ESG Litigation Guide

Although the growth of environmental, social and governance (ESG) litigation in Canada was not quite as rapid compared to other jurisdictions, the developments there are no less interesting. To date, climate change litigation brought by NGOs, consumers and their representatives has primarily targeted public administrations such as the province of Ontario based on alleged infringement of the Charter of Rights and Freedoms, specific legislation such as the Greenhouse Gas Pollution Pricing Act, or companies in the natural resources and energy sectors.

However, litigation involving allegations of greenwashing and false ESG claims is now coming into the public eye, at least since an increasing focus on greenwashing by the Canadian Competition Bureau. As a result, companies will continue to face increased regulatory scrutiny and greenwashing litigation, including class actions and shareholder activism litigation. Just recently, a manufacturer of coffee pods agreed to pay a multi-million dollar penalty for greenwashing allegations in a competition law case. Further, Greenpeace Canada recently submitted a complaint alleging a coalition of oil sands producers making false and misleading representation trough an environmental advertising campaign. This development is not surprising given the variety of ESG claims being made, the lack of consensus on what it really means or should mean to advertise a product as "carbon neutral" or "sustainable", and the lack of widely accepted verification and certification schemes. Ongoing regulatory developments in this area should therefore be monitored and marketing strategies regularly reviewed, as ESG litigation and regulatory proceedings increasingly represent a significant risk to the company and its management and directors. Corporate governance and D&O cases are also likely to increase as a result.