Keurig greenwashing fine: What businesses need to know about ESG regulations

As Keurig, the brand known globally for its range of coffee makers agrees to pay $1.5 million in penalties over misleading recycling statements related to their packaging, John Hartley, Head of Business Crime and Regulation has warned that such ESG regulation matters are an increasing concern for businesses worldwide.

The American beverage firm Keurig has been fined by the Securities and Exchange Commission, for making misleading statements about just how recyclable its popular K-Cup single-use coffee pods are.

Whilst the case follows American jurisdiction, John Hartley comments that the case highlights a growing litigation and regulatory risk for business – and that a careful understanding of FCA regulations is crucial for businesses who are trying to take part in similar environmental initiatives in the UK:

“The SEC brought an enforcement action against Keurig for making false or misleading statements in its public accounts regarding the effectiveness of Keurig’s ability to recycle its single use coffee pods under its ESG (Environmental, Social & Governance) claims.

“More and more consumers and investors are making choices based on ethical reasons, to support their individual ESG commitments. This has led to an increase in the number of financial and consumer products that claim to have a sustainable characteristic”, explains John, “however, companies should tread carefully, as falsifying these claims can result in fines, reputational damage and more, and there’s a lot that UK businesses can learn from Keurig’s mistakes.

“According to the FCA, in the UK more than 80% of adults would like their investments to do some good as well as give a financial return. Inevitably this has led to what has become known as ‘green-washing’ – giving the false impression as to the environmentally friendly characteristics of a product.

“The FCA is taking this seriously, as shown through their rule on anti-greenwashing, which came into force earlier this year. The rule requires FCA regulated firms to have consistency with their sustainability claims as well as the claims being clear, fair and not misleading.

“For UK companies looking to promote the ethical or environmental benefits of a service or product, they should be certain that their claim is indisputable. Otherwise, breaching the anti-greenwashing rule could result in the FCA taking disciplinary or enforcement action against the firm.

“ESG is one of the fastest growing issues facing businesses and environmental concerns are central to that. It’s crucial that businesses have a firm understanding of ESQ requirements to avoid greenwashing allegations, which can have significant financial and reputational repercussions.”

For more information about ESG regulation and advice, speak to our Head of Business Crime and Regulation, John Hartley.