On January 30, 2026, the Federal Court of Appeal (the “Court”) released a significant decision in Attorney General of Canada v. Responsible Plastic Use Coalition (2026 FCA 17), reshaping the national conversation on plastics regulation and validating the federal government’s authority to list Plastic Manufactured Items (“PMI”) as “toxic” under the Canadian Environmental Protection Act, 1999 (CEPA).
While the decision does not immediately impose new obligations on businesses, it cements the federal government’s framework for future plastics regulation and confirms that the federal government can act broadly to address plastic pollution. For businesses that manufacture, use, transport, or dispose of plastics, this ruling signals that plastics governance in Canada is entering a new phase: one where ESG expectations, operational risk, and regulatory compliance are increasingly intertwined.
Below, we break down what this decision means for organizations across the plastics value chain and how your business should be integrating strategic decisions in plastics management.
A clear signal: federal plastics regulation is here to stay
The Court of Appeal overturned the Federal Court’s earlier ruling and confirmed that the Cabinet acted reasonably in listing PMI as toxic under CEPA. Three key points stand out:
1. Broad federal authority affirmed
The Court held that CEPA’s listing process is intentionally designed as a two‑stage framework:
- First, government may broadly identify a class of materials as potentially harmful (the listing stage); and
- Second, it may later craft targeted regulations that specify which items require restrictions, prohibitions, or other controls.
In doing so, the Court characterized this structure as both deliberate and reasonable, citing the need to manage widespread, multi‑source environmental issues such as macroplastic pollution.
2. Scientific evidence provides a sufficient foundation
The Court accepted the federal Science Assessment’s findings that macroplastics are ubiquitous, persistent, and capable of causing harm through ingestion, entanglement, suffocation, habitat disruption, and other non‑chemical pathways. It emphasized that CEPA requires only a showing that plastics may cause harm under certain conditions—not that all plastics do so in every application.
3. The listing imposes no direct penalties—regulations come later
The decision underscores that listing PMI is an enabling measure, not a prohibition. Actual restrictions arise only through later regulations, such as the Single‑Use Plastics Prohibition Regulations. But, with the listing upheld, the federal government now has a solid foundation to expand plastics regulations over time.
Why this decision matters for your business
Although the Court’s ruling is administrative and constitutional in nature, its implications are broad, especially for businesses in plastics‑intensive sectors.
a. Regulatory certainty makes long‑term planning possible
This decision removes the legal uncertainty that had clouded the federal plastics agenda since 2021. With judicial approval of CEPA’s framework, businesses should expect more clarity, more activity, and more policy momentum on plastics, from design standards to recovery requirements.
b. ESG expectations will intensify across the value chain
Investors, customers, and supply‑chain partners increasingly expect companies to treat plastics as a material sustainability issue, comparable to climate impacts. The Court’s endorsement of federal authority reinforces the legitimacy of these expectations and is likely to catalyze:
- Enhanced reporting on plastics use and recovery
- Supplier requirements tied to recyclability or circularity
- Closer scrutiny of high‑leakage or low‑recovery materials
c. Operational and reputational risks require more proactive management
Macroplastic pollution has become a key ESG issue, and the decision highlights the scale and cumulative nature of the problem. For example, the Science Assessment found that even though only about 1% of PMI enter the environment annually, this still amounts to 29 kilotonnes, a figure the Court called materially significant.
For companies, this translates into heightened scrutiny of:
- Containment and waste‑management practices;
- Pellet loss prevention;
- Facility housekeeping;
- Transport and logistics controls; and
- Product design that reduces litter‑prone materials.
Understanding plastic leakage — A growing governance priority
A concept increasingly used by regulators, investors, and ESG frameworks, and echoed in the federal government’s scientific findings, is plastic leakage.
Plastic leakage refers to any release of plastics into the natural environment across the product lifecycle. This includes, but is not limited to:
- Litter or mismanaged waste;
- Wind‑blown materials from sites or landfills;
- Micro‑ or macro‑fragmentation over time;
- Resin pellet spills during manufacturing or transport;
- Sorting failures at recycling facilities; and
- Losses during shipping, agriculture, fisheries, construction, or warehousing.
The Court noted that identifying the sources of macroplastics is inherently difficult because plastics are persistent, mobile, and degrade slowly, making it crucial to manage leakage upstream rather than relying solely on end‑of‑life systems.
For businesses, leakage is no longer seen as an operational mishap—it is now understood as a governance and stewardship issue with clear ESG implications.
Strategic opportunities for forward‑looking companies
The FCA decision opens doors to innovation and competitive differentiation. Companies with credible plastics transition strategies will be well positioned as governments, investors and customers converge around circularity.
Opportunities may include:
- Designing for recyclability, durability, and reusability;
- Material lightweighting and simplification;
- Partnerships with recyclers, municipalities, and technology developers;
- Investing in advanced or mechanical recycling capacity; and
- Participating actively in federal consultations to shape pragmatic, sector‑specific rules.
Early movers can help shape industry standards, mitigate future compliance costs, and strengthen brand trust.
What boards and executives should do now
To navigate the coming regulatory wave, we recommend that leadership teams:
- Direct management to develop a plastics transition strategy
Integrate plastics into ESG, risk, and sustainability planning, including targets and KPIs. - Map plastics across the value chain
Identify high‑leakage, low‑recovery, and high‑volume product categories. - Strengthen operational controls
Implement best‑practice measures for storage, shipping, manufacturing, and waste handling. - Monitor and engage in federal regulatory consultations
The next round of CEPA regulations is where businesses have the greatest influence. - Enhance disclosures
Prepare for increased investor expectations around plastics footprints, recycling performance, and stewardship measures.
Conclusion
The Federal Court of Appeal’s ruling confirms that Canada’s plastics regulatory framework is moving forward. For businesses across the plastics value chain, the time to prepare, and to seize strategic opportunities, is now. We will need to wait to see what regulations are proposed, and whether an appeal to the Supreme Court of Canada is in the cards.
If your organization needs guidance on regulatory compliance, ESG strategy, or engagement with the next phase of CEPA rulemaking, our Environmental Law team would be pleased to assist.
