Julien Beaulieu, Lecturer in Law at the University of Sherbrooke, returns to the Counterfactual podcast to discuss recent amendments to the Competition Act regarding environmental claims.
On June 20, 2024, the Competition Act was amended to require businesses to have testing or substantiation to support certain environmental claims. The Competition Bureau is currently engaged in a public consultation process to assist it in providing guidance on the interpretation of the new provisions. Soon, the Competition Tribunal will be able to grant leave to private parties to bring deceptive marketing cases, including in relation to environmental claims, if the Tribunal is satisfied that it would be in the “public interest.” In our fifteenth episode of the Counterfactual podcast, Julien Beaulieu, who was our guest in a previous episode about environmental claims that aired in April 2023, returns to share his insights on these important developments.
0:00
Counterfactual Podcast
Welcome to Counterfactual: the podcast brought to you by the Competition Law and Foreign Investment Review section of the Canadian Bar Association. Counterfactual takes a fresh look at issues relevant to business, competition, and related areas of regulation, and explores the real and hypothetical world to gain practical insights and debate policy. Hope you enjoy the show!
0:29
Ian Macdonald
Hello, and welcome to Counterfactual: the podcast produced by the Competition Law and Foreign Investment Review section of the Canadian Bar Association. My name is Ian Macdonald, and in this episode, I’ll be speaking with Julien Beaulieu of the University of Sherbrooke about recent developments regarding environmental claims. Julien holds a Bachelor of Laws and an MBA from the University of Sherbrooke and a Master of Economics from the Erasmus School of Economics in Rotterdam. He currently works as a law lecturer at the University of Sherbrooke and collaborates with the Quebec Environmental Law Centre on research projects relating to greenwashing. Juien and I have already discussed greenwashing in a previous episode which aired in April 2023. In that episode, we defined greenwashing and greenhushing, explored how the Competition Act could apply to environmental claims, and discussed certain specific categories of claims, like net-zero pledges and the use of voluntary carbon offsets. Today is August 3rd, 2024, and since we last spoke, a lot has happened in this space. Civil society groups have filed additional complaints to the Competition Bureau regarding environmental claims. The government has adopted amendments to the Act that introduced new requirements to substantiate environmental claims,and grant private access to the Competition Tribunal for deceptive marketing cases. Finally, the Bureau has launched a public consultation that will inform its future greenwashing enforcement guidelines, which the agency plans to adopt on an accelerated pace over the next months.
Julien, hello and welcome again to Counterfactual. We’re so glad to discuss this this important topic with you once more.
2:26
Julien Beaulieu
Hi Ian. It’s a great pleasure to be with you. I would also like to mention that my research on the regulation of environmental claims is funded by the CBA, the CBA’s Law for the Future Fund. So it is with great pleasure that I participate in a podcast hosted by the CBA.
2:41
Ian Macdonald
That is a great coincidence. Let’s start with the recent amendments. As we discussed the last time we spoke, the Competition Act already included provisions on deceptive marketing that could apply to environmental claims. What are the new requirements, and were they even necessary?
2:56
Julien Beaulieu
Yeah, that’s a very great question. As you have noted, the Competition Act already prohibited, and still prohibits, the making of representations to the public to promote a product or business interest that are false or misleading in a material respect. The Act also required, and still requires, organizations making claims about the performance, the efficacy or the length of life of a product to base their claims on adequate and proper tests. This requirement aims at preventing speculative and unsupported claims.
3:33
Julien Beaulieu
Over the past years, several complaints have been filed by NGOs under these provisions. As you’ve mentioned, the Bureau has also filed and won one lawsuit and entered into a few consent agreements with firms. It’s therefore fair to say that greenwashing – or at least some forms of greenwashing – was already illegal in Canada prior to the amendments. However, the pre-existing provisions had a few gaps. For example, the testing requirement would only apply to claims about products, excluding claims about businesses and business activities, such as a firm claiming to be net-zero or sustainable. It was also unclear whether the testing requirements applied to environmental benefits claims that were not clearly related to the performance, efficacy or life length of a product.
4:23
Julien Beaulieu
So essentially, this meant that an organization could, theoretically, make speculative environmental claims without possessing any supporting evidence. For example, an organization could claim that it was a net-zero organization without having to demonstrate that this claim was based on adequate and proper accounting of its carbon emissions.
4:45
Julien Beaulieu
Such claims could still be found to be false or misleading under the Act, but the Competition Bureau would have the burden to come up with evidence to convince the Competition Tribunal that the claim was false or misleading in a material respect, which could sometimes be difficult.
5:00
Julien Beaulieu
So, the amendments address these gaps. They explicitly require organizations to substantiate their environmental benefits claims, including claims about their products, business and business activities. So, in a nutshell, the new provision reverses the onus to require organizations to base their environmental benefits claims on sufficient evidence.
5:21
Julien Beaulieu
We must remember that environmental claims often relate to what economists call credence characteristics. Credence characteristics, maybe you haven’t heard about it before, but they are characteristics that cannot be directly verified by consumers, who have no choice but to trust the company making a claim. It’s the same as when you go to the doctor or the car mechanic – you don’t know if you need the treatment or the repairs that they recommend, and you have no choice but to trust them.
5:51
Julien Beaulieu
It’s often the same for environmental characteristics. A net-zero claim, a claim about carbon offsets, a claim that a product is organic – these are all things that cannot be directly verified by consumers, because they relate to the production process or supply chain of a product or organization, which won’t translate into physical characteristics that can be directly observed. So, the information asymmetry between firms and the public in these cases is significant. And this couldbe why Parliament decided to act.
6:25
Ian Macdonald
Thanks. The new substantiation requirements are slightly different depending on the subject of a claim. Claims about products must be based on an “adequate and proper test.” Is that the same test as existed before with respect to performance claims?
6:41
Julien Beaulieu
Yeah, that’s a great question. Before answering your question, I want to point out a few things about the new substantiation requirements that might not be obvious to the non-experts that listen to our episode. First, it’s important to note that the new requirements do not require firms to make any environmental benefits claims. So, claims remain voluntary under the Act. However, if firms voluntarily choose to make an environmental benefit claim, then it comes with some legal obligations, and that’s the mindset behind these amendments. We are essentially turning away from a regime where cheap talk and speculative environmental claims are allowed unless the enforcer can prove that they are false and misleading, to a regime where making an environmental claim is a consequential commitment.
7:30
Julien Beaulieu
The second thing to note is that the substantiation requirements apply to all environmental benefits claims made to the public, irrespective of the industry, and irrespective of their materiality. This is very different from s.74.01(a), which only prohibits claims that are false or misleading in a material respect. Under the new framework, every claim, whether material or not for consumers, must be substantiated.
8:02
Julien Beaulieu
There’s a third thing, a third preliminary comment, before I answer your question, that I want to make. The amendments don’t go as far as requiring organizations to disclose their test results and supporting evidence. Firms need to keep a record of their supporting evidence to make sure that they can disclose upon request from the Bureau or as part of a lawsuit, but they do not need to proactively provide it to consumers. Personally, I think this is a shortcoming of the amendments, because potential violations of the Act will remain hard to detect for the public. Consumers are unlikely to file a complaint to the Bureau every time they want to verify whether a claim is based on sufficient evidence, so in my opinion, some form of public access to substantiation evidence would have been welcome. But that’s not the decision that has been made by Parliament.
8:53
Julien Beaulieu
And finally, the fourth preliminary remark, the Act provides for a due diligence defence. Section 74.1(3) states that no order may be made against a person that exercised due diligence to prevent the reviewable conduct from occurring. And this is a very important defence. It shows that it’s very important for organizations to develop solid governance and compliance mechanisms to ensure that they can demonstrate their efforts to comply with the law.
9:27
Julien Beaulieu
Now that’s it for my preliminary remarks. Now coming to your question, the concept of adequate and proper test is not entirely new. As I mentioned before, organizations making claims about the performance, efficacy or the length of life of a product were already required to base their claims on adequate and proper tests. However, the new provision makes it clear that all claims about the environmental benefits of a product will be subject to the testing requirement.
There has been some case law on the concept of adequate and proper testing for product-level performance claims. The general principles set in case law under the pre-existing testing requirement are that “testing should…” and there’s a short list so I’ll provide all the different requirements that have been indicated by case law.
10:23
Julien Beaulieu
So first, testing should depend on the nature of the representation made and the impression it conveys. It should eliminate subjectivity as much as possible. It should be conducted under controlled circumstances or in conditions which exclude external variables. It should be conducted on more than one independent sample where possible, and the sample must be reasonable. It must not be certain but must be reasonable given the nature of the harm. So, if there’s more risk, more harm, then we can think that more serious testing would be required. It must be performed regardless of the size of the organization or the volume of sales. It must establish the effect claimed, and it must not be the result of chance. However, there is no requirement that a test must be validated by a third party. And there’s also no requirement for a test to meet the standards of a peer-reviewed publication, such that traditional or scientific testing may not be required.
11:28
Julien Beaulieu
Now, in the future, we will see if the courts consider that these pre-existing requirements - pre-existing concept of testing - is exactly the same as in the environmental context, because some claims relate to the production process of a good, or impacts along its supply chain, and therefore it might be difficult to test them in a lab or as part of an experiment. For example, how would you test whether a product is truly carbon neutral? That might be a bit difficult. For these process-type claims, the courts may opt for a wider interpretation of the concept of testing.
12:04
Ian Macdonald
Thanks. A lot of the public debate has been around the requirement that claims about businesses and business activities be “based on adequate and proper substantiation in accordance with internationally recognized methodology.” Can you tell us more about what these new criteria mean?
12:22
Julien Beaulieu
For sure. This is something new. This is something different than for products. It’s really about business and business activities. As you’ve mentioned, for this concept of adequate and proper substantiation in accordance with internationally recognized methodology is new under Canadian law. It’s not something we’ve had before, so there’s unfortunately no case law that we can directly draw from.
However, this expression can be found elsewhere outside of Canada. For example, it’s very similar to what can be found in the draft EU Green Claims Directive, which will require firms to substantiate their environmental claims and rely on, and I quote, “widely recognised scientific evidence, using accurate information and taking into account relevant international standards.”
13:09
Julien Beaulieu
In the US, the FTC Green Guides also refer to the importance of substantiating green claims, stating that marketers must ensure that, and I quote again, “all reasonable interpretations of their claims are truthful, not misleading, and supported by a reasonable basis,” end of quotation. Which in the context of environmental marketing claims, quotation again, “requires competent and reliable scientific evidence,” end of quotation. And the FTC also has a policy statement regarding advertising substantiation.
13:44
Julien Beaulieu
So that’s for Europe, for the US, but now coming back to Canada, what does it actually mean, internationally recognized methodology in the Canadian context? It’s something that us lawyers will have to work on to try to interpret the meaning of these words. However, we should note that there are several international standards that are widely used by Canadian firms to evaluate the environmental performance of organizations, their products and their services. To name just a few: the ISO14000 series of standards, the GHG Protocol, the Science-based targets initiative, the ISSB.
14:25
Julien Beaulieu
Out of curiosity, I asked ChatGPT to provide me with a list of internationally recognized standards, and it gave me 20 of them, all seemingly issued by reputable international organizations, and covering the most common types of green claims. So, there are a lot of methodologies out there. And at the end of the day, beyond all the methodologies that exit, a firm must ask itself whether it is confident that it can convince a judge, under the balance of probabilities standard, that it holds substantiation evidence, that this evidence is adequate and proper, and that this evidence follows internationally recognized methodology.
15:09
Ian Macdonald
Do you see any risks related to the type of organization that sets a methodology or testing standard? For example, consider three categories: first, a government organization of Canada or a major Canadian ally and trading partner, such as the US or EU; second, a private organization that would objectively be considered to be independent of the businesses that may benefit from being able to verify to its testing methodology; and third, an industry group or association that may have been created and funded by the businesses that seek to validate to its methodology. Is there a risk that the third type of organization in particular could be perceived as setting a low bar that industry participants can easily meet? And to the extent that a government or private independent organization does not establish a testing methodology against which certain types of claims can be tested, does this impair the ability of industry groups to fill the void by establishing their own methodologies?
16:13
Juien Beaulieu
These are very fundamental questions that you’re asking. And I’m sure these are the questions that are on the minds of Canadian businesses these days as they try to find out which methodologies they should use to substantiate their claims. So, the Act does not define what constitutes adequate and proper substantiation, so we don’t have legal certainty on these questions at this point. The few cases that have interpreted the concept of adequate and proper testing in the very specific context of performance claims have indicated that this requirement depends on the circumstances at issue. The amendments do not explicitly refer to the type of organization that sets a methodology or testing standard. But it could be that the courts take this aspect into consideration in the future when evaluating whether a given method is adequate and proper.
17:05
Julien Beaulieu
Now, in my opinion – and this is not based on case law or formal guidance from the Bureau, so it is to be taken with a grain of salt – but in my opinion, if a governmental organization in Canada, in Europe or in the US has officially issued or endorsed a given standard, such as the EU Ecolabel in Europe, or the Canada organic standard in Canada, then I would be more confident that organizations relying on these standards will face lesser risks.
17:35
Julien Beaulieu
Regarding independent standard-setting organizations, I think they can be a very useful source of information if they are independent, recognized internationally, and as long as they reflect the best practices of the industry. And obviously these practices should be grounded in science. You mentioned industry standards, and I think they can also, in some cases, be a highly credible source of information, of testing standards, and methodologies. But there’s always a risk, whether with industry standards, that conflicts of interests arise. And that could be seen as making these methodologies less credible. So I would not dismiss them entirely, but I would recommend prioritizing government issues or independent standards where possible.
18:22
Ian Macdonald
Thanks. You mentioned that your research quicky revealed a high number of existing internationally recognized standards set by reputable organizations. Let’s consider a scenario where two or more reputable organizations have different standards for the same type of environmental claim. For example, assume that Standard 1 is widely used in the EU and is more rigorous in certain respects than Standard 2 which is widely used in the US, and that a business could meet Standard 2 but not Standard 1?Does the new Competition Act provision effectively force a highest common denominator approach?
19:01
Julien Beaulieu
That’s another fundamental question. You’re asking me all the hard questions, Ian.
So, not necessarily. The Act only requires adequate and proper substantiation, not the best substantiation possible. But depending on the circumstances, we could see a situation where two standards with different criteria are simultaneously seen as adequate and proper substantiation methodologies for the same category of claims. So it could be that more than one standard is fine and is adequate and proper.
19:34
Julien Beaulieu
In any case, organizations should clearly indicate the scope and assumptions of the methodology that they rely on when making a claim, to make sure that the public correctly understands the scope of a claim. Because often, the methodology and the scope of the claim are intrinsically related. For example, if an organization sets a net-zero target using a methodology that excludes scope 3 emissions, one way to limit the risks would be to disclose this fact and clearly indicate that the target only relates to some of the firm’s emissions. And that the methodology that is being used excludes these emissions, to make it very clear.
20:14
Ian Macdonald
Some organizations have publicly criticized the amendments for being vague and for unfairly restricting their ability to communicate on their good practices. What do you think about such criticism?
20:26
Julien Beaulieu
So, obviously, this is new law, so I understand that there is uncertainty and there will be a need for legal interpretation from the courts and also a need for guidance from the Bureau. In the meantime, some organizations have removed some of their environmental claims from the internet to mitigate any legal risks. Now this is not necessarily a bad thing if it’s a sign that companies are taking legal compliance seriously and only making claims when they are confident that they hold sufficient evidence to substantiate them.
21:00
Julien Beaulieu
But we also need to remember that the deceptive marketing provisions of the Act – like most of the Act’s substantive provisions – are formulated in broad terms meant to apply to a wide range of situations and industries. As such, it is not surprising that the legislator came up with a general concept like “internationally recognized methodology.”
21:26
Julien Beaulieu
But there are certainly legitimate questions, you’ve already asked some of them, some legitimate questions that will need to be answered. For example, can firms rely on provincial or national industry standards if they are as credible as international equivalents? What should firms do when there are no specific standards for the claim they want to make? And finally, do the new substantiation requirements effectively prohibit all generic environmental claims, such as the words, “green,” “sustainable,” or “eco-friendly”? As these claims lack specific standards or definitions, given their generic nature, firms may not be able to substantiate them in an adequate and proper way. So hopefully we’ll get some answers about that in the short term.
22:12
Ian Macdonald
Indeed. And on that note, on July 4th, the Bureau issued a press release stating that it had received a large number of requests for guidance on the interpretation of the new provisions aimed at greenwashing. On July 22nd, the Bureau launched a public consultation to seek feedback as it develops the new guidance. Can you tell us a bit more about the consultation and the impact of future guidance?
22:38
Julien Beaulieu
Yes, for sure. So, the consultation web page that was released by the Bureau includes two series of questions, one regarding product level claims and one regarding claims about business and business activities. And in both cases, the structure is similar. The Bureau wants to know what the most common environmental claims in the marketplace are, which claims are less likely to be substantiated, how should the Bureau consider whether supporting evidence is adequate and proper, and what the compliance challenges faced by businesses are. The consultation will last until September 27, and after that, we can expect the Bureau to prepare a draft version of its guidelines and then consult the public once again before their final adoption.
23:29
Julien Beaulieu
In terms of content, it's a bit difficult to predict the final form of the guidelines. Back in 2008, the Canadian Standards Association had published a best practice guide on environmental marketing claims in collaboration with the Bureau. This guide, which relied on the standard CSA ISO 14-021, was very comprehensive, providing guidance on a wide range of claims, including recyclability, energy consumption, water use, waste reduction, and many others. However, it was archived in November 2021. The Bureau could decide that it will publish a revised and expanded version of this guide and endorse specific standards and practices. CSA ISO 14-021 still exists. Actually, it was revised in 2016, and ISO has also adopted several other standards for other aspects of environmental performance, and the Bureau could decide to formally endorse them.
24:29
Julien Beaulieu
The Bureau could also opt for a more principle-based approach, for example, by defining the minimum criteria for a methodology or certification scheme to be considered adequate and proper. In my opinion, there is a risk here for the Bureau to commit to specific standards that are not consensual. For example, there are some certification schemes that have been subject to greenwashing complaints in the past. Now, if an exhaustive list of specific endorsements is not issued, the Bureau should at least establish minimum requirements for standard setting organizations, similar to what has been done in the EU Green Claims Directive. For example, the Bureau should recommend that businesses rely on internationally recognized methodologies that reflect the best available science. These methodologies should be adaptable to evolving scientific knowledge and best practices.
25:24
Julien Beaulieu
But on the other hand, there's clearly an appetite from the business community for legal certainty. We want precision, we want clear, well-identified standards that we can rely on. If the agency chooses to endorse specific standards, it's very important that the Bureau avoids endorsing contested methodologies and remains vigilant about green lighting, which is officially endorsing certification schemes and standards that have been previously been subject to greenwashing complaints or criticism from the scientific community.
25:56
Julien Beaulieu
In parallel to the launch of the consultation, the Bureau will publish a new deceptive marketing practices digest that can already be helpful because it provides preliminary guidance on environmental claims. And that's already public. It's on the Bureau's website. For example, the Bureau recommends that firms avoid over-promising and under-delivering, avoid claims that can create a false or misleading general impression, even if they might be literally true. Do not rely on disclaimers or fine print to cure an otherwise misleading claim. Be specific when making comparative claims. Avoid exaggeration. Avoid vague claims - we spoke about them earlier - such as the word eco-friendly, which can be difficult to back up unless the claim is true throughout the entire lifecycle of the product. So that means the production, the transportation, the disposal of the product. across the whole supply chain. And finally, companies should avoid aspirational claims about the future, such as a net-zero pledge, and ensure that such claims, when they are made, are based on concrete, realistic, and verifiable plans with interim targets and meaningful steps underway.
27:15
Ian Macdonald
Earlier you mentioned that businesses are not required to make environmental benefits claims and that some businesses have removed some of their environmental claims from the internet to mitigate any legal risks and that that's not necessarily a bad thing in your view. Let's discuss the broader context for a moment. At an abstract level at least, pretty much all stakeholders from consumers to interest groups to governments are pushing for more environmentally friendly or less environmentally harmful products and business practices. Many businesses have responded to that demand and have incurred significant costs in doing so. What would you say to businesses who may be of the view that first, in order to justify those significant costs, they need to be able to make some kind of environmental claim, possibly to explain to consumers why their products or services may be more expensive than before, or more expensive than those of competitors who may not have made similar environmental investments. Second, that as a practical and functional matter, they need to be able to make short and pithy environmental claims in language that is relatable to consumers. Third, that they need clear lines or guidance as to what they can say or not say. And fourth, that if they cannot achieve the above three things, that this is actually a disincentive to investing in the environmental improvements virtually all stakeholders are seeking.
28:48
Julien Beaulieu
Thank you for this this great question, which really touches on the under underlying economic principles that were driving probably these amendments. I agree with most of your comments. So, of course, in order to justify the cost of improving their environmental performance, firms need to be able to make environmental claims. Often, companies or products that have an added value from an environmental perspective, their products that are differentiated, right? And that's the idea - that you are going to innovate on the environmental dimension of a product or a production process, and that's going to be a way to gain market share, to attract consumers, to attract investors. So of course, information is key. It's the only way that, investors, consumers, policymakers can differentiate, can distinguish companies’ different products on the basis of their environmental performance.
29:42
Julien Beaulieu
And I agree, claims should not be overly complicated, they should not contain super complicated technical wording. Consumers have limited time, they have limited resources, and they are unlikely to be environmental science experts. So, it's very difficult for a consumer to understand some of the very technical information about the environmental footprint of a product. Several studies actually have shown that providing too much or too specific information in ads or on product labels confuses consumers more than it helps them. So, I think that that's something that we want to avoid here.
30:17
Julien Beaulieu
On the other hand,claims that are too generic, that are too simple, are unlikely to send an informative signal to consumers and influence their consumption choices. So, it's really about finding the balance between comprehensiveness, clarity, and simplicity. And this is certainly an art more than a science. But this is, I think, what companies should try to achieve. And it's always possible to make front-end claims that are truthful, precise, and then to provide more contextual background, to QR codes, to links, by providing some explanations. So that's certainly something that that companies should do. And regarding the need to have guidelines and legal certainty, that's certainly something that needs to be tackled. And this is likeclear priority. It should be a clear priority for the enforcer. And I think it is. Legal certainty has been a problem since the Bureau archived its previous environmental marketing guidelines back in 2021. And since then, I think we've been facing a lot of uncertainty in the marketplace.
31:20
Julien Beaulieu
So hopefully the upcoming guidelines will help. And unfortunately, they will not be legally binding. So, to address this issue, the government could decide to step in and adopt regulations under the Act to formally endorse certain standards, define which claims will always be considered misleading. The government could also provide more clarity through regulation on the materiality threshold under Section 74.01. This is, of course, this is just me thinking what could be done, but there's been no public statement about the fact that this will be coming in in any way.
31:58
Julien Beaulieu
Regarding your fourth point and the risk that there would be a disincentive to investing in environmental improvements. This is a real risk, and this is a real risk that organizations perceive that making green claims will cause them more problems than benefits. And I have heard it. I've heard from certain business representatives who are sustainability leaders in their respective industries and who are thinking of slowing down their sustainability programs because of fears of legal risk. And for me, that's a big problem because I think that the message around these amendments should be clear. For most firms, these amendments will not change anything because they were already - for these firms - they were already complying with internationally recognized methodologies when making their environmental claims, such as the GHG protocol, such as the science-based target initiative, the ISSB, the TCFD, and many more. These firms should just keep doing the amazing work that they have been doing for the past years. However, the firms that were making speculative claims and were not grounding their pledges and reporting on facts will need to change their practices and these are the firms that are being targeted by these amendments.
33:11
Julien Beaulieu
I think at the end of the day, the purpose of this bill should not be to punish honest firms, but to ensure that firms making serious, meaningful commitments, meaningful claims are rewarded by the market. And that's really where you have a marketplace that works where sustainability leaders can be rewarded. And with better information, consumer investors can be in a position to incentivize firms to keep improving their environmental performance. So hopefully we'll reach that point where the green markets actually work.
33:43
Ian Macdonald
Another aspect of the amendments that we haven't yet discussed is private access to the Competition Tribunal. Earlier you mentioned that consumers are unlikely to file a complaint to the Bureau every time they want to verify whether a green claim is based on sufficient evidence, and that some sort of public access to substantiation evidence would have been welcome. But there are some things that consumers and consumer groups can do. Do you expect private plaintiffs and especially civil society groups, which have submitted most of the greenwashing complaints to the Bureau so far, to take advantage of this new right of access?
34:21
Julien Beaulieu
So, prior to the amendments, only the Bureau could file deceptive marketing cases before the Tribunal under Section 74.01. And the amendments will allow – they'll be live in in a few months - private plaintiffs to bring cases before the Competition Tribunal, as was already the case for other provisions of the Act. And in order to proceed, plaintiffs will need to apply to the Tribunal for leave. So, the Tribunal may grant leave if it is satisfied that it is in the public interest to do so. This is a new concept. It is intended to prevent frivolous litigation. So, it will have to be defined by the Tribunal, but there will be this requirement to meet this public interest requirement to be able to file a case.
35:12
Julien Beaulieu
And I expect that some of the cases that were filed as complaints will now be filed directly to the Tribunal. But not all cases, because filing a complaint is way easier for NGOs and civil society groups, and way less resource intensive than filing a formal lawsuit, such that, in my opinion, complaints will likely remain commonplace. We could also see some cases being brought by competitors, which may sometimes be in the best position to identify greenwashing cases. Because as I've noted before, it can be difficult for the public or even the Bureau to detect greenwashing, but competitors may have expertise and technical knowledge that allows them to identify claims that seem to be too good to be true.
36:00
Julien Beaulieu
In preparation for this episode, I've been looking at past complaints and legal cases, and they may actually help us predict the future predict future areas of enforcement or litigation. There has been at least 16 cases of greenwashing complaints and lawsuits initiated in Canada since 2015 under the Competition Act or under provincial consumer protection laws. Clear trends emerge from these cases. Only two of these cases are class actions aimed at obtaining compensatory damages for companies from companies. Therefore, the vast majority of cases of alleged greenwashing are the result of complaints made by civil society groups to the authorities. So, we really see that most complaints are driven by civil society groups.
36:52
Julien Beaulieu
The second big trend that I noticed is that half of these cases involved an organization in the fossil fuel sector and five of them related to products that are marketed directly consumer to consumers. Now, this follows directly from my previous comment, which is that these sectors are more likely to be monitored by civil society groups, the fossil fuel sector and consumer goods. They're more visible. They're more easy to identify. They're more under scrutiny. So, this could help us predict in which sectors of the economy future cases could be found.
37:26
Ian Macdonald
Thanks. Before we wrap up, I have one final question for you. Competition law is certainly not the only area where legislative and policy reforms are underway to regulate environmental claims. Are there other legislative developments that our listeners should be aware of?
37:42
Julien Beaulieu
Yes, actually, there's a few and this is a space that's evolving so fast. And I've spent a lot of time looking at sustainable finance and greenwashing in this sector. So, I'll be publishing an extent of and extensive report on the topic in the upcoming months. So, stay tuned for that. But one major development that may take place this fall is the publication by the federal government of a green and transition taxonomy, which would set criteria for projects and investments to be labeled as sustainable. Now, it's a bit difficult to predict what the final form of the taxonomy will be, but it could eventually be used to develop formal regulatory criteria for the environmental labeling of financial products or even embedded in sustainability disclosure requirements. That's a major development. We could also see the adoption of new climate related disclosure requirements under securities laws, as well as for federal corporations. Although the timeline of these initiatives is unclear at this point.
38:43
Julien Beaulieu
If they materialize, these new legal obligations could create a new area of legal risk for firms. There's also been a lot of enforcement action in other jurisdictions under securities laws, notably in the US and Australia. Canada could be next, especially given the several notices published on sustainability-related topics by the Canadian securities administrators over the past year. Another development is the upcoming publication by the federal government of regulations on plastic labeling requirements. Here as well, the timing and final form of the requirements are uncertain, but based on what has been announced by the government so far, these regulations are supposed to establish formal rules for recyclability and compostability claims for certain plastic items.
39:32
Julien Beaulieu
And finally, one thing that should be on everyone's radar is the provincial consumer protection laws, which also regulate deceptive marketing practices. In the past year, there's been at least one injunction case filed in British Columbia against a natural gas distributor and one class action got approved in Quebec against a group of retailers regarding claims about the recyclability of plastic bags. We could see more of these cases in the future. So, this is really an area that's evolving rapidly and there's a lot of connections between these developments and what we're seeing in the
Competition Act so everybody should have it an eye on them.
40:10
Ian Macdonald
Julian, this has been very interesting. There are so many more issues that we'd love to discuss and more deeply, and we could go on for hours. But we've taken up enough of your time, I suspect. I'd like to thank you for sharing your knowledge and insights with the Counterfactual Podcast. We'll look forward to following your ongoing research and publications. Thank you.
40:32
Julien Beaulieu
Thank you so much Ian. It was a great pleasure.
40:35
Counterfactual Podcast
Thank you for listening. Counterfactual is produced and distributed by the Competition Law and Foreign Review Section of the Canadian Bar Association. The opinions expressed by the participants in this podcast are their own and do not necessarily represent those of their employer or other organizations. If you enjoyed this podcast or would like to join the Canadian Bar Association, please visit www.cba.org/sections/competition-law.