How Cleantech Companies Can Navigate Canada’s Rules and Global Standards

With growing scrutiny from regulators, investors, and consumers, cleantech companies face increasing pressure to back their environmental claims with credible evidence. In this sector, proving the impact of sustainability solutions is not just a matter of reputation—it’s essential for gaining investor confidence, entering new markets, and driving technology adoption. As concerns about greenwashing rise, clear communication and robust verification are more important than ever.

To improve transparency, the Government of Canada passed amendments to the Competition Act in 2024, requiring businesses to substantiate the environmental claims used to promote their products or services in Canada. Bill C-59 stated that all sustainability claims must be backed by scientific evidence and data rather than vague or unqualified statements. Claims must also align with globally recognized standards and methodologies—such as those of the International Organization for Standardization (ISO)—to ensure credibility.

These requirements apply to all companies—regardless size—that promote products, services, or business activities with environmental benefits, which has significant implications for cleantech companies developing climate solutions. The regulations also apply to a wide range of environmental claims, including those related to carbon emissions reduction, “eco-conscious” or “eco-friendly” products, and waste reduction. These amendments increase the risk for companies that do not have robust evidence for their environmental claims. 

Why Verified Claims Matter for Cleantech Companies

While additional verification requirements can seem burdensome—particularly for smaller companies with limited resources—ensuring claims are robust and evidence-based can have multiple benefits, including: 

• Attracting responsible investors: Measurable and verified claims enhance investor confidence. Institutional investors are maintaining their commitment to responsible investing, with 93% of Canadian investors integrating ESG considerations into their strategies.
• Enhanced credibility and consumer trust: Verified claims and transparent communication builds consumer trust, supports customer loyalty, and enhances brand credibility.
• Reduced risk: Verifiable and scientific data to support environmental claims can mitigate legal liability, regulatory penalties, and reputational damage.
• Compliance with foreign markets: Major markets such as the EU require environmental claims to be substantiated. Compliance with these standards can help facilitate international market entry.
• Supporting buyers’ ESG and sustainability reporting: Buyers may need verified environmental data to meet their own sustainability targets and regulatory requirements, particularly large corporations that may be subject to mandatory reporting requirements. Verified claims can support buyers with their own ESG and scope 3 disclosures. 

Governments and regulatory bodies worldwide are increasingly implementing sustainability reporting frameworks to achieve transparency regarding ESG risks and opportunities. The European Union, 10 other countries and California have corporate climate disclosure mandates in place, with six other countries considering enacting mandates. Although requirements are primarily limited to larger entities at this stage, there will likely be a trickle-down effect for SMEs. 

Despite some regions adjusting their approach, such as the Canadian Securities Administrators' decision in May 2025 to pause mandatory reporting, small companies and startups proactively embracing robust sustainability practices and early data collection can still secure a competitive advantage. By ensuring their sustainability claims are verified and robust, SMEs can build consumer trust and attract socially responsible investors. This initial step can then pave the way for integrating broader sustainability metrics into their overall environmental and social performance strategies. Cleantech companies, by their very nature, are uniquely positioned to lead this charge,  demonstrating that authentic sustainability efforts not only drive environmental progress but also enable commercial success.

Verifying Sustainability Claims 

The first step is to gather evidence and relevant data to support sustainability claims. This can include energy use, emissions data, material sourcing, waste management, and water usage. A standardized process can then be used to assess the impact and verify claims. 

Life cycle assessments (LCAs) are a well-recognized process for analyzing the environmental impact of products or services. This process can also compare a product's environmental impact to that of a standard alternative. Environmental Product Declarations (EPDs) can then be produced based on the LCA to disclose environmental data. Other science-based and internationally recognized methods can be used depending on the specific product or scenario. 

Third-party verification and auditing increase the robustness and validity of data. When communicating claims, the scope and methodology of the assessment can be referenced, and supporting evidence can be provided to interested parties.