From “Greener Fuel” to Greenwashing: Lessons from the ARB’s Recent Ruling

In a significant development for climate-related advertising and Environmental, Social and Governance (“ESG”) risk in South Africa, the Advertising Regulatory Board (“ARB”) has upheld a complaint against CNG Holdings Proprietary Limited (“CNG Holdings”) concerning environmental claims made about compressed natural gas (“CNG”).

The ruling reflects an increasingly strict approach to “greenwashing”, highlights important parameters for entities to consider when advertising their “green” credentials, and provides important guidance on climate-risk disclosures and sustainability communications. A copy of the ruling can be accessed here.

Background

A complaint was lodged with the ARB concerning a series of claims on CNG Holdings’ website describing CNG as a “cleaner, greener fuel option”, “environmentally friendly”, “one of the cleanest forms of energy”, and a product that “promotes a sustainable future”. 

It was argued that these statements created the misleading impression that CNG is environmentally benign or aligned with sustainability goals, despite being a fossil fuel associated with significant lifecycle greenhouse gas emissions. Particular concern was raised by the complainant regarding the omission of reference to methane leakage and carbon dioxide emissions associated with the production and combustion of CNG.

CNG Holdings contended that its claims were intended as comparative only – namely that CNG performs better than diesel or petrol in relation to certain pollutants such as particulate matter and nitrogen oxides. It argued that the references to “cleaner” and “greener” were contextual and not intended to suggest carbon neutrality or an absence of environmental harm when using CNG.

Notably, CNG Holdings is not a member of the ARB and the ARB therefore does not have jurisdiction to issue a binding ruling on CNG Holdings. Notwithstanding, CNG Holdings elected to participate in the process in good faith, and the ruling was issued by the ARB as guidance for its members. The ruling also provides a useful indication of what the ARB’s position will be in respect of future rulings.

The ARB’s Findings

The ARB considered the matter under Clause 4.1 (substantiation), Clause 4.2.1 (misleading claims) and Appendix G (environmental claims) of the Code of Advertising Practice (“the Code”).

It was found that the environmental descriptors used by CNG Holdings constituted broad and effectively absolute environmental claims because they were presented without adequate qualification or contextualisation. The ARB emphasised that advertising must be assessed as presented to the reasonable consumer, rather than according to the advertiser’s subjective intention.

Importantly, the ARB held that phrases such as “green”, “environmentally friendly” and “sustainable” are potentially absolute environmental claims unless they are clearly qualified. Because the claims were presented prominently and without qualification, and were not expressly confined to reductions in specific pollutants or operational contexts, the ARB found that they were likely to mislead consumers, in breach of Clause 4.2.1 and Appendix G of the Code. In reaching this conclusion on the environmental descriptors, the ARB made reference to its earlier ruling against Total Energies in 2025, in which it applied the same principle.

In dealing with the requirement for substantiation of environmental claims contained in Clause 4.1 of the Code, the ARB explained that advertisers are required to hold documentary evidence to support all claims capable of objective verification. While the ARB accepted that scientific literature may support limited comparative claims regarding reduced particular emissions, it found that CNG Holdings lacked evidence to substantiate broader claims that CNG is environmentally friendly or sustainable in an overall or lifecycle sense.

The ARB further held that the omission of lifecycle emissions information contributed to a misleading overall impression, particularly given that CNG remains a fossil fuel with climate-related impacts, which is in breach of Clause 4.2.1 and Appendix G of the Code.

The ARB ultimately instructed its members not to publish advertising using broad environmental descriptors such as “green”, “greener”, “clean”, “cleaner”, “environmentally friendly”, “fuel of the future” or “promotes a sustainable future” unless such claims are clearly qualified or contextualised. 

Implications for Climate Risk and Insurance

This ruling is of import and notable for the following reasons:

1. It signals a tightening advertising regulatory environment around ESG and sustainability claims in South Africa. The ARB’s approach aligns with international trends in climate-related advertising and consumer protection, where regulators are increasingly scrutinising vague or aspirational environmental language which may mislead consumers. This trend aligns to the broader climate change disclosure trends in the corporate sector in general, and financial services sector in particular in South Africa.
2. The ruling confirms that partial environmental advantages do not justify broad and unqualified sustainability claims. Businesses relying on comparative environmental performance must ensure that marketing language accurately reflects the limited scope of those benefits. Claims relating only to reduced operational emissions, for example, cannot easily be extrapolated into claims of overall sustainability.
3. The ruling has direct implications for insurers and reinsurers assessing climate-related liability exposure. Greenwashing claims are increasingly emerging as a source of regulatory, reputational and litigation risk. Advertising statements, ESG disclosures and sustainability reporting may all create potential exposure where representations are inaccurate, inadequately qualified or unsupported by evidence.
4. Rulings such as this one are likely to influence underwriting and policy wording considerations, particularly in relation to directors’ and officers’ liability insurance, professional indemnity cover, and ESG-related exclusions.
5. Finally, the ruling illustrates the growing importance of lifecycle analysis in climate-related representations. Even where a product performs comparatively better than alternatives in certain respects, regulators may still regard broad “green” messaging as misleading if material upstream or downstream emissions impacts are omitted.

Concluding remarks

The ARB’s decision against CNG Holdings represents another step in the evolution of climate-related accountability in South Africa. It demonstrates that environmental claims will be interpreted strictly and through the lens of the ordinary consumer.

Businesses operating in carbon-intensive sectors, including energy, transport and heavy industry, should carefully review marketing and ESG communications to ensure that environmental claims are precise, evidence-based and properly qualified.

For insurers and risk professionals, the ruling serves as a reminder that climate risk increasingly encompasses not only physical and transition risks, but also legal and reputational risks arising from sustainability representations and alleged greenwashing.

Should you require further information on greenwashing, climate risk and disclosures, and ESG, please reach out to Kate Swart or Celeste du Toit.