Ottawa’s move to fine companies over deceptive green claims triggers wave of website disclaimers in energy sector

Several Canadian oil companies and lobby groups have added disclaimers to their websites and social-media feeds – in one case, scrubbing all content – in response to new federal legislation that aims to stamp out false or exaggerated environmental claims.

A contentious provision within the government’s Bill C-59 makes changes to the Competition Act to combat greenwashing, and puts companies at legal risk for making environmental or social assertions in public communications that do not stand up to scrutiny. Individuals and companies could face sizable fines if found liable.

On Wednesday, Pathways Alliance, a coalition of oil sands producers proposing a multibillion-dollar carbon capture and storage project, replaced its website and social-media content with a disclaimer it said is in response to the C-59 anti-greenwashing measure.

The amendment “will create significant uncertainty for Canadian companies that want to communicate publicly about the work they are doing to improve their environmental performance, including to address climate change,” it reads. The group warned that creating a disclosure standard it described as vague will open the door to frivolous lawsuits.

The legislative changes are part of the Fall Economic Statement Implementation Act, which received royal assent on Thursday.

Environmentalists have lauded the measure, saying it will help protect consumers by injecting reality into green claims as Canadian regulators drag their feet implementing mandatory climate-related disclosures.

Business and energy groups have argued vociferously against the provision, saying they will be forced to back up their assertions against standards that are still undefined. Alberta, a perennial foe of Prime Minister Justin Trudeau’s government on environmental matters, blasted the measure as “draconian.” Provincial Environment Minister Rebecca Schulz said it will hinder Canadians’ ability “to hear the truth about the energy industry and Alberta’s successes in reducing global emissions.”

At least three of the Pathways Alliance member companies, Suncor Energy Inc. SU-T, Cenovus Energy Inc. CVE-T and Canadian Natural Resources Ltd., CNQ-T have added notes to their online communications that warn of uncertainty regarding their ability to discuss environmental, social and governance matters.

“We’re going to see a lot more of this from a bunch of companies in a variety of sectors in the coming days,” said Conor Chell, national leader, ESG legal risk & disclosure, at KPMG.

“I think it will be a combination of disclaimer-type language that we’ll see, and some companies will likely choose to withdraw some or all of their ESG disclosure from the public domain,” he said. “Over all, I think what it says is there’s a lot of uncertainty.”

The change is primarily aimed at corporate net-zero or carbon-neutrality assertions, but also address the authenticity of consumer product claims, he said.

The provision is broad – apart from sustainability reports, it could apply to comments made on social media, in investor presentation slides and even documents submitted to requests for project proposals, Mr. Chell said. In addition, the Competition Bureau could examine commentary made in the social realm, such as adherence to the Modern Slavery Act or regarding diversity, equity and inclusion.

Pathways Alliance said its members are committed to improving the industry’s environmental performance, but urged the bureau to provide clarity so it can determine the material they can publish.

The group has faced criticism over delays in moving forward with a $16-billion project to capture 12 million tonnes of greenhouse gas emissions by 2030, a development that would require significant taxpayer support.

The Competition Bureau, which in recent years has dealt with greenwashing complaints, has said the amendment will strengthen its ability to police deceptive claims. But it declined on Thursday to provide details on how enforcement and determining infractions would change from current practices.

The Canadian Association of Petroleum Producers, the industry’s main lobby group, said it too had reduced the amount of information on its website in response to the amendment, which it contends is aimed at silencing its members and the ability of Canadians to debate climate and environmental policy.

Under the legislation, individuals could be fined up to $750,000, or three times the amount of any financial benefit gained, whichever is greater. Companies could face fines of $10-million or three times the financial benefit. If that figure is unknown, a company may have to pay 3 per cent of worldwide revenues.

Asked at a news conference about Pathways Alliance removing the content from its website, the Prime Minister said he believes freedom of expression is important in a democracy. “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,” he said.

An alliance of green groups – the Canadian Association of Physicians for the Environment, Ecojustice, Équiterre and the Quebec Environmental Law Centre – had made recommendations to the government on the anti-greenwashing provision. The group said on Thursday that it would help address skepticism among consumers and reward companies that make sincere investments in sustainability.

Canada’s big banks are frequent targets of activists who complain that they tout their net-zero targets, while at the same time remaining major lenders to fossil-fuel producers. The banks have consistently said they are setting aside billions of dollars to help those companies make the transition to lower-carbon operations.

The Canadian Bankers Association said the financial institutions are reviewing the legislation and its implications, and there appeared to be no changes to the banks’ digital communications on Thursday.

“Banks in Canada are implementing climate action plans and reporting on their actions,” said Maggie Cheung, spokesperson for the association.