Canada Rethinks Greenwashing Rules Under 2025 Budget

Highlights

• Budget 2025 suggests removing the internationally recognised methodology condition from the Competition Act.
• Private rights of action with respect to greenwashing complaints may no longer proceed directly to the Competition Tribunal.
• Many companies temporarily scaled back ESG reporting and environmental claims due to legal risk concerns.

The amendments to the Competition Act introduced on June 20, 2024, were introduced with the stated aim of curbing greenwashing, particularly around environmental claims made in business marketing and ESG reporting.

The federal government said these changes are improvements designed to stop companies from presenting sustainability claims without proof. Even so, the rollout produced tension between stakeholders. Environmental organisations welcomed stricter oversight, yet many companies expressed frustration as they tried to understand how the rules would apply in practice.

Read More: Greenwashing: Definitions and ESG Context

Two elements of the amendments generated the most reaction.

First, businesses were told that environmental claims must be substantiated using “internationally recognised methodology.” This phrasing raised questions because no single global standard exists, leaving companies unsure of the correct method to validate claims.

Second, the private rights of action clause opened the door for individuals and organisations to bypass the Competition Bureau and take complaints directly to the Competition Tribunal.

Corporate groups viewed this as creating exposure to legal action from many sources, thereby prompting some to remove sustainability statements from websites or pause ESG reporting altogether.

By November 2025, the federal government, through Budget 2025, acknowledged that the amendments had produced outcomes that ran counter to environmental policy goals. It stated that the rules had, in some cases, slowed companies’ climate-related initiatives.

As a result, the government indicated that it intends to amend the law again by removing the internationally recognised methodology condition and restoring the Competition Bureau as the gatekeeper for complaints.

The Competition Tribunal would therefore no longer receive direct filings from third parties.

Also Read: First Greenwashing Action in Canada Hits Toronto Fund Manager

The timeline for implementing these revisions has not yet been announced, and the corporate response is still unfolding. Many organisations are waiting to see how the rewritten sections of the Competition Act will be interpreted, particularly regarding future environmental claims and ESG reporting practices.

Legal advisors are monitoring discussions and remain in contact with clients as updates continue to develop.

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