Inaccurate Recycling Claims Land K-Cups in Hot Water

Single-serve coffee, tea, and cocoa are a consumer convenience but for K-Cup giant Keurig Dr Pepper, greenwashed claims about their recyclability have drawn a penalty from the US Securities and Exchange Commission (SEC).

In an SEC release, the agency said Keurig violated Section 13(a) of the Securities Exchange Act of 1934 and its Rule 13a-1, which concern financial and annual reporting. Also according to SEC: “Without admitting or denying the findings in the order, Keurig agreed to a cease-and-desist order and to pay a civil penalty of $1.5 million.”

The issue stems from FY 2019 and 2020 activity.

According to the SEC’s order, annual reports from Keurig dated during fiscal years 2019 and 2020 stated that the company’s single-use K-Cups could be “effectively recycled” at municipal recycling facilities. What wasn’t disclosed, however, was that two of the largest US recycling companies had expressed significant concerns to Keurig regarding the commercial feasibility of recycling K-Cup pods in curbside recycling steams. The companies also indicated that they did not at present intend to accept the K-Cups for recycling.

In fiscal year 2019, sales of K-Cup pods represented a significant percentage of net sales in Keurig’s coffee systems business segment. And, for consumers increasingly concerned with their environmental footprint, previous K-Cup research conducted by a Keurig subsidiary indicated that environmental concerns were a key consideration among some consumers in their decision to purchase a Keurig brewing system.

Related:Green Claims are Increasing — So are Liability Risks

“Public companies must ensure that the reports they file with the SEC are complete and accurate,” says John T. Dugan, associate director of the Boston Regional Office. “When a company speaks to an issue in its annual report, they are required to provide information necessary for investors to get the full picture on that issue so that investors can make educated investment decisions.”

Keurig Dr Pepper responds.

A Keurig Dr Pepper spokesperson emailed Packaging Digest, saying the company was “pleased to have reached an agreement that fully resolves this matter.”

“Our K-Cup pods are made from recyclable polypropylene plastic (also known as #5 plastic), which is widely accepted in curbside recycling systems across North America,” the spokesperson added. “We continue to encourage consumers to check with their local recycling program to verify acceptance of pods, as they are not recycled in many communities. We remain committed to a better, more standardized recycling system for all packaging materials through KDP actions, collaboration, and smart policy solutions.”