In a significant development for Canada’s financial technology sector, fintech companies are now navigating stricter regulations surrounding environmental claims under recent amendments to the Competition Act.
As reported by the National Crowdfunding & Fintech Association (NCFA Canada), these changes, enacted through Bill C-59 in June 2024, introduce robust anti-greenwashing provisions aimed at ensuring businesses substantiate their environmental claims with evidence.
This shift is poised to reshape how financial technology firms market their sustainability initiatives, requiring greater transparency and accountability in an industry increasingly focused on eco-conscious innovation.
The Competition Act amendments target misleading environmental claims, commonly referred to as greenwashing, where companies exaggerate or falsely advertise the environmental benefits of their products or services.
With growing consumer demand for sustainable solutions—evidenced by countless Canadians prioritizing eco-friendly products—fintechs offering green bonds, sustainable investment platforms, or circular economy solutions are under scrutiny.
The Competition Bureau’s draft guidelines, released in early 2025, clarify that businesses must back environmental claims with “adequate and proper substantiation.”
This means fintechs must provide verifiable evidence, such as internationally recognized methodologies, to support assertions about carbon neutrality, waste reduction, or other sustainability metrics.
For fintechs, this regulatory shift presents both challenges and opportunities.
Companies like CoPower, a Toronto-based fintech acquired by Vancity Community Investment Bank, have enabled sustainable investing through green bonds funding energy-efficient projects.
Such firms must now ensure their marketing aligns with the new rules, potentially increasing compliance costs for data collection and verification.
Smaller fintechs, already navigating a complex regulatory landscape with anti-money laundering (AML) and data protection requirements under laws like PIPEDA, may find these additional obligations daunting.
Failure to comply risks severe penalties, including fines and reputational damage, as the Competition Bureau emphasizes truthful advertising to protect consumers.
The amendments reflect a broader push to modernize Canada’s competition framework, a process that began with consultations in 2022 under the Innovation, Science and Economic Development Canada (ISED) review.
The NCFA has long advocated for balanced regulations that foster innovation while protecting consumers, noting that Canada’s fintech sector—spanning payments, blockchain, and sustainable finance—faces a complex and sometimes chaotic regulatory environment.
The new rules aim to level the playing field, ensuring fintechs compete fairly with traditional financial institutions while maintaining consumer trust in their green offerings.
However, uncertainty remains, as highlighted by KPMG’s analysis of the draft guidelines.
The guidelines provide clarity on the need for evidence-based claims but leave room for interpretation, particularly around what constitutes “adequate” substantiation.
Fintechs must also contend with the global context, as jurisdictions like the European Union have implemented similar regulations, such as the Circular Economy Action Plan, which promotes sustainable finance.
This global trend underscores the need for Canadian fintechs to align with international standards to remain competitive, especially as they expand into markets like Asia, where Canada’s financial services brand is strong.
Opportunities abound for fintechs that adapt swiftly.
By leveraging technology to provide transparent, data-driven sustainability metrics, firms can differentiate themselves in a crowded market.
For instance, robo-advisor platforms could integrate real-time environmental impact tracking, while blockchain-based solutions could offer immutable records of green project outcomes.
The NCFA emphasizes that fintechs’ agility and innovation can help them meet these requirements, potentially attracting eco-conscious investors and customers.
Moreover, collaboration with regulators and industry partners, a hallmark of NCFA’s advocacy, could streamline compliance efforts and foster a supportive ecosystem.
As Canada’s fintech sector continues to grow—reportedly three times faster than traditional finance with 97% of the market untapped—adhering to these green claim rules will be critical.
Fintechs must balance innovation with compliance, ensuring their sustainability promises are not only compelling but also credible.
By doing so, they can lead the charge in transforming Canada’s financial landscape into one that is both innovative and environmentally responsible.