A green tea pod inside a Keurig coffee maker, December 17, 2022.
Gado | Stock Photos | Getty Images
The Securities and Exchange Commission has charged Keurig Dr Pepper over what the agency said are the company's inaccurate claims about the recyclability of its disposable K-Cup pods, the agency said Tuesday.
Keurig agreed to pay a $1.5 million civil penalty without admitting or denying the agency's findings.
As consumers have become more conscious of their carbon footprint, questions about the environmental impact of K-Cups have dogged Keurig for more than a decade. The pods’ inventor told The Atlantic that he feels bad “sometimes” about creating K-Cups because of the waste they create. A 2018 lawsuit over recycling claims led to a $10 million class-action settlement. In late 2020, K-Cups became fully recyclable, according to the company.
But before reaching that milestone, the company was already telling investors that the capsules could be recycled.
Keurig said in its annual reports for fiscal years 2019 and 2020 that testing with recycling facilities determined that K-Cups could be effectively recycled. However, the SEC said the company failed to disclose that two of the largest U.S. recyclers told Keurig they did not intend to accept the disposable coffee pods for recycling and had expressed “significant concerns” about the financial viability of recycling K-Cups collected curbside.
The company’s claims may have swayed some consumers, boosting sales of both K-Cups and its brewers. An earlier investigation by a Keurig subsidiary found that environmental concerns were a key factor some buyers considered when purchasing a Keurig coffee machine, according to the SEC.
In Keurig's fiscal second quarter, sales of the company's K-Cup pods and coffee brewing systems accounted for nearly a quarter of the company's revenue, according to a company presentation.
In a statement, a company spokesperson said: “We are 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 said. “We continue to encourage consumers to check with their local recycling program to verify pod acceptance 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.”
