How to Avoid the Pitfalls of Greenwashing

“Whether by act or by omission, greenwashing will not be tolerated in Canada. A new era in environmental, social, and governance (ESG) disclosure and regulation is upon us.” –  Conor Chell, Partner and National Leader ESG Law

In the current geopolitical landscape, authenticity is a business imperative. Partner with YellowYellow today to ensure your environmental commitments are both genuine and compliant, safeguarding your reputation and contributing positively to our planet’s future.

Canada enacted Bill C-59 in 2024, introducing stringent measures to combat greenwashing – the act of making misleading or unsubstantiated environmental claims. This is a major change to the status quo as the burden of proof now falls on the companies themselves instead of the other way around.

3 Key Provisions of Bill C-59

1. Substantiation of Environmental Claims: Businesses must ensure that any environmental benefits they promote are backed by “adequate and proper testing” using internationally recognized methodologies.
2. Private Action Cases are Allowed: This means that anyone can sue an organization for greenwashing. In 2023 alone, there was 47 greenwashing cases brought to court and 70% favored the claimants. False environmental claims can lead to expensive legal battles and settlements.
3. Severe Penalties for Non-Compliance: Companies found guilty of greenwashing can face fines up to $10 million for a first offense and $15 million for subsequent offenses, or 3% of their annual worldwide gross revenues, whichever is greater.

5 Misconceptions About Bill C-59

1. “I do not need to worry about forward-looking environmental statements like net-zero goals.”
   Reality: Bill C-59 requires entities to make reasonable and realistic forward-looking statements. They need a clear implementation plan and evidence that they are being actively pursued. Failure to do so will count as greenwashing under the bill.
2. “Only product-related claims are scrutinized.”
   Reality: The legislation encompasses all corporate communications, including service-related claims, sustainability reports, and investor disclosures.
3. “Third-party certifications automatically ensure compliance.”
   Reality: While helpful, businesses must still ensure all claims are substantiated with proper testing and methodologies.
4. “What does it mean to be “specific” “adequate” and “proper”?”
   Answer: Having specific, adequate, and proper evidence means backing up your environmental claims with relevant evidence that is of high quality and of sufficient quantity. Environmental claims should be truthful, concise, unexaggerated, and testable.
5. “What is considered “internationally recognized”?”
   Answer: Bill C-59 mentions that the method to substantiate environmental claims should be “internationally recognized” which caused some confusion for business leaders. In this case, it simply means that the technique is used in two or more countries.

Why You Need to Act Now

With Bill C-59 in effect, businesses face heightened scrutiny over their environmental assertions. It applies to any publicly facing environmental claim. This shift necessitates a comprehensive approach to environmental responsibility:

• Have proper, accessible sustainability guidelines: Having a well-defined environmental management system can help you collect and store the necessary data needed to prove your claims while providing a framework to proactively improve your environmental performance, avoiding regulatory risks altogether.

• Engage your employees: Making sure your employees are well-informed about your organization’s sustainability policies can help you avoid accidental greenwashing situations.

• Be flexible to changing circumstances: Especially when making future-oriented environmental claims. Regulations, stakeholder expectations, and unforeseen events may mean revisiting sustainability goals and assertions

Futureproof Your Business!

Navigating the complexities of Bill C-59 requires expertise and dedication. YellowYellow offers tailored environmental consulting services to help businesses.

Partner with YellowYellow to safeguard your reputation and contribute positively to our planet’s future.

You can contact us by email at hello@yellowyellow.ca

Phone us at 647-366-9878 for a no- obligation call to explore the next steps.