From policy to practice

This number reflects the average in relation to thousands of pages of documentation and a wide variety of disclosure documents. Notably, sustainability reports and websites often contain more than 1-2 potential misrepresentations per page. Many claims are reiterated within and across documents, webpages, and corporate reports, thereby potentially increasing the cumulative or overall risk of each individual claim.

Key takeaway: Even after 1 year of Bill C-59 coming into effect, many companies have not identified nor effectively mitigated the significant legal risk that is created by their sustainability disclosures.

While most environmental-related claims appear in the environment section of disclosures, introductory sections or CEO letters often create significant legal risk by summarizing or simplifying detailed information.

Key takeaway: Bill C-59 creates legal risk exposure relative to many components of an organization's sustainability communications, well beyond purely climate and environmental disclosures, and companies must comprehensively identify the sources of such risk to effectively mitigate.

Unfortunately, this trend lends weight to those who argued for the new provision. This finding also heightens risks for companies, as it represents untested legal territory (i.e., there is no existing jurisprudence to guide or help interpret). Before making public commitments or reporting on performance, organizations should test assumptions, plans, and data and substantiate their claims in accordance with internationally recognized methodologies (i.e., go above and beyond referencing or aligning) per the Competition Bureau's ("Bureau") Guidelines.

Key takeaway: Many organizations do not fully realize the extent or frequency of the business-benefit sustainability claims they make, thereby increasing legal risk exposure.

Product-specific claims are less commonly found in corporate reports or communications materials, and more often housed in online content, labels, and marketing or proposals for products and services. This means organizations need to assess a wider range of disclosure documents to identify product claims. Previous Competition Bureau cases provide some helpful examples of establishing adequate and proper tests for product-related claims. However, this provision creates uncertainty as to the ordinary meaning for terms like "social" or "ecological" and how these may be interpreted by the courts.

Key takeaway: For organizations who market products directly to customers, it is increasingly important to compile evidence for substantiation before making public claims in order to support a due diligence defence.

The use of vague wording or terminology in environmental claims has long been a focus of the Bureau. As such, the risk to companies is two-fold: first, broad language is inherently riskier as it increases the likelihood of various interpretations (or 'general impressions') and thereby can be potentially false or misleading. Second, organizations may have a more challenging time defending the use of broad terms given the Bureau's numerous warnings and guidance to avoid them.

Key takeaway: Using precise and specific wording in environmental claims is necessary to mitigate legal risk and should include accurate and defendable descriptions, definitions and examples where appropriate.

While there's no prescriptive legal requirement for environmental claims to publish supporting details or evidence in the public domain, presenting a claim without sufficient supporting evidence increases the risk of scrutiny. Where the claim points to an impressive outcome, it can draw attention from a variety of stakeholders including activists and regulators.

Key takeaway: When substantiation of an environmental claim is not disclosed publicly, organizations risk complaints or legal proceedings that may compel them to demonstrate adequate and proper substantiation. By describing how a conclusion was reached and providing evidence within disclosures, organizations can proactively mitigate legal risk.

This category commonly relates to a product or service consumers purchase, rather than business activities. These types of claims may be challenging to identify using search functions and organizations can easily overstate or inadvertently exaggerate when describing benefits to the environment. This can occur where the technical specialists are not able to review, influence, or approve marketing materials like brochures, newsletters, or other advertising that is often attention grabbing or uses catchy phrases like 'nature-positive'.

Key takeaway: Where there are limited details of beneficial environmental impact, or how the conclusion was reached, legal risk increases as the claim's intended meaning is likely to be different from its literal meaning and the general impression conveyed.

Organizations often set ambitious goals to demonstrate their commitment to sustainability, and while the intention is commendable, challenges often arise due to the inherent risk posed by ambitious commitments and future outcomes that are difficult to guarantee. Because of the uncertainty surrounding the future, some argue that forward-looking statements should not fall under regulatory provisions related to anti-greenwashing. However, the Bureau has acknowledged this risk and, since 2024, has provided guidance on managing aspirational claims by recommending that such claims be coupled with concrete plans.

Aspirational claims also create an obligation to demonstrate ongoing progress through periodic reporting and, most critically, to achieve the stated goal. In addition, organizations' actions must align with stated plans to achieve their aspirational goals to avoid misleading the reader. For example, if a claim implies transition away from fossil fuels to achieve net-zero, business plans and investments should reflect a reduction in fossil fuels. While some organizations may choose to list dependencies this can be precarious, especially if competitors accomplish similar aspirations under identical market, regulatory, or policy conditions. Similar tactics, like the use of disclaimers are not a reliable or simple remedy, as clarified by the Bureau in its previous guidance on deceptive marketing practices.

Key takeaway: Organizations should avoid making aspirational claims until they have a concrete and defensible plan in place to achieve the stated claim.

As environmental claims increasingly rely on substantiation it is critical for organizations to tell the whole story with sufficient data. Unfortunately, it's not uncommon for claims to exclude data points. Whether intentional or not, omitting key factors or cutting corners of scientific rigor undermines the reliability of environmental claims. In many cases, the data itself is reliable, and the challenges center on what is said about the data, or without the data. This is where assurance, whether limited or reasonable, offers a helpful checkpoint for companies preparing to make environmental claims.

Key takeaway: Reliable and credible data is necessary and should be discussed and provided within sustainability disclosures to mitigate legal risk associated with sustainability-related claims.

These claims can be difficult to identify without experience developing, managing, and reporting on sustainability performance. Goals can appear impressive or targets may seem well structured to the untrained eye. However, our assessments identified dozens that lacked clear timelines, baselines, scope, or other factors such as interim reviews that are critical for ongoing progress reporting and accountability.

Key takeaway: In order to mitigate legal risk, organizations should only disclose structured goals with baselines, scopes and timelines, supported with evidence and credible transition and adjustment mechanisms. Organizations should also disclose limitations and assumptions and provide regular updates to demonstrate ongoing substantiation.

While all identified claims present risk, organizations can focus their mitigation efforts through prioritizing high urgency claims. At the same time, medium and low risk claims are often repeated throughout disclosures which could increase the overall risk and urgency. Performing a greenwashing risk review can identify lower risk terms or sentences that repeat across disclosures for streamlined refinement.

Key takeaway: Organizations should prioritize addressing high urgency claims as well as common lower risk claims which can create cumulative legal risk.

Certain terms are identified as at-risk as they are more likely to draw attention, higher scrutiny and carry greater uncertainty. We identified these terms as high urgency to refine, remove, and substantiate using the Bureau's guidance, market trends, and aggravating factors such as ENGO focus areas, Bureau consultation submissions, and analogous complaints. At-risk terms often attract questions, such as "greener than what?", and regardless of existing substantiation, these terms are more likely to draw attention and scrutiny and require robust substantiation.

Key takeaway: Organizations should carefully consider the context in which they use high-risk terms (e.g. net-zero), as they are also frequently broad or vague, which increases the likelihood of misinterpretation or the creation of a misleading general impression.

While detailed refinements are specific to each claim, organizations can often reduce risk through adding, removing, or modifying claim content. Substantiation is often required in the form of a plan or program or data and analysis. We commonly provide multiple avenues for risk reduction as mitigations ultimately depend on an organization’s risk appetite.

Key takeaway: Increasingly, claims require both text refinement of text and substantiation to fully mitigate legal risk.