The U.S. Securities and Exchange Commission on Tuesday filed a lawsuit against Keurig Dr Pepper Inc., a maker of disposable coffee pods, for making inaccurate claims about the recyclability of its products.
Keurig settled the lawsuit and agreed to pay a civil penalty of $1.5 million, a relatively modest amount for a large corporation.
According to the SEC, Keurig said in its 2019 and 2020 annual reports that it has tested the recyclability of K-Cups and that recycling facilities have verified that the single-user pods “can be effectively recycled.”
In fact, according to the SEC, two major recycling companies expressed “significant concerns” to Keurig at the time about the feasibility of commercial recycling of K-Cup pods and “indicated that they did not intend to accept them for recycling at this time.”
“Public companies must ensure that the reports they file with the SEC are complete and accurate,” said John Duggan, deputy director of the SEC's Boston Regional Office.
“When companies mention an issue in their annual reports, they need to provide investors with the information they need to understand the full scope of the issue and make educated investment decisions,” Dugan added.
Keurig has long touted the recyclability of its pods.
According to the SEC, a Keurig subsidiary conducted a study in 2019 that found that environmental concerns were a “material factor that some consumers consider when deciding whether to purchase a Keurig coffee brewing system.”
Reached for comment, a Keurig spokesman would not confirm whether the allegations were true, saying, “We are pleased to have reached an agreement that fully resolves this matter.”
A spokesperson said the pods are made from a certain plastic that is “widely accepted in curbside recycling systems across North America,” but added that “in many areas the pods are not recycled, so we continue to encourage consumers to check whether their local recycling program will accept the pods.”
“We remain committed to improving and standardizing the U.S. recycling system for all packaging materials through KDP's work, collaborations and smart policy solutions,” the spokesperson added.
