Canada’s greenwashing rules affect everyone, not just oilsands

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A group formed by Canada’s six largest oilsands companies that is working on reducing its carbon emissions in the coming decades surprised many last week when it removed all its content from its website after the government enacted Bill C-59, which, among other things, addresses what some call “greenwashing.”

The Pathways Alliance‘s goal is to reduce oilsands emissions by 22 million tonnes per year by 2030 and become net zero by 2050 by using technologies such as carbon capture and storage and nuclear energy. One of its goals is to build a large carbon capture and storage project in the Cold Lake region of northeastern Alberta.

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The oil and gas sector is the largest single source of emissions for Canada, accounting for about 28 per cent of the country’s overall emissions in 2021, according to government data.

Here’s why the group decided to remove the content and why the change in Canada’s Competition Act affects more than just the oilsands.

What is greenwashing?

The act of greenwashing occurs when companies provide false information regarding how environmentally sound their products are or when they deceive the public by making unsubstantiated claims about the steps they are taking to protect the environment or reduce their carbon emissions.

In 2015, Canada and 194 other countries signed the Paris Agreement, under which the world is aiming to limit the rise of the global average temperature to less than 2 C. In order to do that, Canada is trying to reduce its carbon emissions by 30 per cent below 2005 levels by 2030.

To meet that goal, Canada would need some of its heavy-emitting sectors, such as transport and oil and gas, to reduce their dependency on carbon. As such, the federal government wants to ensure companies are actually taking steps towards that goal instead of just participating in deceptive marketing practices.

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Why Pathways responded?

Pathways decided to remove all its content from its website after the bill that includes the amendments to the Competition Act was passed.

The bill adds two paragraphs linked to environmental protection in a Competition Act section that deals with deceptive marketing practices. The additions essentially say that the methods promoted by businesses to protect the environment need to be based on verified methods and should be in accordance with “internationally recognized methodology.”

The Pathways Alliance, comprised of Canadian Natural Resources Ltd., Cenovus Energy Inc., ConocoPhillips Canada, Imperial Oil Ltd., Meg Energy Corp. and Suncor Energy Inc., has a problem with the apparent vagueness of the additions .

“Creating 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,” the association said in a statement on June 20. “This represents a serious threat to freedom of communication.”

It said its decision to remove the content was not because it didn’t believe in what it promoted, but because of the “significant uncertainty and risk” that it creates for all Canadian companies, regardless of the sector. The legislation will also “silence” Canadian businesses, it added.

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The federal government disagreed with the alliance and said the bill’s passage was “good news” for the market.

Environment Minister Steven Guilbeault said he hasn’t seen oil and gas companies execute their commitments to “get shovels in the ground for projects” that will cut emissions.

“It’s simple: consumers deserve to know the truth about the record profits being made by the oil and gas sector,” he said in a statement.

How are other industries responding?

Akin to Pathways, the Canadian Association of Petroleum Producers (CAPP), which represents nearly three-quarters of Canada’s annual oil and natural gas production, also reduced the amount of information on its website and digital platforms until the Competition Bureau releases further guidance.

“These amendments have been put forward without consultation, clarity on guidelines, or the standards that must be met to achieve compliance,” it said in a statement on Thursday.

It said the amendments have been designed in such a way that those making a complaint face “no risk or accountability,” and that the burden falls entirely on companies to justify their public comments.

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These changes empower private parties to force companies to appear before the Competition Tribunal to defend themselves, which is a shift from the current practice, where only the bureau enforces misleading advertising laws, it said. This opens the “floodgates” to “resource-draining complaints.”

Canada’s largest mining association echoed a similar sentiment in a letter sent to Deputy Prime Minister Chrystia Freeland and Industry Minister François-Philippe Champagne late last month.

The vagueness of the proposed amendment might force companies to make “very conservative representations” of their environmental actions that might hurt their ability to secure investments, Pierre Gratton, chief executive of the Mining Association of Canada, said.

He said that based on legal review, the lack of clarity around “internationally recognized methodology” raised serious concerns.

“It is unclear how the bureau or tribunal would apply this standard and the ambiguity could lead to ongoing compliance uncertainty and risk,” he said.

The Canadian Banking Association, which represents the country’s top banks, said it is still reviewing the changes.

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“Banks in Canada are implementing climate action plans and reporting on their actions,” said Maggie Cheung, the group’s media relations manager, in a statement last week. “This includes working with clients … to help them work towards their sustainability goals and pursue energy transition opportunities, and financing new and existing green projects.”

The Canadian Chamber of Commerce, which represents about 200,000 businesses, expects the changes to limit the ability of companies to contribute to the country’s climate objectives. It said in a statement last week that the recent changes introduced a sense of uncertainty for companies.

Alberta vs Ottawa

Alberta Premier Danielle Smith said her government was “actively exploring the use of every legal option” to protect its energy sector from the “draconian” legislation.

“Alberta is a global leader in the complex effort to reduce emissions from our energy industry,” she said in a statement on Thursday. “We need a lucid partner in Ottawa that is willing to work with us and not demonize one of Canada’s largest employers and industries.”

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Prime Minister Justin Trudeau said it’s important that “people build their positions and their decisions around facts,” according to the CBC.

“Now, freedom of expression, freedom of people to share their points of view, is extraordinarily important. It’s one of the foundations of a free and open democracy,” he said on Thursday. “But we need to make sure that people are debating and discussing and basing their worldview on things that are anchored in truth and reality.”

• Email: nkarim@postmedia.com

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