Keurig Dr Pepper has agreed to pay a $1.5 million civil penalty to settle charges that it made inaccurate recyclability claims about its K-Cup single-use coffee pods, the Securities and Exchange Commission announced Tuesday.
In annual reports for fiscal years 2019 and 2020, Keurig failed to disclose “significant concerns expressed” by two of the largest U.S. recycling companies “regarding the commercial feasibility of curbside recycling of K-Cup pods,” the SEC says in its ruling. At the time of the report, both recycling companies indicated that they did not intend to accept the disposable coffee pods for recycling, the Federal agency claims.
“Public companies must ensure that the reports they file with the SEC are complete and accurate,” John T. Dugan, associate director of the SEC’s Boston regional office, said in the statement. “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.”
According to the SEC’s order, “sales of K-Cup pods comprised a significant percentage of net sales of Keurig’s coffee systems business segment,” in fiscal year 2019.
Research by a Keurig subsidiary found that “environmental concerns were a significant factor that certain consumers considered, among others, when deciding whether to purchase a Keurig brewing system,” the Federal agency claims.
In agreeing to the settlement, the multinational soft drink company did not admit to or deny the findings of the ruling. Keurig also agreed to a cease-and-desist order, which states the company must adhere to rules about accurate disclosures in annual reports.
“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,” a spokesperson from Keurig Dr Pepper told CBS News.
It 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 U.S. recycling system for all packaging materials through KDP actions, collaboration and smart policy solutions.”