Australian example can help Canada fight greenwashing without chilling climate investment

A new Analysis from the Institute for Sustainable Finance (ISF) at Smith School of Business, Queen’s University warns that while Canada’s new anti-greenwashing rules mark a major step forward in addressing harmful marketing practices, they also risk discouraging legitimate sustainability disclosure and investment unless key gaps are addressed.

Titled “Canadian Competition, Aussie Rules: A model from Down Under to fight greenwashing, reduce litigation risk and support investment in climate action,” the paper examines the implications of elements of Bill C-59, which amended the Competition Act in June 2024 to combat misleading environmental claims. Download the paper, here.

The ISF analysis notes that Bill C-59 imposes stringent new requirements — including a reverse onus on companies to prove their environmental claims and significant penalties for non-compliance — while also allowing private organizations to bring greenwashing cases before the Competition Tribunal. Although intended to rebuild public trust, these provisions have created regulatory uncertainty and prompted some firms to scale back ESG disclosures. Despite guidance issued by the Competition Bureau earlier this year, ISF’s Analysis finds the legislation has created significant litigation risk to be navigated by firms.

“The intent of Bill C-59 is sound,” said Thomas Walker, ISF Executive Director (Academic). “But without clearer guidance and better coordination across regulators, we risk deterring the very disclosures that enable investors to direct capital toward climate solutions.”

Drawing on Australia’s coordinated framework, the report highlights how detailed guidance, clear examples, and strong collaboration between competition and financial regulators have created both robust consumer protection and a healthy environment for sustainability reporting.

The authors recommend several steps for Canada, including:

• clearer, sector-specific guidance from the Competition Bureau;
• greater alignment between the Bureau and securities regulators such as the Office of the Superintendent of Financial Institutions and Canadian Securities Administrators;
• restart the CSA process to establish mandatory climate related disclosures to globally aligned standards developed by the Canadian Sustainability Standards Board;
• consideration of amending the legislation to include safe-harbour provisions for forward-looking climate statements; and
• a review of the new private right of action to prevent opportunistic litigation.

“With targeted reforms, Canada can create a system that promotes both accountability and transparency — ensuring capital continues to flow toward net-zero goals,” said Maya Saryyeva, ISF Director.