Greenwashing is a form of marketing that misrepresents a product, service or practice as having positive environmental effects,1 thereby misleading consumers and preventing them from making an informed purchasing decision.2 Several initiatives have been launched around the world to counter this practice. In California, a law requires business entities to disclose information in support of environmental claims.3 In France, ads featuring environmental claims such as “carbon-neutral” and “net zero” must include a quick response (QR) code that links to the studies and data supporting such claims.4 Within the European Union, a proposal for a directive was published with a view to possibly banning generic terms like “environmentally friendly.”5 In South Korea, the Korea Fair Trade Commission proposed an amendment to its Guidelines for Review of Environment-Related Labeling and Advertising that would simplify the process of issuing fines to businesses engaged in greenwashing.6 The Parliament of Canada seemingly followed suit by tabling Bill C-597 on November 30, 2023, which introduces a provision into the Competition Act8aimed at improving the means to fight greenwashing. Amended on May 28, 2024, Bill C-59 finally received royal assent on June 20, 2024, date on which it partially came into force. Because the provision will apply to “any person,” all businesses will be subject to it, regardless of their size or legal form. Amendments to the Competition Act regarding environmental claims The Competition Act now allows9 the Commissioner of the Competition Bureau (the “Bureau”) to inquire into10 the conduct of a person who promotes 1) a product by making an environmental claim or warranty11 or 2) any business interest by making representations about the environmental benefits of a business or business activity. Claim concerning a product or service Insofar as a business or person is unable to demonstrate a product’s benefits for protecting the environment or mitigating the environmental and ecological effects of climate change, the Commissioner of Competition will be entitled to apply to a court for an order requiring such business or person to (i)cease promoting the product on the basis of a non-compliant environmental claim or warranty, (ii)publish a corrective notice and (iii)pay an administrative monetary penalty12 of up to, for a legal person, the greater of $10 million and three times the value of the benefit derived from the deceptive conduct, or, if that amount cannot be reasonably determined, 3% of the legal person’s annual worldwide gross revenue. The penalty for each subsequent offence could be as high as $15 million. A “product” within the meaning of the Competition Act may be an article (real or personal property of every description) or a service.13 This new provision expressly requires any person or business to base their environmental claims on “an adequate and proper test”.14 A “test” within the meaning of this Act consists in an analysis, verification or assessment intended to demonstrate the result or alleged effect of a product. It does not necessarily have to be a scientific method nor do the results need to meet a test of certainty, as the courts have generally interpreted the term “proper” to mean fit, apt, suitable or as required by the circumstances.15 With regard to misleading claims, the courts16 have clarified the nature of the criteria that must be considered to determine whether a particular test is “adequate and proper.” Thus, an adequate and proper test depends on the claim made as understood by the common person. The test must also meet the following criteria: It must be reflective of the risk or harm which the product is designed to prevent or assist in preventing. It must be done under controlled circumstances or in conditions which exclude external variables or take account in a measurable way for such variables. It must be conducted on more than one independent sample wherever possible (e.g., destruction testing may be an exception). The results need not be measured against a test of certainty, but must be reasonable given the nature of the harm at issue and establish that it is the product itself which causes the desired effect in a material manner. It must be performed regardless of the size of the seller’s organization or the anticipated volume of sales.17 Representations accompanying product that come from a person outside Canada are deemed to be made by the person who imports the product into Canada.18 General claims about a company’s activities While Bill C-59 was initially intended to cover only environmental statements, warranties or guarantees regarding products, the assented version of the bill provides that any representation made regarding 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 are subject to a Bureau inquiry.19 As an example cited by the Bureau, a company’s claims about being “carbon neutral” or that it commits to becoming so within a certain number of years20 would constitute “representations of the benefits of a business or business activity in mitigating the causes of climate change.” The company making such claims must be able to demonstrate that they are based on “adequate and proper substantiation” obtained using an “internationally recognized methodology”.21 The Competition Act does not specify which internationally recognized methods may be used for this purpose. Should the substantiation the company uses be inadequate, improper or obtained using a method that is not recognized internationally, it will be subject to the same consequences as those mentioned in the previous section.22 Regardless of whether the claims concern a product or service or a business activity, the persons concerned are allowed to defend themselves under the Competition Act by establishing that they exercised due diligence.23 What impact will these amendments really have? Notwithstanding the proposed legislative amendment, the Competition Act already covers false or misleading representations with respect to green advertising.24 The current provisions already prohibit making representations to the public that are false or misleading in a material respect.25 In recent years, several complaints of greenwashing have been lodged with the Bureau on that basis, prompting it to open a number of investigations. Some have led to major settlements involving companies having made representations regarding their products.26/27/28/29 In all of these cases, the heavy burden of establishing that the business’s environmental claim was false or misleading fell on the Bureau. The proposed amendments to the Competition Act would change this by shifting the burden of proof onto businesses. The onus would therefore be on them to demonstrate that their product benefits the environment in some way or mitigates the environmental and ecological effects of climate change or that its claims are based on adequate and proper substantiation obtained using an internationally recognized method. These new legislative provisions now confirm what was already a general standard since 1999, and they ease the Bureau’s burden of proof. In addition to the Competition Act, other laws applicable in Quebec provide a general framework for greenwashing, such as the Consumer Protection Act.30Under this Act, no merchant, manufacturer or advertiser may, by any means whatsoever, make false or misleading claims to a consumer, which implicitly includes greenwashing.31 To determine whether a representation constitutes a prohibited practice, the general impression it gives, and, as the case may be, the literal meaning of the terms used therein must be taken into account. In particular, it is prohibited to falsely ascribe particular advantages to a product or service, or to claim that a product has a particular feature or ascribe certain characteristics of performance to it.33 Offences are subject to criminal34 and civil35 penalties. Private remedies Another new measure to combat greenwashing in the Competition Act is the possibility for any person (individual, organization, competitor, etc.) to apply directly to the Competition Tribunal for an order against a business making environmental claims or representations about a product, service or activities without adequate substantiation.36 In the first version of Bill C-59, only the Commissioner of Competition could institute such proceedings before the Tribunal.37 However, the Competition Tribunal must first give leave to make such an application.38 The Tribunal’s power to give leave is largely discretionary, meaning that the Tribunal may grant it if it deems that it is in the public interest to do so.39 This new measure will come into force in one year on June 20, 2025.40 Best practices It is crucial for a company to adopt and display a realistic image of its environmental impact based on credible data and facts. Making sure that claims are legally compliant is not all that’s at stake. A business’s failure to do the above is likely to seriously harm not only its reputation, but also its relationship with its stakeholders. Thus, before claiming to be “green,” businesses must consider the following questions. Are the real motivations behind the business’s sustainability commitments clear, legitimate and convincing? Is sustainable development an integral part of the business strategy? Is it applied when addressing key business issues and taking new actions? Does the company have a sustainable development policy that is credible and based on relevant issues? Was it developed collaboratively with and approved by its Board of Directors? Has the company set specific, clear, measurable and achievable objectives and targets? Considerations for public companies As concerns public companies subject to continuous disclosure obligations under Canadian securities legislation (“reporting issuers”), these considerations are set against a backdrop of increasing pressure from investors, including institutional investors, and others for greater transparency on climate-related issues. Although climate-related disclosure requirements for Canadian reporting issuers are still relatively limited, many issuers choose to voluntarily disclose such information, for example in sustainability reports. Reporting issuers must pay particular attention to their communications, which could constitute greenwashing within the meaning of the Competition Act and give rise to the penalties and other consequences mentioned above. This is another risk to add to reporting issuers’ liability in the secondary market for misrepresentation and failure to make disclosures within prescribed time limits. As far as climate issues are concerned, the risk arises in particular from overestimating or inadequately disclosing how activities contribute to protecting the environment or how they mitigate the environmental and ecological effects of climate change. The current move towards standardized methodologies and frameworks and the forthcoming adoption of binding rules on climate-related disclosures should help to limit greenwashing in this context. In the meantime, reporting issuers can reduce the risk of greenwashing by following a well-established international methodology and by including disclaimers for forward-looking statements adapted to the risks and uncertainties inherent to the climate-related information they provide. Conclusion The new provisions of the Competition Act are already having an impact. As a precaution, some companies have removed ads, promotional documents and websites containing claims that certain activities were undertaken specifically to mitigate the causes of climate change. Parliament’s message could not be clearer: Shifting the burden of proof onto businesses means closing the door on an era when products, services and business activities could be marketed as green in the absence of tangible evidence. Definition of the Autorité des marchés financiers: 8 questions and answers about carbon credits and related concepts | AMF (lautorite.qc.ca). Definition of the Competition Bureau: Environmental claims and greenwashing (canada.ca). Assembly Bill No. 1305: Voluntary carbon market disclosures, California, 2023. Read it here: Bill Text – AB-1305 Voluntary carbon market disclosures. Décret no 2022-539 du 13 avril 2022 relatif à la compensation carbone et aux allégations de neutralité carbone dans la publicité, Journal officiel de la République française, 2022. Read it here: Légifrance – Publications officielles – Journal officiel – JORF n° 0088 du 14/04/2022 (legifrance.gouv.fr). Proposal for a Directive of the European Parliament and of the Council amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transition through better protection against unfair practices and better information, Council of the European Union, Brussels, 2022. Read it here: pdf(europa.eu). Read it here: KFTC Proposes Amendment to Review Guidelines Regarding Greenwashing – Kim & Chang (kimchang.com). An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, 44th Parliament, 1st Session. Read it here: Government Bill (House of Commons) C-59 (44-1) – First Reading – Fall Economic Statement Implementation Act, 2023 – Parliament of Canada. The Bill is currently at second reading in the House of Commons. R.S.C. 1985, c. C-34. These provisions came into force on June 20, 2024. This power to make inquiry would be available, as the Competition Act already provides, upon receipt of a complaint signed by six persons who are not less than 18 years of age or in any situation where the Commissioner has reason to believe that a person has contravened section 74.01 of the Competition Act (see R.S.C. 1985, c. C-34, ss. 9 and 10). An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, 44th Parliament, 1st Session, section 236. Read it here: Government Bill (House of Commons) C-59 (44-1) – First Reading – Fall Economic Statement Implementation Act, 2023 – Parliament of Canada; section 236 of this Act adds paragraphs b.1 and b.2 to subsection 74.01(1) of the Competition Act. Competition Act, R.S.C. 1985, c. C-34, article 74.1. Competition Act, R.S.C. 1985, c. C-34, subsection 2(1). An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, 44th Parliament, 1st Session, para. 236(1). Read it here: Government Bill (House of Commons) C-59 (44-1) – First Reading – Fall Economic Statement Implementation Act, 2023 – Parliament of Canada The Commissioner of Competition v. Imperial Brush Co. Ltd. and Kel Kem Ltd. (c.o.b. as Imperial Manufacturing Group), 2008 CACT 2, paras. 122 et seq. Competition Act, R.S.C. 1985, c. C-34, section 74.09: “courts” means the Competition Tribunal, the Federal Court and the superior court of a province. The Commissioner of Competition v. Imperial Brush Co. Ltd. and Kel Kem Ltd. (c.o.b. as Imperial Manufacturing Group), 2008 CACT 2. Competition Act, R.S.C. 1985, c. C-34, subsections 74.03(1) and (2). An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, 44th Parliament, 1st Session, section 236. Read it here: Government Bill (House of Commons) C-59 (44-1) – First Reading – Fall Economic Statement Implementation Act, 2023 – Parliament of Canada; paragraph b.2 of section 74.01 of the Competition Act was added by amendment adopted on May 28, 2024. Letter from Anthony Durocher and Bradley Callaghan to the Honourable Pamela Wallin dated May 31, 2024. Read it here: BANC_Follow-up_CompetitionBureau_e.pdf (sencanada.ca). An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, 44th Parliament, 1st Session, section 236. Read it here: Government Bill (House of Commons) C-59 (44-1) – First Reading – Fall Economic Statement Implementation Act, 2023 – Parliament of Canada. Competition Act, R.S.C. 1985, c. C-34, article 74.1. Competition Act, subsection 74.1(3). Louis-Philippe Lampron, “L’encadrement juridique de la publicité écologique fausse ou trompeuse au Canada : une nécessité pour la réalisation du potentiel de la consommation écologique?” Revue de Droit de l’Université de Sherbrooke, Vol. 35, No. 2, 2005, p. 474. Read it here: A:\lampron.wpd (usherbrooke.ca). Competition Act, R.S.C. 1985, c. C-34, paragraph 74.01(1)(a). Amanda Stephenson, Des groupes écologistes misent sur la Loi sur la concurrence(Environmental groups banking on the Competition Act), October 1, 2023, La Presse. Read it here: Des groupes écologistes misent sur la Loi sur la concurrence | La Presse. Brenna Owen, Un groupe accuse Lululemon d’« écoblanchiment » et demande une enquête (A group accuses Lululemon of “greenwashing” and calls for an investigation) February 13, 2024, La Presse. Read it here: Un groupe accuse Lululemon d’« écoblanchiment » et demande une enquête | La Presse. Martin Vallières, “Gare aux tromperies écologiques” (Beware of greenwashing), January 26, 2022, La Presse. Read it here: Écoblanchiment | Gare aux tromperies écologiques | La Presse; Keurig Canada to pay $3 million penalty to settle Competition Bureau’s concerns over coffee pod recycling claims – Canada.ca. The Commissioner of Competition v. Volkswagen Group Canada Inc. and Audi Canada Inc., 2018 Competition Tribunal 13. Consumer Protection Act, CQLR c. P-40.1, ss. 219, 220 and 221. Definition of the Competition Bureau: Environmental claims and greenwashing (canada.ca). Richard v. Time Inc., 2012 SCC 8, paras. 46 to 57. Consumer Protection Act, CQLR c. P-40.1, ss. 220 and 221. Consumer Protection Act, CQLR c P-40.1, ss. 277 to 279: Fines range from $600 to $15 000 in the case of a natural person and $2 000 to $100 000 in the case of a legal person. Offenders convicted a second time are liable to fines twice as high as those prescribed. Id. at ss. 271 to 276: Consumers may request that the contract be annulled, that the merchant’s obligation be performed or that their obligation be reduced, among other things. For civil matters only; An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, 44th Parliament, 1st Session, subsection 254(1). See subsection 103.1(1) of the Competition Act, R.S.C. 1985, c. C-34, effective before June 20, 2024. An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, 44th Parliament, 1st Session, subsection 254(1). Id. at 254(4). An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, 44th Parliament, 1st Session, section 272.

On March 28, 2024, the Department of Finance Canada announced a one-year extension to the 15% Mineral Exploration Tax Credit (“METC”) available to investors in flow-through shares. The extension means that the METC will be effective until March 31, 2025. This announcement came at a time when uncertainty loomed over the industry and some stakeholders feared that the government would not renew the METC. Over time, this tax credit has become a key component of flow-through share financings. It is intended to enhance the tax deductions already available to flow-through share holders and ultimately help companies raise capital for mineral exploration. The METC was last renewed in 2019 for a five-year period, indicating the government’s long-term commitment to the sector at that time. And while this renewal is welcome news for exploration companies, it should be noted that the shorter one-year horizon of the extension does not provide the same assurance regarding the incentive’s future. It is possible that this one-year renewal reflects the government’s intention to promote the new 30% Critical Mineral Exploration Tax Credit (“CMETC”) instead, on which more information can be found here: Federal Budget 2022: Good News for Mining Exploration Companies! In closing, it is important to note that the one-year extension to the 15% METC will not affect the period during which the 30% CMETC is available for critical mineral exploration, which will end on March 31, 2027, and is subject to renewal. If you were planning on financing non-critical mineral exploration, you may want to complete this transaction in the coming year in order to benefit from the 15% METC. Our team of professionals specializing in securities, mining law and taxation is available to answer any questions you may have concerning this new measure and to guide you in arranging a successful flow-through financing.

Provisional entry into force 90% of the Agreement will be in force The date is still uncertain, possibly as soon as June 2017   The Agreement in 6 key points Access to the European Union market, which includes 28 States and 500 million consumers; Elimination of custom duties on 98% of tariff lines; Projected increase of $324 million per year in Québec exports to the European Union by 2022; Projected 20% increase of exchanges with Europe; Access to the vast European public market; Impact on all sectors of the economy, from services and natural resources to the agricultural and the manufacturing sector.   On the eve of the provisional entry into force of the Canada-Europe Free Trade Agreement, understanding its implications should be a top priority for any company wishing to expand its activities over the course of the next few years. The vote held on February 15th at the European Parliament in favour of the ratification of the Agreement makes its entry into force imminent. The Agreement will open the door to the vast European market for Canadian businesses, a market representing on average thousands of billions of dollars per year with a population of 500 million. Imminent provisional entry into force In the wake of the historic vote of the European Parliament in favour of the ratification of the Comprehensive Economic and Trade Agreement (“CETA” or “Agreement”), one of the most important free trade zones in the world is on the verge of being established. This vote was held the day after Bill C-30 was passed by the House of Commons in Ottawa and referred to the Senate. This Bill aims to initiate the legislative amendments which are necessary for the Agreement to come into force in Canada. The important steps taken in the last few weeks make it possible for the Agreement to provisionally enter into force as early as this summer. In what way will the entry into force of the Agreement be provisional? At the time of the provisional entry into force, only the provisions on the Investor-State remedies and a provision on the criminalization of Camcording will not enter into force. That means that the entire Agreement will apply in both jurisdictions: 99% of industrial tariffs and 95% of agri-food tariffs will henceforth disappear. The pending legislative amendments in Canada will result in the opening of the Canadian public markets by the provinces and their dependant organizations, including the education, health and municipal sectors. In addition to the elimination of custom duties, the entry into force of the Agreement will result in a reduction of administrative formalities and bureaucratic obstacles to trade. The provisions of the Agreement will allow Canadian entrepreneurs to have the products they intend to export to the European market tested and certified in Canada, thus avoiding the costs related to certification and reducing delays. CETA will also improve access to the services trade, facilitate labour mobility and provide access to European public markets. Conclusion Once the Agreement fully enters into force, Canada will have unequalled access to the two most important world markets, that is, the North- American market, which is governed by NAFTA, and the European market through CETA. Québec businesses will find it most beneficial to consider the new business opportunities and partnerships made possible by the Agreement in order to profit from this preferential access and make their companies prosper.

Quebec mining, oil and gas companies are henceforth subject to the imposing disclosure regime under the Act respecting transparency measures in the mining, oil and gas industries (the “Act”), which came into force last October 21. This statute echoes the Extractive Sector Transparency Measures Act (Canada),1 which took effect on June 1, 2015, and follows a global trend to increase the transparency of mining, oil and gas exploration and development. The measures provided for in the Act are aimed at discouraging and detecting corruption, as well as fostering the social acceptability of these activities. Under the Act, the companies subject to the Act are required to declare in a statement, as of the next fiscal year following their current fiscal year on October 21, 2015, the payments covered by the Act made to payees for each project and country in which they have operations. Furthermore, this obligation extends to the subsidiaries controlled by a company subject to the Act. The statements will be made public for five years. Companies subject to the Act Is subject to the Act any company which engages in exploration for or development of mineral substances or hydrocarbons and which meets any of the following requirements: its securities are listed on a stock exchange in Canada and its head office is in Quebec; or it has an establishment in Quebec, exercises activities or has assets in Quebec and, based on its consolidated financial statements, meets at least two of the following three conditions for at least one of its two most recent fiscal years: $20 million or more in assets, $40 million or more in revenue, an average of 250 employees or more. Payments covered The payments covered are monetary payments or payments in kind made to the same payee during a fiscal year, where the total value of those payments is equal to or greater than $100,000. The following payments are subject to disclosure: taxes and income tax, other than consumption taxes and personal income taxes royalties fees, including rental fees, entry fees, regulatory charges and any other consideration for licences, permits or concessions production entitlements dividends other than those paid as an ordinary shareholder of a person subject to the Act bonuses, including signature, discovery and production bonuses contributions for infrastructure construction or improvement Payees The Act defines a payee as a government, a body established by two or more governments, a municipality or an aboriginal community,2 as well as an agent exercising powers or duties for such payees. Application and administration of the Act The administration of the Act is assigned to the Autorité des marchés financiers ("AMF"). To avoid duplication, the Act provides that a statement filed in accordance with the requirements of another state may be substituted for the statement required under Quebec law if the government has determined by regulation that the requirements of that state are an acceptable substitute. The statement must be accompanied by a certificate made by an officer or director of the company subject to the Act, or by an independent auditor, attesting that the information contained in the statement is true, accurate and complete. In addition to the investigative powers generally available to the AMF under the Act respecting the Autorité des marchés financiers (chapter A-33.2), the Act gives it the power to require the communication of any document or information considered useful for purposes of the Act. This includes a list of the mining, oil or gas exploration or development projects in which the company subject to the Act has an interest, an explanation of how the disclosed payments were calculated, and a statement of any policies implemented for purposes of meeting the obligations under the Act. The AMF may also require an audit by an outside independent auditor of the statement or the documents pertaining to the disclosed payments. Penalties Lastly, significant penalties are provided for a failure to comply by a company subject to the Act. In particular, the Act provides for administrative monetary penalties for which the directors and officers are jointly and severally liable, unless they demonstrate that they exercised due care and diligence to prevent the failure which led to the penalty. In addition, the penal provisions provide for a fine of up to $250,000 for a failure to comply with certain significant provisions of the Act. Quebec mining, oil and gas companies will be well-advised to stay informed of the regulations that will be passed by the provincial government and which could provide for exceptions or extensions to the requirements of the Act regarding the companies subject to the Act, the payments covered and the payees concerned. 1 Need to Know newsletter, june 2015. 2 A transitional period is provided for regarding payments made to aboriginal communities. The Act will apply to these communities beginning on June 1, 2017.