Green Marketing: Beware of greenwashing!
Andrée-Anne Perras-Fortin
ROBIC, LLP
Partner, Lawyer
Environmental impact awareness and the fight against climate change are at the heart of consumer and business practices across industries. Consumers and suppliers have in fact become increasingly more savvy in their preference for goods and services that have a low negative environmental footprint. In order to woo potential customers, businesses are often tempted to use a green-marketing strategy and boast of the enviro-friendly virtues of their products. Although efforts and innovations to promote environmentally conscious goods and services are significant, businesses need to be cautious to avoid greenwashing in their campaigns.
What is greenwashing?
Greenwashing involves the practice of leading customers to believe that products and services intended for them have more environmental benefits than they truly have. This practice skirts the boundaries of legality, especially, when it involves making false or misleading public claims.
Why is greenwashing a problem?
Competition Law
Canadian competition law condemns deceptive marketing practices. In particular, the Competition Act prohibits false or misleading claims in a material respect aimed at promoting a product, a service or a business. This prohibition is included in two different regimes: criminal and civil[1]. The criminal regime allows for private action and enables individuals and businesses to claim damages in the event of an offence. The civil regime, on the other hand, provides for significant administrative penalties.
The amounts of these penalties increased substantially in early summer 2022 following the coming into force of the amendments to the Competition Act. For corporations, the administrative penalty can now be up to $10,000,000 for a first offence and up to $15,000,000 for any subsequent offence[2]. A sum equivalent to three times the value of the profit obtained from the deceptive commercial practices may also be added to the penalty amount.
The Legal Framework for Consumer Packaging and Labelling
In Canada, the Consumer Packaging and Labelling Act[3] prohibits a product supplier from affixing to any prepackaged product a label that contains, or is likely to give the impression of containing, false or misleading information relating to the product. All information on a package, whether in symbols or words, must be neither false nor misleading to the consumer[4].
The Legal Framework for Textile Labelling
Also in Canada, the Textile Labelling Act[5] regulates the sale, importation and advertising of consumer textile articles. Like the Consumer Packaging and Labelling Act, it requires that labelling on a consumer textile article contains accurate and sufficiently explicit information, and prohibit false or misleading representations. Further, it identifies the information that must be included on labels[6].
Consumer Protection Law
Quebec consumer protection law also prohibits businesses and manufacturers from making false or deceptive representations to consumers[7]. In addition, manufacturers cannot falsely claim that a good has been made according to a specified method of manufacture[8]. In determining whether a representation is false or misleading and therefore constitutes a prohibited practice, consideration must be given to the general impression given by the representation and, as the case may be, to the literal meaning of the terms therein[9].
In addition, the Consumer Protection Act requires that a good or service provided must conform to its description in the contract[10] and to a statement or advertisement made about it by the merchant or manufacturer[11].
Trademark Law
Under the Trademarks Act, no person shall make use, in association with goods or services, of any description that is false in a material respect and likely to mislead the public as to the mode of the manufacture, production or performance of the goods or services. Enacted in section 7 of the Trademarks Act, this rule is intended to protect the public[12]. More specifically, it aims to protect the buyer or consumer against deception with respect to products or services[13].
Subsection 7(d) of the Trademarks Act allows businesses to restrain third parties who, using substantially false descriptions, whether through a made-up trademark or a misused descriptive term, mislead the public as to the inherent characteristics of the goods or services offered[14].
What does Competition Bureau Canada say?
The Competition Bureau urges businesses to be vigilant when publishing environmental claims. It encourages them to follow best practices to ensure that statements:
- are truthful and are not misleading;
- are specific – and accurate – with regard to the environmental benefits of the products offered;
- are substantiated and verifiable – the claims must be tested and tests must be adequate and proper;
- do not result in misinterpretation;
- do not exaggerate the environmental benefits of the products;
- do not imply that the products offered are endorsed by a third-party organization if that is not the case[15].
Conclusion: What should businesses do?
Due to the increased sensitivity to greenwashing, businesses need to be diligent in their business practices. Environmental claims must always be true, specific, verifiable, and consistent with other public statements and representations made by the business. This requires careful consideration of public statements, press releases, advertising materials and packaging prior to publication.
For any questions or if you would like to further discuss your business’s green marketing practices, please feel free to contact our Regulatory Affairs team.
[1] Competition Act, RSC 1985, c. C-34, sects. 74.01 and 52.
[2] Id. at para. 74.1c) ii).
[3] Consumer Packaging and Labelling Act, RSC 1985, c C-38 at paras. 7(1) and (2).
[4] Competition Bureau Canada, Environmental claims and greenwashing, published online January 20, 2022: https://ised-isde.canada.ca/site/competition-bureau-canada/en/environmental-claims-and-greenwashing>.
[5]Textile Labelling Act (RSC 1985, c. T-10)
[6] Competition Bureau Canada, supra., note 4.
[7] Consumer Protection Act, CQLR, c. P-40.1, sect. 219.
[8] Id., sect. 222d).
[9] Id., sect. 218.
[10] Id., sect. 40.
[11] Id., sect. 41.
[12] Laurent Carrière, Canadian Trade-Marks Act – Annotated Robic, Toronto, Thomson Reuters, 1990, 7§ 5.5.
[13] Id., 7§ 6.
[14] Kelly Gill, Fox on Canadian Law of Trade-marks and Unfair Competition, 4th ed., Toronto, Thomson Reuters, 2002, § 4.2 e).
[15] Competition Bureau Canada, supra., note 4.