competition Act.

In a letter to Parliamentarians, Competition Bureau Commissioner Matthew Boswell recommends [pdf] six changes to the amendments currently being pursued via Bill C-59—legislation that contains a “generational upgrade” of Canada’s Competition Act.

Two of Boswell’s suggestions relate to sustainability and climate action: expanding a clause designed to prevent greenwashing, and removing another one that would permit business competitors to collaborate for environmental good—without fear of falling afoul of the Act.

On greenwashing, he writes that Clause 236(1) adds a new provision to the Act’s deceptive marketing provisions, helping address “certain types of false or misleading environmental claims.” It specifies that claims of a “product’s benefits for protecting the environment or mitigating the environmental and ecological effects of climate change” must be “based on an adequate and proper test.”

But he adds that the clause, as written, has no power against “a significant portion of the greenwashing complaints the Bureau receives”—those that are focused not on products, “but rather more general or forward-looking environmental claims about a business or brand as a whole (e.g. claims about being ‘net zero’ or ‘carbon neutral by 2030’).”

“While these more general claims may not be amenable to ‘testing’ like product performance claims, business should at least be able to substantiate them if challenged,” Boswell writes, suggesting that parliamentarians “study whether the approach to greenwashing taken in Clause 236(1) could be expanded to cover all environmental claims made to promote a product or business interest.”

Boswell’s recommendation shows “he recognizes that greenwashing is an important issue that the current Competition Act is not able to adequately address,” Ecojustice lawyer Matt Hulse told CBC News.

Hulse added that he’d like to see C-59 go even further on greenwashing. He said it should require companies to make their environmental proofs publicly available, “ideally at the point of purchase—to allow consumers and others to check the truthfulness of their claims.”

Boswell’s second recommendation of significance for environmental action relates to Clause 265, which would create a new voluntary “environmental certificate” mechanism allowing the Competition Bureau to “immunize potentially unlawful agreements under the Act, provided they are for the purpose of protecting the environment and do not lessen or prevent competition substantially.”

Such “agreements” might, for example, involve “companies universally adopting a more environmentally-friendly practice in supplying a product (e.g. delivery services switching to electric vehicles), or restricting one’s product offering with the environment in mind (e.g. agreeing to remove an outdated, inefficient class of washing machines from the market),” explains Montreal-based law firm McCarthy Tétrault in its own commentary on Clause 265.

Boswell says the clause is “well-intentioned” but “unnecessary,” and could lead to “significant unintended consequences.” He adds that the bureau’s “strong preference would be to remove Clause 265 from the bill so that it can be studied more carefully.”

The environmental certificate process—which could “potentially” see the bureau authorizing “hard-core” criminal cartel conduct like price-fixing—would send a “confusing signal about the seriousness of cartel conduct to the marketplace, and could potentially undermine how courts view this conduct in Canada,” Boswell writes.

“While environmental protection is an important global priority, we are not aware of other countries adopting an environmental certificate mechanism under their competition laws, providing further indication that it is probably not needed.”

Going ahead with environmental certificates may also be unwise from the standpoint of encouraging environmental protection, says McCarthy Tétrault, especially when the process outlined in Clause 265 is compared with the approach taken by the European Commission and the United Kingdom’s Competition and Markets Authority.

“While the two frameworks differ in their specifics, a common thread is that environmental agreements that have ‘appreciable negative effects’ on competition, or that are ‘restricting competition appreciably’ are capable of being saved by environmental benefits,” says the firm. This is not the case with Clause 265, which requires that any collaboration for environmental ends must not result in a substantial prevention or lessening of competition.

“Given the mechanism in Canada would be voluntary and would provide no safe harbour for collaborative agreements that do have significant anti-competitive effects, it is unclear how private parties contemplating such collaborations are incentivized to come forward and seek a certificate,” the law firm writes.

“Overall, a rigid and conservative approach to issuing environmental certificates may result in a seldom-used mechanism, and in that way fail to advance environmental objectives.”