Bill C-59: What CPAs Need to Know
Bill C-59, Fall Economic Statement Implementation Act received royal ascent and took effect on June 20, 2024. It brought significant amendments to the Competition Act aimed at addressing misleading claims about environmental and social benefits also known as greenwashing. The amendments place the burden on organizations making claims to substantiate that these claims are based on adequate and proper testing, following internationally recognized methodologies.
What changes does the Bill introduce?
The Bill amends section 74.01 of the Competition Act to address misleading environmental and social benefit claims made to the public. Specifically, the amendments pertain to:
- Any statement, warranty or guarantee of a product’s benefits for protecting or restoring the environment or mitigating environmental, social, and ecological causes or effects of climate change that are not based on adequate and proper testing.
- Any representations with respect to the benefits of a business or business activity for protecting or restoring the environment or mitigating the environmental and ecological causes or effects of climate change that are not based on adequate and proper substantiation in accordance with internationally recognized methodology.
The amendment to the Competition Act results in a significant change where the Commissioner of Competition needed to rely on the general misleading advertising provisions of the Competition Act and bore the burden of proving that the environmental or social claims were materially false or misleading. With the introduction of Bill 59, the onus is now placed on the advertiser to prove, if they are challenged, that the claims are based on adequate and proper testing or substantiation.
What does "adequate and proper" test mean?
The phrase “adequate and proper” is not defined in the Competition Act, nor is the phrase “adequate and proper substantiation in accordance with internationally recognized methodology.” The Competition Bureau (Bureau) has said it is still assessing the impacts of these new requirements and will provide guidance in due course.
Who will be impacted by these new provisions?
All companies in Canada, irrespective of whether they are public or private, will be impacted by these new provisions in the Competition Act.
Who can take action under the amendments to the Competition Act?
The Competition Commissioner can take action in accordance with these amendments to the Act, but as of June 20, 2025, private parties can seek to bring actions for deceptive advertising directly before the Competition Tribunal if they can show “public interest.”
What is the role of CPAs?
The skillset and ethical obligations of CPAs position the profession to help ensure that environmental and social information disclosed by organizations is both reliable and credible.
CPAs understand the strong governance and internal controls necessary to support the “adequate and proper” testing of a claim, and how to create and maintain supporting evidence so third parties could independently assess the veracity and reliability of the representation made by the company.
What are CPA’s professional obligations in relation to Bill C-59?
CPAs are required to act with integrity and due care, meaning CPAs have an obligation to ensure that environmental and social claims made by their organizations are accurate, substantiated and not misleading.
CPAs should only undertake work and responsibilities that they have the competency to perform. If the CPA does not have the necessary knowledge and skills required to substantiate an organization’s environmental and social claims, reaching out to an expert in the field may be necessary.
CPAs are obligated to not associate themselves with information that they know or should know is false or misleading.
For more information on potential ethical issues CPAs need to watch out for in sustainability reporting, refer to our article: Greenwashing and Litigation.