Keurig, the company behind the popular home brewing and single-serving coffee maker systems, will pay the SEC a $1.5 million civil penalty after it failed to disclose concerns from two major recycling companies about the K-Cup pods in its annual reports.
The Securities and Exchange Commission announced Tuesday that Keurig Dr Pepper Inc. will settle with the agency for the hefty fine after it was “charged with making inaccurate statements regarding the recyclability of its K-Cup single use beverage pods.”
“Public companies must ensure that the reports they file with the SEC are complete and accurate,” John T. Dugan, Associate Director for the regional Boston office of the SEC said in a press release. “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.”
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A spokesperson at Keurig Dr Pepper told ABC News that 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. 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,” the statement continued.
In this Nov. 10, 2014, file photo, a Keurig station is shown at New York Taste 2014 Hosted By New York Magazine, in New York.
Bryan Bedder/Getty Images for New York Magazine, FILE
In consecutive annual reports for the company’s fiscal years 2019 and 2020, the SEC found that “Keurig stated that its testing with recycling facilities ‘validated that [K-Cup pods] can be effectively recycled.’ But Keurig did not disclose that two of the largest recycling companies in the United States had expressed significant concerns to Keurig regarding the commercial feasibility of curbside recycling of K-Cup pods at that time and indicated that they did not presently intend to accept them for recycling.”
In this Feb. 16, 2017, file photo, used K-cups are shown.
The Washington Post via Getty Images, FILE
According to the government agency’s review of the 2019 report, “sales of K-Cup pods comprised a significant percentage of net sales of Keurig’s coffee systems business segment, and research earlier conducted by a Keurig subsidiary indicated that environmental concerns were a significant factor that certain consumers considered, among others, when deciding whether to purchase a Keurig brewing system.”
The SEC order found that “Keurig violated Section 13(a) of the Securities Exchange Act of 1934 and Rule 13a-1 thereunder.
Keurig agreed to a cease-and-desist order, according to the SEC, without admitting or denying the findings in the order.
The SEC investigation was conducted by Michael Franck, Cassandra H. Arriaza, Susan Cooke, and Michele T. Perillo of the Boston Regional Office.
The popular coffee maker company Keurig has recently been fined $1.5 million by the Securities and Exchange Commission (SEC) for making misleading claims about the recyclability of its K-Cups. The fine comes after an investigation by the SEC found that Keurig had overstated the recyclability of its single-use coffee pods, which are a major source of waste in landfills.
Keurig has long marketed its K-Cups as being recyclable, but the SEC found that the company’s claims were misleading. In reality, only a small percentage of K-Cups are actually recycled, with the majority ending up in landfills. This discrepancy between Keurig’s marketing claims and the reality of the situation led to the SEC imposing the hefty fine on the company.
The issue of single-use coffee pods like K-Cups has been a growing concern for environmentalists in recent years. These pods are typically made of a combination of plastic and aluminum, making them difficult to recycle. As a result, billions of K-Cups end up in landfills each year, contributing to the growing problem of plastic pollution.
In response to the fine from the SEC, Keurig has stated that it will be taking steps to improve the recyclability of its K-Cups. The company has pledged to invest in research and development to create more sustainable packaging options for its coffee pods. Additionally, Keurig has committed to increasing awareness among consumers about the importance of recycling and proper disposal of its products.
While Keurig’s efforts to improve the recyclability of its K-Cups are a step in the right direction, there is still much work to be done to address the environmental impact of single-use coffee pods. Consumers can also play a role in reducing waste by opting for reusable coffee pods or choosing brands that prioritize sustainability.
Overall, the fine imposed on Keurig by the SEC serves as a reminder to companies that misleading claims about environmental sustainability will not be tolerated. It also highlights the importance of transparency and accountability in corporate marketing practices, especially when it comes to issues as critical as waste management and recycling.
