In Canada, the federal (national) and provincial/territorial (regional) governments have responsibility for the protection of the environment. Federal laws will generally apply to all projects or operations throughout the country, while provincial/territorial laws apply only to those projects or operations located within the specific province or territory.

The key federal laws governing environmental protection include:

• the Canadian Environmental Protection Act, 1999;
• the Fisheries Act;
• the Impact Assessment Act (for projects carried out or financed by federal authorities on federal lands);
• the Migratory Birds Convention Act, 1994;
• the Transportation of Dangerous Goods Act;
• the Species at Risk Act; and
• the Canadian Navigable Waters Act.

Provinces bolster these laws with legislation within their jurisdiction, such as British Columbia’s Environmental Management Act, Ontario’s Environmental Protection Act and the provincial environmental and impact assessment legislation. Territories also have legislation within their jurisdiction, such as Nunavut's Environmental Protection Act.

Each one of these acts is underscored by regulations, orders and guidelines designed to ensure compliance and further the goals of each respective act.

The key federal regulatory authorities in Canada include:

• Environment and Climate Change Canada;
• Fisheries and Oceans Canada;
• the Impact Assessment Agency of Canada;
• Crown-Indigenous Relations and Northern Affairs Canada;
• Transport Canada;
• Parks Canada; and
• Natural Resources Canada.

Other key regulatory authorities exist in each province or territory, many of which will co-ordinate their approach to regulation and enforcement with their federal counterparts. This includes, for example, provincial ministries for the environment or the protection of wildlife, but also regulatory agencies like provincial impact assessment or enforcement agencies.

The federal and provincial regulatory bodies often co-operate through mechanisms such as equivalency agreements in the context of impact assessment, or joint inspections or investigations in the context of enforcement. There are also partnerships between federal and provincial governments and First Nations across Canada. It is becoming more common for First Nations to be recognised for and empowered in their stewardship over the environment in Canada.

Laws in the form of statutes and regulations generally provide blanket protection for environmental assets. Activities that may harm those assets typically require authorisations or permits, which contain obligations to monitor whether harm is occurring and to mitigate any such harm.

Consequences for breaching environmental statutes and regulations, and for breaching permits or authorisations, include compliance orders, suspensions or revocations of the permit or authorisation, administrative penalties, fines and imprisonment.

Most regulatory authorities employ officers or other enforcement personnel, who are often granted the power to conduct inspections and investigations. These inspections and investigations may be routine or in response to suspected regulatory breaches. For example, a federal fishery officer may enter and inspect a facility or vessel if he or she has reasonable grounds to believe that federal fishery regulations are being breached. In this example, they may also open containers, examine fish or take samples of them, conduct tests, or take copies of documents. Regulatory officers investigating a potential offence may be required to obtain search warrants, or may request voluntary disclosure.

The approach to the enforcement of environmental laws varies according to the severity of the environmental incident or breach. Whenever possible, regulatory authorities often seek to enforce environmental law through voluntary agreements and compliance. Canadian authorities will hold polluters responsible for the clean-up costs of pollution or contamination, and may seek further penalties where necessary.

Environmental permits are issued by federal or provincial/territorial governments, depending on the nature and location of the activity at issue. Environmental permits are generally obtained by applying to the appropriate government authority with responsibility over the permitting scheme; for example, permits around fish or fish habitats will commonly be obtained from Fisheries and Oceans Canada.

Depending on the circumstances, the various environmental permits required for a project can be obtained through a single process, but this is not always the case. Project proponents or operators in Canada need to obtain permits from each of the responsible governmental authorities (federal and provincial/territorial), as required. A federal or provincial environmental assessment (or both) may be required before permits are issued.

Environmental permits may be necessary for a wide variety of activities. For example, activities that may harm a threatened or endangered species will require a permit under the federal Species at Risk Act, while activities related to forestry will require a permit from the relevant provincial or territorial regulatory authority. While federal and provincial jurisdictions may not strictly overlap, environmental activities often require both federal and provincial permits and authorisations, thereby increasing compliance concerns for businesses. Some activities will also require municipal or regional permits and authorisations.

Environmental permits are usually time-limited, but the duration will depend on the nature of the activity being permitted. Permits can often be renewed, but an additional regulatory process may be required to secure renewal.

Permits typically contain conditions that accord with the requirements of the legislation under which they are granted.

In many cases, the applicable legislation explicitly states that environmental permits will only be granted to individuals or businesses that can show they are qualified to hold them. As an example, the federal Nuclear Safety and Control Act forbids transfers of licences unless the licensee can show that they are authorised to carry out the particular activity granted under the licence.

Some, but not all, permitting regimes will provide for appeal rights if a permit is denied or if the permit-holder is not satisfied with the permit conditions. Typically, such appeals are made to a quasi-judicial authority (often an administrative tribunal) or a member of the federal government (ie, a minister). The decision to grant or refuse a permit can be reviewed by the courts through an application for judicial review.

Canada takes a strong approach to enforcing environmental policy. Environmental prosecutions are common, and enforcement decisions are published as a form of both specific and general deterrence. Penalties are often increased for repeat offenders, while penalties may be reduced for those who co-operate with enforcement activities and voluntarily remediate any environmental harm caused.

Most environmental permits can be transferred, but governmental consent may be required to do so. The permit transfer process may be lengthy in some circumstances, and may trigger consultation with Indigenous groups. Usually, change of control will not trigger the need for governmental consents, but the specific requirements of the applicable legislation as well as the language of the permit itself must be carefully reviewed to determine whether governmental consents are required. In some cases, transfers may be prohibited unless the transferee can show that they are authorised to carry out the particular activity granted under the licence.

The consequences for breaching an approval or permit are set out in the governing legislation; additional consequences may also be set out in the authorisation or permit itself. Consequences can include compliance orders, suspension or revocation of the approval or permit, administrative penalties, fines and imprisonment.

The key types of liability faced by project proponents or operators in Canada for environmental damage or breaches of environmental law include monetary fines, remediation orders, the loss of environmental permits and prosecution.

Environmental legislation often includes a provision that makes it an offence to fail to comply with the legislation. Furthermore, environmental legislation typically provides that any committed or continued offence that occurs over time shall be considered a separate offence for each day the offence occurs. The result is that offenders may be subject to multiple convictions and large monetary fines if environmental breaches continue for a period of time. Employees, agents, directors or officers may be held personally responsible for environmental offences.

There are requirements to self-report environmental incidents or damage to regulators in Canada. These requirements often apply to spills or releases of environmentally harmful substances such as oil, sewage and ozone-depleting substances, but may also apply to “near misses” where no substance is actually spilled into the environment. Larger spills or releases may also be required to be reported to the public at large.

Permit and authorisation holders also often have annual reporting requirements, through which they must report on their environmental activities.

Failure to comply with the incident disclosure obligations may be an offence itself or may be used against an offender as evidence of conduct worthy of sanction via punitive damages or an increased fine for a conviction.

Subject to available defences, a current or purchasing operator or landowner will be subject to liability if they acquire contaminated land. The Canadian liability regime is designed to ensure that liability always falls on either past or present owners or operators of land in order for federal and provincial governments to avoid incurring remediation costs.

In addition to the requirement to report spills or releases of environmentally harmful substances, holders of environmental permits and authorisations often have annual reporting obligations to report on their environmental activities and compliance with the permit/authorisation during the course of the year. A failure to file the necessary reporting may result in fines, suspensions or revocation of the permit/authorisation.

Most environmental legislation in Canada operates on the “polluter pays” principle, which requires the party that caused the harm to the environment to bear the ultimate cost of any clean-up or remediation.

However, Canadian contaminated sites legislation can impose liability for historic environmental incidents or damage on a current operator or landowner of contaminated land; for example, a new landowner who is aware of contamination and takes no steps to mitigate its spread may be liable (subject to the various defences set out in the legislation).

There are several types of liability for environmental incidents or damage in Canada. Project proponents, operators or suppliers and transporters of products may face liability for:

• pollution or harm to the environment;
• failing to comply with specific environmental regulations or permits;
• the ownership, operation or control of contaminated sites; or
• the supply of products to contaminated sites.

They may also face claims of nuisance or negligence from private parties affected by contamination.

A defence of due diligence is normally available to parties accused of breaching environmental legislation, as are various common law and equitable defences. However, there are some offences where due diligence is not available as a defence.

A case that demonstrates many of the key principles and issues in a contaminated sites context is JI Properties Inc v PPG Architectural Coatings Canada Ltd, 2015 BCCA 472. This appellate decision provides commentary on the regulatory regime, the status of pre-legislation comfort letters and due diligence by the defendants, the operation of limitation periods on environmental damage, and the scope of reasonably incurred remediation costs.

As noted in 6.3 Types of Liability and Key Defences, Canada has adopted the polluter pays principle for environmental liability, and this applies to corporations. Corporate entities that damage the environment or breach environmental legislation will be liable for the harm caused. This can include damage caused by oil spills and sewage pollution, or breaches of regulations around wildlife, fisheries, the transportation of dangerous goods, the disposal of hazardous materials and contaminated sites.

Environmental taxes are imposed on activities or products that have a negative impact on the environment. They are designed to limit environmentally harmful behaviour through a price incentive, and are levied on the tax bases of energy, transportation, pollution and natural resources, among other things. Examples include federal and provincial fuel consumption taxes, and provincial taxes on mineral use, waste management and carbon emissions. Other provisions may allow businesses to recoup costs or receive accelerated depreciation write-offs for pollution control or energy conservation equipment and machinery.

Many government programmes will offer incentives for companies seeking to improve their environmental performance and reduce emissions. In some cases, exemptions may be allowed in the context of new environmental obligations where compliance will require significant changes to processes or facilities. While there are no strict penalties for “bad” environmental citizenship, failures to comply with environmental legislation will likely result in sanctions and may make it more difficult for “bad” environmental citizens to obtain or renew necessary permits and authorisations.

It is uncommon in Canada for the shareholders or the parent company of a polluting corporate entity to be held liable for the environmental damage. However, Canadian contaminated sites legislation contains broad liability provisions that may apply to shareholders or a parent company that owns, controls or manages a contaminated piece of property. Also, in very rare circumstances, a party or government may seek permission from the court to “pierce the corporate veil” and sue the parent company for actions taken by the subsidiary.

Currently, ESG reporting is not mandatory in Canada, although there are plans to introduce mandatory climate-related reporting for federally regulated banks and insurance companies, with the aim that those requirements will then have impacts on broader industry participants.

Many environmental regulators have inspection and investigation powers to audit holders of environmental permits and authorisations. Those regulators will also regularly audit any annual reporting made by such permit holders, and such audits may result in further directions or sanctions.

Several pieces of federal environmental legislation impose responsibilities on directors and officers for their company’s environmental performance. Penalties for environmental damage or breaches of environmental law can include:

• being fined or imprisoned for the corporation's pollution, even if the corporation has never been prosecuted or convicted;
• being fined for the corporation's failure to obtain the necessary permits or approvals, follow required environmental processes, or report spills;
• being prosecuted for failure to take all reasonable care to prevent the corporation from causing or permitting pollution;
• being heavily fined or imprisoned for the corporation’s contempt of court where there are repetitions of events that led to a previous environmental conviction; or
• being personally liable for the costs of remediating historical and current property contamination associated with any real estate that the corporation owns, controls or occupies, or formerly owned or controlled.

Most directors and officers in Canada rely on director and officer insurance to insure them against any errors and omissions made in the course of their duties. Given the serious consequences of potential environmental breaches, it is not uncommon for directors and officers to have coverage for environmental breaches as part of their insurance policies. However, such policies are often additional and expensive, as they are not traditionally included as part of standard policies.

Directors and officers may seek further indemnification from the company itself for any liability that arises from their role in the company; however, this may be of less utility if the company becomes insolvent due to environmental penalties.

Most commercial general liability policies in Canada exclude pollution liability. Businesses can purchase optional pollution liability extensions, although such extensions are subject to strict exclusions.

Instead, Canadian businesses may wish to purchase an environmental liability policy from one of a variety of insurers in Canada. These policies can provide coverage for liability arising from, among other things, a sudden or gradual pollution event, waste management services, storage tanks and contractors.

It is unlikely that financial institutions or lenders will be liable for the environmental damage caused by one of their clients. However, Canadian contaminated sites legislation contains broad liability provisions that may apply to a lender who owns, controls or manages a piece of property. For example, a lender that realises on security taken on real property assets that are contaminated may have sufficient “control” over the property to incur liability.

To protect themselves from liability risk, lenders should investigate the potential environmental liabilities inherent in an undertaking before investing, and should ensure that money is allocated for meeting environmental contingencies. Furthermore, lenders can make it a term of any lending agreement that the owner or operator of a site meets and/or exceeds any environmental regulations or policies in furtherance of the agreement. Finally, a lender could ask for an indemnity or for the provision of an insurance policy naming them an additional insured in order to further mitigate potential environmental liability.

Civil claims for compensation or other remedies can be brought through common law causes of action, such as nuisance, negligence, trespass or loss of property value, or through statutory causes of action set out in environmental legislation.

Canadian courts of inherent jurisdiction almost always have jurisdiction to award exemplary or punitive damages. However, generally speaking, they are unlikely to award such damages unless the conduct in question is high-handed, malicious, arbitrary or highly reprehensible. The bar for awarding punitive damages is high, but punitive damages have been awarded for breaches of environmental responsibilities in certain jurisdictions, such as Alberta.

Class actions are available for environmental-related civil claims. However, class actions in Canada must first be “certified” by a court in order to proceed. This process ensures that the claim raises common issues and that a class proceeding is the preferred way to resolve those issues. Few environment-related cases have made it past this initial threshold.

Two appellate decisions, released in 2013 and 2014, confirmed that class action regimes are not often appropriate to remedy environmental harms: Canada (Attorney General) v MacQueen, 2013 NSCA 143 and Windsor v Canadian Pacific Railway Ltd, 2014 ABCA 108. Although environmental causes of action may seem to involve common issues among class members, proof of those claims is often an individual issue.

As cited in 6.3 Types of Liability and Key Defences, the decision in JI Properties Inc v PPG Architectural Coatings Canada Ltd, 2015 BCCA 472 was key in reinforcing the “polluter pays” principle in contaminated sites legislation, even though the defendant had obtained pre-legislation clearance from the provincial government that the defendant would not be liable for subsequent remediation.

Indemnities and other contractual arrangements can be used to transfer or apportion liability for environmental pollution or breaches of law, although the appropriate terms in a particular situation will be fact-specific. However, third parties – including regulators – are not likely to be bound by such agreements, and are entitled to prosecute or seek compensation from the party who is liable at law. Polluters relying on such indemnities and contracts must then seek indemnification or compensation through those mechanisms.

See 9.1 Environmental Insurance.

Jurisdiction over contaminated sites is divided between the federal and provincial/territorial governments in Canada. The federal government has some powers to issue remedial and preventative orders regarding water and soil contamination, and has jurisdiction over any federal lands. All other lands are governed by provincial contaminated sites legislation.

Provincial contaminated sites legislation details hazardous waste disposal and storage, site investigations, permitting and authorisations, pollution prevention, site remediation, administration, penalties, etc. All of these fall under provincial jurisdiction relating to the environment and property management.

Contaminated sites are defined as areas of land where the soil, sediment, vapour or groundwater contains a prescribed substance in quantities or concentrations exceeding risk-based criteria, standards or conditions. Prescribed substances generally include hazardous substances such as sulphur, petroleum hydrocarbons, heavy metals and chlorofluorocarbons (CFCs).

When a “responsible person” has not remediated an identified contaminated site, a regulatory authority can issue a remediation order to ensure remediation is carried out. This could occur if the contamination is severe, or if the responsible person will not voluntarily carry out the remediation requirements.

Persons who may be liable for the costs of remediating a contaminated site include:

• the current owner or operator of a site;
• a previous owner or operator of a site;
• the persons who produced the prescribed substance found on the site; and
• the persons who transported the prescribed substance found on the site.

However, specific exclusions apply. For example, a prior owner or operator might not be found liable if they can demonstrate that the site was not contaminated at the time they owned or controlled it, and that they did not contribute to the contamination. Similarly, a current owner who can demonstrate that none of their conduct exacerbated or contributed to the costs of remediation may not be found liable.

A person liable for remediating contaminated land can seek recourse from the original polluter or former landowner. Such actions may be available in contract law, in negligence, or in some provinces through a statutory cause of action.

A polluter or landowner can transfer some liability for a contaminated site to a purchaser by way of contract. However, environmental legislation in most provinces permits regulators to order those who formerly owned or controlled contaminated property to carry out remediation measures. Parties seeking to rely on contractual terms to recover their costs or limit liability will need to seek a remedy through those mechanisms.

Environmental legislation in most provinces permits regulators to order current owners and operators, as well as those who formerly owned or controlled contaminated property, to carry out remediation measures. Those who are responsible for cleaning up the contaminated lands will generally engage qualified environmental professionals to oversee and carry out the remediation.

Liability is generally determined both according to the “polluter pays” principle and on a joint and several basis.

The “polluter pays” principle says that those who pollute will generally be responsible for the pollution they cause. More than one person can be liable for remediation of contaminated land, with liability typically apportioned according to the degree of fault or contribution by the parties to the pollution. Gehring et al v Chevron Canada Limited et al, 2006 BCSC 1639 provides commentary on the allocation of remediation costs. The recent appellate case of Victory Motors (Abbotsford) Ltd. v Actton Super-Save Gas Stations Ltd., 2021 BCCA 129 confirmed that, at least in British Columbia, remediating parties may claim both litigation legal costs and legal costs incurred throughout the actual remediation of the contaminated site.

However, based on the “joint and several” nature of liability, any individual defendant may be liable for the entirety of the remediation costs if they are the only extant or non-impecunious party.

Generally, proceedings can be brought against polluters, landowners or occupiers of land who are responsible for contamination through statutory causes of action set out in the applicable environmental protection legislation, or through common law causes of action such as nuisance, negligence, trespass or loss of property value.

Waste operators are generally required to hold permits and authorisations for the waste they generate, and are strictly regulated as to how they may dispose of such waste (both through their permits and authorisations, and through the applicable legislation). Consequences of breaching such obligations include compliance orders, suspensions or revocations of permits and authorisations, administrative penalties, fines and imprisonment.

Investigations into environmental accidents are led by the responsible federal or provincial regulatory authority, and will likely include site investigations, the collection of documentary evidence from those responsible, and interviews with relevant witnesses and stakeholders. While regulators prefer to proceed through voluntary compliance, and authorisation and permit holders generally have a duty to comply with such investigations, many regulators also have powers to compel a person or company to provide documents or attend interviews.

Although a large part of the Canadian economy is resource-based, the country’s economy varies greatly from coast to coast. The strategies to combat climate change have therefore been as varied as the economies in which they are implemented. As it currently stands, a patchwork of different environmental policies are in effect across the country, with varying adherence to policies concerning carbon credits, renewable energy credits and emission standards.

Canada is a signatory to the major international climate change conventions. As a party to the Paris Agreement, Canada has committed to an economy-wide target to reduce greenhouse gas emissions by 40–45% below 2005 levels by 2030. The Canadian Net-Zero Emissions Accountability Act formalises Canada’s target to achieve net-zero emissions by the year 2050, and establishes a series of interim emissions reduction targets at five-year milestones toward that goal.

Although the federal government signed the Paris Agreement and has set emission targets, Canada is a federal system and the federal and provincial levels of government have the jurisdiction to regulate matters concerning the environment. In recognition of the collaborative approach needed for progress on climate change, the federal and provincial Ministers of the Environment developed the Pan-Canadian Framework on Clean Growth and Climate Change, which required all provinces and territories to have carbon pricing initiatives in effect by 2018. However, the framework gives the provinces and territories the flexibility to design their own policies to meet emission-reduction targets through the different initiatives or mechanisms that best suit their individual economies.

The federal government subsequently issued a further climate plan in 2020: A Healthy Environment and a Healthy Economy. The plan builds on the efforts that are currently underway through the Pan-Canadian Framework. Furthermore, in March 2022, the federal government introduced Canada’s 2030 Emissions Reduction Plan, which provides a roadmap for the Canadian economy to achieve 40–45% emissions reductions below 2005 levels by 2030, building upon the actions outlined in Canada’s previous climate plans. In September 2022, the federal government released Canada's Methane Strategy, which builds on the 2030 Emissions Reduction Plan by providing a pathway to achieve methane emissions reductions of 35% by 2030, compared to 2020 levels.

Canada maintains a number of legal requirements with respect to energy efficiency. Regulations apply to a range of products, including appliances, light bulbs, heating and cooling systems, and vehicles. There are also many programmes to incentivise and support the construction of energy-efficient buildings and the development of energy-efficient industries and businesses.

In 2017, the federal government announced that the provinces and territories in Canada had to develop their own carbon pricing system that met federal standards or the federal government would impose its own programme on the provinces and territories. Since 2019, every jurisdiction in Canada has had a price on carbon pollution, either through their own pricing system tailored to local needs or through the federal pricing system. If a province or territory decides not to price pollution, or proposes a system that does not meet the standards set by the federal government, the federal system is put in place.

In June 2022, the Clean Fuel Regulations under the Canadian Environmental Protection Act, 1999 were registered. They seek to reduce greenhouse gas emissions in Canada by requiring liquid fossil fuel suppliers to gradually reduce carbon intensity from the fuels they produce and sell for use in Canada over time. The Clean Fuel Regulations set carbon intensity limits for fuel types, and fuel suppliers must lower the carbon intensity of the fuels they produce in accordance with those limits. Suppliers can maintain compliance with the established limits by participating in a credit market established by the Clean Fuel Regulations. Credits can be created by undertaking projects that reduce the carbon intensity of fuels, supplying low carbon fuels, or supplying fuel or energy to advanced vehicle technology (eg, electric or hydrogen vehicles). Overall, this new regulatory scheme aims to reduce emissions while simultaneously driving innovation in low-carbon and clean energy sectors. The carbon intensity reduction requirements under the Clean Fuel Regulations came into force on 1 July 2023.

Asbestos management in Canada is governed by occupational health and safety legislation and environmental legislation. It is governed federally by legislation such as the Hazardous Products Act and the Canada Consumer Product Safety Act, and provincially by legislation such as the Workers Compensation Act. The federal Prohibition of Asbestos and Products Containing Asbestos Regulations prohibit the import, sale and use of asbestos, as well as the manufacture, import, sale and use of products containing asbestos (with some exceptions).

The responsibility for removing or managing asbestos present in a building generally lies with the building owner. However, in some provinces the occupier of a building, such as a tenant or project developer, may also bear some responsibility.

Landowners or occupiers must conduct a pre-work assessment before commencing certain building work. Any asbestos found must be carefully managed prior to renovations or alterations. The legislation mandates that specific procedures are implemented during asbestos removal, relating to ventilation, waste containers and decontamination.

Asbestos was used frequently in Canadian insulation, fireproofing and construction until the 1980s. Canada was also an active producer of asbestos until 2011. As a result, Canadian exposure to asbestos has been relatively widespread, and asbestos-related diseases continue to be one of the top causes of workplace death in Canada.

Despite this, asbestos litigation against employers is relatively uncommon. Canada has a socialised medical insurance system and most provinces operate a mandatory workers' compensation scheme, which means that the majority of workers injured by asbestos exposure will receive medical treatment and compensation without resorting to litigation.

Where asbestos litigation has been undertaken, it has been initiated by workers' compensation boards, which are the bodies responsible for administering the workers' compensation schemes, and brought against manufacturers of asbestos products to recover the costs of paying out compensation to workers and their families.

To establish a claim for damages for asbestos exposure, a litigant must demonstrate actual physical harm or injury. However, the long latency period of asbestosis and mesothelioma means that the injury or harm may not be realised and litigation not commenced for decades. This has created challenges for Canadian courts. Litigants have often been exposed to asbestos from a variety of sources over a long period of time, making causation and the proper apportionment of liability a difficult issue. More recent jurisprudence suggests courts will take a more relaxed approach to causation in such cases; see Clements v Clements, 2012 SCC 32.

One of the leading cases with respect to asbestos liability in Canada is Privest Properties Ltd v The Foundation Co of Canada Ltd (1995), 11 BCLR (3d) 1 (SC), aff’d (1997), 31 BCLR (3d) 114 (CA). Privest was the first suit to be tried in Canada involving asbestos in buildings. The court rejected the plaintiffs’ position that the building in question had been contaminated by the presence of asbestos-containing spray fireproofing. The court concluded that the substance at issue was not an inherently dangerous product, because the fireproofing contained chrysotile, rather than crocidolite or amosite forms of asbestos. This decision set a meaningful precedent in Canada by constraining liability with respect to the use of asbestos in fireproofing and construction. It also departed significantly from earlier US authorities.

In Canada, the responsibility for managing and reducing waste is shared among federal, provincial, territorial and municipal governments. The federal government regulates the export and import of waste and the interprovincial movement of waste, while the provinces regulate the use and disposal of waste. Both “extended producer responsibility” and “product stewardship” programmes are used to manage products at their end-of-life.

Whether or not a producer or consigner of waste retains liability for waste after it has been disposed of by a third party depends on the province in question. In some provinces, the legislation includes an automatic ownership transfer provision that is triggered once waste is accepted by an authorised waste management facility, which limits further liability of producers or consigners.

In provinces where such a provision does not exist, any past or present owner or person that possessed, controlled or managed the waste remains exposed to liability for waste after it has been disposed of by a third party. However, generally speaking, some direct involvement in the release is necessary in order for the liability to crystallise. Under both schemes, producers or consigners remain liable for any damage caused while the waste was in their possession or in transport.

Producers in Canada are not generally required to take back, recycle or dispose of goods once they become waste. However, legislation across Canada is widely used to impose some or all of the costs of the recovery, recycling and disposal of goods on the producers of waste. These laws are intended to incentivise producers to design products that can be disposed of responsibly.

Furthermore, in June 2022, the federal government published the Single-use Plastics Prohibition Regulations under the Canadian Environmental Protection Act, 1999. Under these new regulations, the manufacture, import, export and sale of six categories of single-use plastics will be banned by the end of 2025, including checkout bags, cutlery and straws. The regulations adopt a staggered timeline to put the ban into place, beginning with prohibitions on the manufacture and import of the identified plastics for sale in Canada in the initial stage (effective December 2022) and leading to a more total prohibition on manufacture, import and export sales by the end of 2025.

There are requirements to self-report environmental incidents or damage to regulators in Canada. These requirements often apply to spills or releases of environmentally harmful substances such as oil, sewage and ozone-depleting substances, but can also apply to “near misses” where no harmful substance is actually spilled. Larger spills or releases may also be required to be reported to the public at large.

Canadian government agencies often publish environmental information on their websites. The public may also request government documents and information through access to information requests, which apply to nearly all public authorities and bodies and a wide range of government documents.

The disclosure of environmental information in annual reports is still largely voluntary in Canada. However, under Canadian securities rules, reporting issuers (which are largely public companies) must disclose all material information, including material information about environmental and social issues. Reporting issuers may also have disclosure obligations under the policies of a particular stock exchange.

The regulation and enforcement of green finance arrangements in Canada is still in the early stages of development.

In May 2021, the government of Canada launched the Sustainable Finance Action Council (SFAC) to help lead the Canadian financial sector towards integrating sustainable finance into standard industry practice. SFAC has a mandate to support the growth of a well-functioning sustainable finance market in Canada, in order to strengthen the mobilisation of private capital in support of Canada's emissions reductions targets and climate adaptation and resilience goals.

On 3 March 2022, Canada's Department of Finance released Canada's Green Bond Framework, which was developed in accordance with the International Capital Market Association Green Bond Principles. The proceeds of green bonds issued are used to finance eligible green expenditures under categories such as clean transportation, energy efficiency, terrestrial and aquatic biodiversity, and renewable energy.

In March 2023, SFAC issued a new taxonomy framework on transition finance and green finance, which contains ten recommendations addressing the merits, design and implementation of a green and transition finance taxonomy for Canada. The framework recommends publishing a complete and detailed taxonomy by the end of 2025.

Private green financing arrangements are also available in Canada and may be developed in accordance with various unlegislated standards.

Environmental due diligence is typically conducted on M&A, finance and property transactions in Canada. The level of due diligence conducted may vary according to the level of risk a particular property may present (for example, a property used as a gas station or dry cleaner may pose a higher risk).

In a share sale, the assets and liabilities of the target company move to the purchaser, meaning that the purchaser will absorb any outstanding environmental liabilities for historic environmental damage or breaches of environmental law.

In an asset sale, the purchaser typically does not inherit the pre-acquisition environmental liabilities associated with the purchased assets. However, by law, the purchaser may inherit liability for the pre-existing environmental condition of the assets, especially in the case of a contaminated site. A purchaser may also be liable where it takes over an ongoing situation of regulatory non-compliance.

Typically, a purchaser of Canadian shares or assets will request any of the relevant environmental studies, reports, permits and orders, key correspondence from regulatory authorities and other critical environmental documents from the vendor. A purchaser can also:

• search public registries for information regarding the target company’s environmental compliance;
• conduct interviews with senior environmental employees of the target company; or
• obtain an environmental audit or site assessment.

Private companies may provide Phase I and Phase II environmental site assessments, with Phase I assessments consisting of database and visual searches and Phase II assessments consisting of site inspection, sample collection and analysis, and recommendations regarding the site and potential remediation.

There is little legislation that mandates the disclosure of environmental information to a purchaser. In some jurisdictions, for example, provincial legislation will require a vendor of real property who knows or should know that the property has been used for an industrial or commercial purpose to provide a site disclosure statement to a prospective purchaser. More commonly, the requirement to disclose environmental information to a purchaser is built into Canadian contracts. Robust representations and warranties regarding the property or the company’s environmental status will create liability where those statements prove untrue.

There are no “typical” environmental warranties, indemnities or similar provisions in a share or asset sale; the allocation of risk depends on the contract negotiated by the parties. It is common in Canadian business transactions to include representations, warranties and indemnities that will affect the allocation of environmental liability. Topics that may be covered by these provisions include the state of the property, the absence of contamination and the company’s environmental compliance status. Often, such warranties and indemnities will be limited in time.

See 7.2 Environmental Taxes.

Environmental disputes may be resolved through different avenues, depending on the nature of the dispute. Disputes with respect to contaminated lands will often be resolved through civil liability in court (or through settlement out of court).

Disputes with respect to the appropriateness and suitability of a significant environmental infrastructure project (such as a mine, pipeline or dam) will be resolved through the environmental and impact assessment processes.

It is also becoming more common to see disputes between government and First Nations regarding harm to the environment resolved through litigation and/or implementation agreements to address historical harm.

Canada has a robust regime for the protection of the environment, which incorporates all levels of government and is increasingly involving First Nations in decision making. The benefits to the environment and to long-term sustainability are clear. However, the regulatory lead time required for project or permitting approvals can result in good environmentally sustainable projects being threatened or cancelled because the process takes too long, especially in the case of innovative green projects. Stricter adherence to timelines and more encouragement of regulatory efficiency is necessary to ensure that the right projects are approved expeditiously, allowing Canada's environmental economy to grow.