Canada chemical industry flags concerns about ‘greenwashing’ amendment

TORONTO (ICIS)–Canada’s chemical industry is concerned about the impacts from a legislative amendment to address “greenwashing”, an industry executive said on Friday.

The amendment to the Competition Act, contained in an omnibus bill (Bill C-59), seeks to address claims about the environmental benefits of products.

Importantly, it also seeks to address claims about the environmental benefits of a business or a business activity that are “not based on adequate and proper substantiation in accordance with internationally recognized methodology”.

“Our view is that the clause as drafted is overbroad and will have unintended consequences,” Isabelle Des Chenes, vice president, policy, at trade group the Chemistry Industry Association of Canada (CIAC), told ICIS in an emailed statement.

The vagueness of the proposed amendment, combined with the threat of “strategic private actions” such as lawsuits, created  “substantial uncertainty about compliance standards and places the burden of proof on businesses for their claims”, she said.

“This ambiguity and the threat of private actions may deter companies from making any environmental claims, which in turn will impact their ability to support the government’s climate goals and subsequently discourage responsible environmental action,” she said.

She added that there is a lack of clarity about the meaning of “internationally recognized methodology”.

“It is well known that there are many different methodologies that have been recognized internationally for measuring environmental and ecological causes or effects of climate change,” she said.

Given the diversity in methodologies, it is unclear how the Competition Bureau or the Competition Tribunal would apply this standard, she said.

“This ambiguity could lead to ongoing compliance uncertainty and risk,” she said.

Also, the lack of clarity would have important implications for environmental tools developed by the government, including the Clean Fuel Regulations Fuel Life Cycle Analysis model used to calculate carbon intensities or the National Pollution Release Inventory reporting tool, she said.

“Industry relies on government tools to promote reduction and environmental benefits and at this time, industry is not sure these tools would meet ‘internationally recognized methodology’,”  Des Chenes said.

On its website, the federal government cites a greenwashing example from the chemical industry:

“For instance, a chemical company may brag about cleaning up its environmental damage in North America – but it remains silent about its new, polluting factories in India”.

OIL INDUSTRY REACTS
In Canada’s oil industry, ExxonMobil’s Canadian affiliate, Imperial Oil, said it fears the amendment may trigger “frivolous litigation”.

A public disclosure standard “that is so vague as to lack meaning and that relies on undefined ‘internationally recognized methodology’ opens the door for frivolous litigation, particularly by private entities who will now be empowered to directly enforce this new provision of the Competition Act”, the company said.

“This represents a serious threat to freedom of communication,” the company said.

“The result of this legislation, which has been quickly put in place with little or no consultation, is to silence Canadian businesses taking climate action,” it added.

Imperial, citing the amendment, also posted a “disclaimer” on its website with regard to its previous press releases and statements.

Meanwhile, the Pathway Alliance – a coalition formed by six oil majors to reduce emissions in Canada’s oil sands industry through carbon capture and other methods – removed all content from its website and social media, citing uncertainty about how the amendment will be interpreted and applied.

In Alberta province, which is home to most of Canada’s oil industry, the government said the amendment “would appear to be part of an agenda to create chaos and uncertainty for energy investors for the purpose of phasing out the energy industry altogether”.

The Alberta government would explore legal options to challenge the amendment, it said.

ENVIRONMENTAL GROUPS
Environmental groups, however, welcomed the amendment, saying it was a response to concerns that greenwashing “is a systemic problem in Canada”.

The new rules were not limited to any one industry and could have an impact across the Canadian economy as “controversial claims such as ‘net zero’, ‘carbon neutral’, and ‘sustainable’ will come under closer scrutiny”, the groups said in a joint statement.

They also welcomed the fact that the amendment would make it possible for “ordinary consumers” to enforce the rules by taking complaints directly to the Competition Tribunal.

Legislators in other countries have also worked to address greenwashing or claims about companies’ ESG (environment, social, governance) performance.

Thumbnail photo source: International Energy Agency