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Dive Briefing:
- The U.S. Securities and Exchange Commission announced Tuesday: Keurig Dr Pepper made inaccurate statements about the recyclability of its K-Cup single-use beverage pods. KDP agreed to pay a $1.5 million civil penalty to settle the charges.
- The SEC alleged that KDP stated in its fiscal 2019 and 2020 reports that its K-Cup single-use coffee pods had been tested at municipal recycling facilities and “could be effectively recycled.” However, the company failed to disclose that two large national recycling companies that participated in the testing provided “substantial negative feedback” about the feasibility of recycling the pods on curbside at the time, according to the SEC order.
- A Keurig Dr Pepper spokesperson said in an emailed statement Tuesday that the company is “pleased to have reached a settlement that fully resolves this issue.” The spokesperson said K-Cup pods are made of recyclable polypropylene plastic, which is “widely accepted in curbside recycling systems across North America,” but “still not recycled in many areas.” The company encourages consumers to check with their local recycling program to see if it will be accepted.
Dive Insight:
John Silvan, who invented the K-Cup in the 1990s, said in 2015 that he regretted making the product because it wasn’t recyclable. At the time, plastic pods were widely criticized for their negative impact on the environment.
KDP’s pod testing began around 2016, when the company was still Keurig Green Mountain, which later merged with Dr Pepper Snapple Group in 2018. Keurig said it has been tracking the pods’ progress through recycling facilities and seeking feedback from the recycling industry.
The two recycling companies that gave negative feedback “indicated that they do not currently intend to accept the pods for recycling,” the SEC order says. Recycler Although not named, the document says they jointly operate more than a third of America's recycling facilities and that KDP operates state-of-the-art equipment that “can better sort materials.”
Despite the negative feedback, the SEC’s order states that KDP disclosed in its Form 10-K filed on February 27, 2020 that extensive testing at its MRFs showed that the pods could be effectively recycled. The following year’s annual report contained similar claims, as did a mention that KDP had donated $10 million to the Polypropylene Recycling Coalition, an effort led by The Recycling Partnership to advance domestic PP recycling. The SEC said the report filed the following year did not include those claims.
“While our test results generally demonstrate that the pods can be successfully separated from other materials in the early stages of the process within a recycling facility, KDP has omitted any negative feedback. Recycler The SEC order states that the submitted documents are “incomplete and therefore inaccurate.”
“Public companies must ensure that the reports they file with the SEC are complete and accurate,” John Duggan, deputy director of the SEC’s Boston District Office, said in a press release. “When companies address issues in their annual reports, they must provide investors with the information they need to get a full picture of the issue, so they can make educated investment decisions.”
In addition to imposing a civil penalty of $1.5 million, which must be paid within 14 days of the SEC issuing the order, the agency also ordered KDP to cease further violations of SEC regulations.
A KDP spokesperson said the company is “working to build a better, more standardized U.S. recycling system for all packaging through KDP actions, collaborations and smart policy solutions.”
Ford sales “accounted for a significant portion of net sales” during fiscal 2019 Keurig's The coffee system business division accounted for a significant portion of the business, and the division Keurig's According to SEC documents, total net sales were $180 million. The coffee systems segment, which includes pods, had $4.23 billion in sales in 2019, or 38% of the company’s total.
In 2017, Keurig conducted detailed tests of a new pod made of PP instead of polystyrene blends. At the time, it reported that 90% of its PP pods were making it through the container lines at eight MRFs. In late 2020, the company announced that it had achieved its goal of making all of its K-Cups pods recyclable.
Earlier this year, KDP announced it would be launching a plant-based disposable coffee pod as an addition to its existing PP pods. And in June, it released a corporate responsibility report in which it pledged to meet its 2025 sustainable packaging goals, including making all of its packaging recyclable or compostable.
