The U.S. Securities and Exchange Commission announced that it fined Keurig Dr. Pepper $1.5 million after finding the company hid crucial information about its popular K-Cup single-use coffee pods, making its recyclability claims inaccurate.
What's happening?
In September, the SEC detailed how Keurig marketed its pods — made from polypropylene No. 5 plastic — as recyclable, with company research in 2016 finding that consumers considered environmental impact when deciding whether to purchase the brand's brewing system.
However, the brand failed to mention that two major recycling companies in the United States — handling one-third of all operations — told Keurig that they had problems recycling its pods. When Keurig filed with the SEC in 2020, it wrote: "We have conducted extensive testing with municipal recycling facilities to validate that [pods] can be effectively recycled."
It doubled down on those claims the following year without disclosing the negative feedback, also telling the SEC that it had dedicated $10 million to improve polypropylene recycling. Ultimately, after its investigation, the SEC told Keurig to pay $1.5 million within 14 days of its order.
"Public companies must ensure that the reports they file with the SEC are complete and accurate," SEC associate director John T. Dugan told the New York Times, which noted that Keurig has agreed to pay the fine.
For its part, Keurig said it is "pleased to have reached an agreement that fully resolves this matter," per the Times, but would neither confirm nor deny the SEC's findings.
Why is this important?
The single-use coffee pod and capsules market is on the upswing, with Straits Research estimating its value will balloon to $34.53 billion in 2023 and $65.16 billion in 2032. In fact, almost half of Americans revealed they depend upon coffee pod brewers, per the Times.
While single-brew machines may be convenient, omitting information from consumers could lead to significant consequences down the line.
For instance, hundreds of thousands to billions of plastic coffee pods end up in landfills every year, taking about 500 years to break down.
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Over that time, they produce methane, a potent planet-warming gas. Rising global temperatures are associated with a host of consequences, from more intense and frequent extreme weather events to increased reproduction rates of crop-destroying pests.
What can be done about this?
The SEC's ruling is one step toward holding Keurig accountable for its misleading claims. However, as the Times points out, a $1.5 million fine is a drop in the bucket for a company with a market capitalization of more than $50 billion.
Nonetheless, the commission's findings are helpful for consumers who want to use their purchasing power to support brands whose products live up to their eco-friendly claims. Some apps, like Commons, also exist to help shoppers sort through the noise.
As for coffee pods in general, while ditching them may be the best option for some coffee drinkers to reduce their negative environmental impact, other research suggests that single-use pods help reduce coffee and water waste.
Ultimately, compostable pods or pods made from infinitely recyclable aluminum are generally easier to keep out of landfills.
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