As tariff tensions rise and CUSMA heads into a politically charged review, Canadian boards are facing a disclosure problem that could quickly become a D&O problem – and artificial intelligence is making it far easier for plaintiffs to exploit any missteps.
Tariff washing has now joined AI‑washing and greenwashing on the list of behaviours that can trigger securities litigation, according to Denis Panariti (pictured), who leads Beazley Canada’s financial lines division. At the same time, AI is becoming a powerful tool for regulators and plaintiff firms to mine years of public filings for overly rosy statements about trade, technology and ESG performance.
Panariti draws a clear line between three related, but distinct, disclosure risks.
AI washing, he said, refers to companies that claim they will deploy AI to cut costs and boost the bottom line, but in practice never implement the technology or quietly shift work to cheaper overseas labour. Greenwashing is the more familiar practice of overstating how environmentally friendly products or operations really are.
Tariff washing sits alongside those risks where companies “overstate [their] ability to withstand tariff pressures and headwinds, or downplay risks… in public statements,” then later blame tariffs for missed guidance.
Older‑style tariff abuse – such as double invoicing or undeclared “assists” to re‑route goods through more favourable jurisdictions – still exists, and regulators have gone after sectors like jewellery where supply‑chain origin is murky. But for listed Canadian firms, Panariti argues the real frontier is disclosure tariff washing, particularly around trade relationships that could be affected by CUSMA’s renewal.
Separate from those behaviours is the way AI is changing how disclosure is analyzed. Here, Panariti sees less a new risk and more a powerful enabler for both sides.
“There’s technology, and there’re ways and means right now to look back 20 years on public disclosures and say, ‘This is where you messed up. This is where you did it wrong. This is where you were too positive,’” he said.
Off‑the‑shelf tools can scan SEDAR, EDGAR and other repositories for patterns in how a company has talked about tariffs, cyber risk or trade relationships over long periods. “You can actually ask… in the last five years, has X company had a positive outlook on tariffs, or their… trade relationship with Europe or with whomever,” he noted.
The same capability can and arguably should be used by issuers themselves. Firms can “scrape your own data and say, ‘Was I a little too bold?’” before finding out the hard way in court, he suggested.
For Panariti, the message to boards and risk managers is that tariff washing has “joined greenwashing and AI washing as a major disclosure risk.” Staying silent about foreseeable exposures – such as the risk of changed tariff treatment – is increasingly untenable, but so is hand‑waving them away.
He frames the dilemma simply: if you say too little for too long, you risk shareholder suits; if you say too much, too early, you can spook the market without full information.
“Silence is really [not] an option,” he said. “Timing and accuracy are critical to avoid shareholder litigation.”
In practice, that means being transparent about decisions that have already been made, and conservative about speculating on decisions that might be forced by future shocks. Companies should disclose material impacts promptly, “especially when you don’t know the potential outcome,” he said, pointing back to the Lundin Mining case, where a four‑week delay in disclosing a production hit turned into a long‑running battle over whether the company moved fast enough.
Materiality, in his view, is inseparable from context – but if something feels likely to alter results in a way a reasonable investor would care about, the safer course is to treat it as material and bring it to market quickly.
“Materiality depends on the circumstances that you’re dealing with,” Panariti said, but the facts in recent cases “suggest that we need to be rather careful with disclosure, and we need to disclose promptly if we find that it’s material.”
