"Greenwashing" And Disclosure Liability Under Securities Law: Two Views

Issuer concerns about liability for ESG-related disclosure are highlighted in the September 10, 2024 enforcement order of the U.S. Securities and Exchange Commission in respect of Keurig Dr. Pepper Inc. and the dissenting statement of SEC Commissioner Peirce. The order and Commissioner Peirce's statement focus attention for public companies on the kinds of sustainability-related disclosure statements that might be scrutinized under securities law, and on the basis for alleging disclosure breaches. The order and the dissenting statement present two views on "greenwashing" and disclosure liability risk.

In the relevant disclosure, Keurig stated in its annual reports in 2019 and 2020 that its plastic pods for making coffee and other drinks "can be effectively recycled". In support of the impugned statements, Keurig had successfully tested the recyclability of the coffee pods. However, Keurig had been advised by two recycling businesses that it was not economic to recycle