Submission to the Competition Bureau regarding the changes to the Competition Act introduced in Bill C-59

Executive Summary

Bill C-59 came into force on June 20, 2024, introducing several amendments to Canada’s Competition Act, two of which are targeted at greenwashing. The Calgary Chamber of Commerce appreciates the general intent of the amendments, however, their impact – particularly in regard to subsection 74.01(1)(b.2) – is extremely concerning. In brief, these amendments will require entities – businesses, organizations, non-governmental organizations, and any entity involved in commercial activities – to prove any claims of environmental benefit against an internationally recognized methodological standard that is yet to be defined. Claims of environmental benefit could include recycling goals for packaging, net-zero ambitions, reductions in carbon emissions, remediation efforts and many more. The scope and reach of these amendments is vast and the lack of clarity is alarming.

The changes to the Competition Act will have far-reaching and significant consequences. They may derail investment directed at reducing emissions – across all sectors – and may cause Canada to miss, not meet, our climate targets. There is absolutely no scenario in which a company will choose to invest in and promote climate initiatives without knowing what standard they will be held to. Take for example a company working to reduce waste by incorporating reusable or compostable products into their operations. If it is unclear how to substantiate their plans per the Competition Act, or if they lack the legal and compliance capacity as an organization to defend their plans, companies will decide to not publicly disclose their achievements or forgo plans altogether.

While businesses of all sizes – in all sectors – will be affected by this, the impact on smaller businesses will be more severe. Firms that do not have the internal capacity in legal or regulatory compliance will be forced to forgo climate initiatives if they cannot spend the valuable time and resources to prove their claims against an undefined methodology.

Markets, institutional investors, the U.S. Securities Exchange Commission, and the European Union’s Corporate Sustainability Reporting Director already require disclosure and verification of environmental benefit claims as covered under the changes to the Competition Act. Not to mention the robust financial reporting requirements related to sustainability goals and metrics under existing legislation contained in the Canadian Sustainability Standards Board. Simply put: investors require more disclosure, not less, on emissions reduction targets and the plans that companies have to get there – 85 per cent of publicly traded companies have sustainability reports.

The Calgary Chamber is encouraged by the Competition Bureau’s continued commitment to engage with stakeholders on the changes introduced in Bill C-59, and as such we have prepared a submission in response to the Bureau’s Public Consultation on Competition Act’s new greenwashing provisions. This consultation will inform the guidelines that are currently being drafted by the Bureau, with the hopes that these guidelines will provide the business community with some degree of certainty regarding the enforcement of these amendments.

Recommendations

Firstly, we would recommend that the Government of Canada withdraw the amendments to the Competition Act introduced in Bill C-59, recognizing that guidelines cannot fix these inherently flawed amendments. Notwithstanding our perspective that amendments within Bill C-59 should be withdrawn, we would recommend that the Bureau establish certainty by defining what methodologies will be accepted under these new provisions, considering what methodologies are already in use by governments and regulators across Canada.

The Bureau must also consider the disclosures already required by bodies such as the International Sustainability Standards Board and the Canadian Sustainability Standards Board, the Bureau should consider any claims substantiated under these bodies to be in accordance with internationally recognized methodologies.

Lastly, the Bureau must ensure that the private right of action clauses are not abused by those who may have ulterior motives for pursuing private right of action. Ultimately, the business community is seeking certainty and clarity from the Bureau, both of which are needed to drive the investment required to decarbonize our economy, jumpstart our waning productivity and meet our ambitious climate goals.

Read full submission below.

Competition Bureau

50 Victoria Street

Gatineau, QC Canada

K1A 0C9

Submitted via electronic portal at: https://competition-bureau.canada.ca/guidance-feedback-form

RE: Implementing Changes to the Competition Act

The Calgary Chamber of Commerce appreciates the opportunity to provide a submission to Canada’s Competition Bureau in response to the public consultation on new provision in Canada’s Competition Act outlined in Bill C-59, specifically section 74.01(1)(b.2).

The Calgary Chamber – and our business community – value the importance of combatting greenwashing, recognizing verifiable reporting is necessary to ensure veracity and clarity on how businesses are impacting the environment. However, unintended consequences must be managed to ensure businesses have clarity on rules by which they will be measured, can meet existing reporting requirements, and are protected against malintent.

Following robust engagement with businesses across sizes and sectors – including agriculture, energy, financial, small businesses, transportation and logistics and telecommunications – we contend that the recent amendments to the Competition Act are unclear and unbalanced. Further, they are already hampering investment in decarbonization and environmental stewardship across sectors, by introducing significant uncertainty at a time when investment in large-scale infrastructure is imperative to achieve our nation’s ambitious climate and productivity goals. This is causing major, critical projects being paused until further clarity is established.

We recognize the Competition Bureau was not directly responsible for drafting and passing the initial amendments introduced in Bill C-59, however we strongly believe that this legislation will have significant negative impacts across all business sectors and sizes. As such, we recommend that the Government of Canada withdraw the amendments to subsections 74.01(1)(b.2) in the Competition Act, recognizing that existing legislation protects against greenwashing, and that the unintended consequences resultant from these amendments cannot be adequately addressed through guidelines.

Notwithstanding our perspective that amendments within Bill C-59 should be withdrawn, or that significant amendments to the new legislation are required to provide clarity and certainty for business, for the purpose of this submission we provide additional information and recommendations to support the development of guidance documents.

Given the vagueness of the existing legislation and the swift impact these changes have already had, the Competition Bureau will be critical in providing timely and much-needed clarity for businesses on the application and enforcement of these new amendments through its guidance documentation. We strongly recommend the following recommendations are taken into consideration.

Internationally Recognized Methodologies

The language in Bill C-59 is irresponsibly vague – specifically as it pertains to ‘internationally recognized methodologies’ – without specifying which methodologies – therefore requiring clear definitions within the Competition Bureau guidance. As it stands, companies wishing to release plans for future climate actions, demonstrate their existing environmental record, or showcase investments in nascent technologies to investors will now be required to comply with the currently undefined internationally recognized methodological standard or standards to prove their statements. Currently, international methodologies for calculating climate related disclosures exist – such as those being developed by the International Sustainability Standards Board, however no such standards currently exist to meet the definition of an internationally recognized methodology.

Without knowing what the Bureau will consider adequate methodology to substantiate claims, it is not possible to comply with this law, leaving businesses open to targeted, excessive or malicious litigation. Additionally, the lack of clarity will significantly compromise businesses’ ability to access capital through lenders and investors who require disclosure around decarbonization targets and other environmental goals such as net-zero ambitions that may or may not be accepted by the Bureau. This will have an outsized negative impact on small businesses, who have less capacity to navigate unclear standards surrounding methodologies. Given this, the Bureau must commit to urgently defining internationally recognized methodologies, based on close consultation with businesses.

Recommendations:

• Clarify and define what internationally recognized methodological standards will be accepted to substantiate claims of environmental benefit. These standards should be decided upon after significant engagement with the business community to understand the potential unintended consequences for all industries. Moreover, the Bureau should recognize methodologies that are currently accepted by Canadian governments and regulatory bodies, noting Canada’s stance as a G7 nation at the forefront of climate protection. Additionally, given technologies related to environmental innovation continue to evolve, definitions must provide adequate flexibility in compliance and include regular review periods.
• Delay enforcement of these amendments until such time as international methodological standards have been designated in consultation with the business community. Given the significant financial penalties and the current impracticability of the amendments, businesses cannot comply with these amendments until they know with certainty the standards under which they will be held to. Further, we suggest enforcement be delayed until methodologies are adopted by other countries, ensuring Canada is not at a further competitive disadvantage – and cross-border firms do not have to comply with contradictory disclosure requirements.

Financial Disclosure

The new amendments present significant contradictions with existing legislation, regulation and securities disclosure standards that require environmental goals, commitments and representations to be shared publicly. These disclosure requirements are critical to the function of public markets, informing investors’ decisions, as well as the ability for businesses to access various government incentives, including investment tax credits, and regulatory and compliance obligations; many key government programs require decarbonization commitments or plans to support broader environmental initiatives.

Additionally, there are concerns relating to how the amendment will affect already mandated disclosure by provincial securities regulators; in fact, it could compromise the ability of Canadian companies to meet those requirements. Moreover, provincial securities regulations already stipulate penalties for deliberately misrepresenting information, raising the question as to why this is needed at all. It must also be mentioned that the Canadian Securities Administrators (CSA) and the CSSB have done significant work in this area, thus the current amendments ignore the progress made by the CSA and CCSB and could conflict with Canadian climate related disclosure standards already in progress.

Finally, introducing this major bureaucratic burden, along with regulatory and compliance uncertainty will disincentivize new investment in Canada altogether, particular from global firms, and has the potential to strand existing assets and investment. Global firms allocate capital within a broad portfolio; anything that needlessly increases regulatory compliance relative to other jurisdictions means Canada will be bypassed as an investment jurisdiction. Without certainty on data reporting standards, and at risk of significant monetary and reputational hazard, companies will not make claims related to environmental benefit, significantly impacting ESG reporting, investment attraction and climate ambition broadly. Furthermore, this bureaucratic burden and uncertainty will have an outsized impact on small businesses, who have less internal capacity to navigate competing disclosure requirements. Simply put, this amendment renders Canadian companies at a significant competitive disadvantage relative to their peers – irrespective of sector.

Recommendations:

• The Bureau's guidance must clarify that disclosures made by companies that are substantiated in accordance with their federal and provincial reporting obligations, such as the International Sustainability Standards Board or Canadian Sustainability Standards Board, will be considered substantiated in accordance with internationally recognized methodologies.
• The Bureau should use the guidance to adopt a “safe harbour” for forward-looking sustainability claims and information (FLI). Securities legislation has addressed concerns over forward-looking sustainability and climate-related disclosures by providing protection for these claims. As long as forward-looking sustainability claims have a reasonable basis or are substantiated by a reasonable investigation, they should not be subjected to proof under an internationally recognized methodological standard.

Private right of action

Companies will be challenged on the veracity of their commitments or representations by as few as six private citizens and would be liable for the costs to defends themselves from proceedings at the Competition Tribunal, whether their claims were found to be legitimate or not. If they are unsuccessful in meeting these currently undefined criteria, business would be subject to penalties as high as three per cent of global revenues. Firstly, the Bureau must be vigilant, ensuring bad-faith actors are not taking advantage of these provisions to bring frivolous proceedings against businesses. Furthermore, this will create massive financial risk for any organization sharing their work to protect or restore the environment or mitigate adverse environmental and ecological effects. Given the potential increase in administrative burden presented by these changes, small and medium-sized companies may be disproportionately impacted by this amendment as they will not have the necessary resources or internal capacity in legal, regulatory and compliance to adjust their public statements or defend themselves against potential proceedings from the Competition Tribunal.

Recommendations:

• Withdraw the private right of action clauses in relation to section 74.01(1)(b.2), recognizing that the Bureau has the expertise, knowledge and resources to appropriately investigate firms or organizations that are perceived to be greenwashing, rather than individuals who may have ulterior motives for pursuing private right of action.
• Develop a screening process in the guidance to ensure the reverse onus is not abused by private parties. The Bureau must assess claims on a case-by-case basis, ensuring that there is an objective and verifiable need to bring proceedings against an organization or firm.
• Delay enforcement through private right of action and the Tribunal system until such time as certainty and clarity can be provided to businesses through guidelines, directives or further policy as needed. Noting that there is no case law to reference regarding the requirement to satisfy an adequate and proper substantiation for claims of environmental benefit in accordance with internationally recognized methodology.
• Clarify all definitions in the amendments, specifically noting the mention of “public interest”, in reference to the Tribunals capability to grant leave to make an application under section 74.01, if it is satisfied that it is in the “public interest” to do so.
• Engage with provincial securities regulators, the CSA and CSSB to ensure the legislation does not – will not – contravene existing legislative provisions, which are provincially governed.

Closing

The Competition Bureau must commit to robust and ongoing engagement with the business community to develop effective guidelines for implementing this legislation, ensuring unintended consequences and regulatory burdens are minimized as much as possible. As an organization representing businesses of all sectors and sizes, the Bureau also must clarify whether companies that support the Chamber will be held liable if a representation was made that appeared to violate Section 74.01(1)(b.2).

To provide the certainty needed for businesses to thrive, the Bureau must draft guidance that provides clarity on which methodologies will be accepted under the new provisions. Additionally, businesses must not be subject to competing disclosure requirements between CSSB and the requirements introduced in Bill C-59. Lastly, the Bureau has a responsibility to ensure that the provisions for private right of action are not abused by bad faith actors and must provide certainty to businesses regarding requirements to satisfy an adequate and proper substantiation.

Decarbonizing Canada’s economy is one of the greatest challenges – and opportunities – of our time. We need governments to work with businesses to drive the innovation needed to achieve our ambitious climate goals.

Sincerely,

Deborah Yedlin
President & CEO
Calgary Chamber of Commerce  

ABOUT THE CALGARY CHAMBER OF COMMERCE  

The Calgary Chamber of Commerce exists to help businesses reach their potential. As the convenor and catalyst for a vibrant, inclusive and prosperous business community, the Chamber works to build strength and resilience among its members and position Calgary as a magnet for talent, diversification and opportunity. As an independent, non-profit, non-partisan organization founded in 1891, we build on our history to serve and advocate for businesses of all sizes, in all sectors across the city.