Greenwashing Risks for SMEs: How to Avoid Overstating Your Sustainability Efforts

We recently co-led a workshop at Toronto Climate Week, where we explored how businesses of all sizes can communicate sustainability without greenwashing. For small and medium-sized enterprises (SMEs), this topic is especially important. Even companies with simple operations can face reputational risk if environmental claims are overstated or misleading.

With Canada’s new anti-greenwashing provisions under Bill C-59, environmental or climate-related claims must be accurate and substantiated— no matter your size. Misleading or exaggerated statements can harm your credibility with clients, suppliers, and regulators.

What is Greenwashing?

Greenwashing happens when a company exaggerates or misrepresents its environmental performance or benefits. Sometimes it’s deliberate, but often it’s accidental — through vague language, assumptions, or incomplete information.

Common pitfalls for SMEs include:

• Using broad terms like “eco-friendly” or “sustainable” without specifics

• Claiming “carbon neutral” without emissions reductions

• Stating a greenhouse gas target, like “net zero by 2050”, without a plan or action

• Advertising recyclable packaging when only part of it is recyclable

Why Is Avoiding Greenwashing Important?

It's important to build and maintain trust with your customers and employees. Many GenZ and millennials want to buy more sustainable products and work for companies that are taking sustainable action. By avoiding greenwashing, you:

• Improve perception and trust

• Reduce reputational and legal risk

• Help people make better choice regarding the impact of their purchases

• Attract and retain more top tier talent

Even small businesses can face lost customer trust or reputational damage if claims aren’t credible — especially when large customers are auditing suppliers for ESG compliance.

How to Stay Credible

1. Be truthful. Be truthful, and not false or misleading - both in terms of literal meaning and general impression of the claim.

   
   

2. Substantiate your claims. Product claims need to be based on adequate and proper tests, and business claims need to employ appropriate internationally recognized methodology.

   
   

3. Avoid vague phrases and absolutes. Phrases like “clean”, “green” or “zero waste” or “100% sustainable” rarely reflect the full picture.

   
   

4. Be specific and avoid exaggeration.

   
   

5. Avoid aspirational claims without a solid plan and action (e.g., net zero by 2050 with no plan)

   
   

6. Highlight progress, not perfection. Customers value honesty about your current stage and future plans.

   
   

7. Document your actions. Keep records of supporting data, methodologies and audits.

   
   

8. Get an external check if needed. Even a brief review by a consultant and/or lawyer can prevent unintentional overstatements.

Turn Compliance Into Opportunity

By communicating about your product or business benefits truthfully and accurately, you strengthen relationships with clients, customers, and employees alike.

At Achieve Sustainability, we help SMEs to formulate claims that align with Canada’s evolving green marketing rules. Whether for websites, reports, or supplier questionnaires, we help you state your environmental claims confidently and credibly.

🌿 For more information, book a free consultation here or email carol@achievesustainability.ca.