Fresh coffee. It’s a staple of most morning routines. And as households become increasingly busy, trying to juggle the demands of work and home, convenience and affordability have become critical, determinant factors for many preparation methods—a priority that largely explains the popularity of Keurig and its K-Cup coffee pods. These machines and their coffee delivery systems feature in many homes, offices, and hotels across the country. Almost half of all U.S. consumers indicate that they use the machines regularly.

Other factors have inspired these loyal customers, including Keurig’s purported commitment to the environment. The company has long claimed that 100 percent of its K-Cup pods are recyclable, having been made from #5 plastic, a polypropylene that is widely accepted in curbside recycling.

But the Securities and Exchange Commission (SEC) has fined Keurig $1.5 million, based on evidence that the company failed to disclose that these pods get rejected by two of the largest domestic recycling companies, which account for more than one-third of all recycling facilities in the United States. According to a Greenpeace survey, only about half of all facilities accept #5 plastic, and only one of the locations that the organization surveyed agreed to take coffee pods made out of this plastic.

In light of these revelations, regulators also have determined that Keurig’s inaccurate statements unfairly inflated shareholder value, which represents a violation of federal law that falls under the jurisdiction of the SEC. The company reportedly reached the settlement and agreed to pay the fine, in exchange for not having to confirm or deny any misbehavior. In its subsequent statement, Keurig noted that in addition to being pleased to have resolved this matter, it has begun working more closely with recycling operators, in an attempt to increase their acceptance of #5 plastic coffee pods across facilities.

Even as it makes these reactive attempts though, the reputational damage might already have had its effect. These effects could be detrimental to the brand, but they also might expand to influence the Federal Trade Commission (FTC), which is responsible for regulating instances of corporate deception. That is, the SEC stepped in to blame Keurig for damages to shareholders due to its false claims, but the FTC has not filed charges against Keurig for apparently misleading consumers. Instead, the FTC has updated its “Green Guides,” which define the rules for corporate marketing claims about environmental impact.

Discussion Questions 

1. What else can regulators do to address misleading environmental claims?
2. Are environmental concerns one of the primary factors in choose a coffee brand? Why or why not? Would these reports about Keurig damage your trust in the brand?

Sources: Hiroko Tabuchi, “Those Keurig Coffee Pods? They’re Not So Recyclable, the S.E.C. Says,” The New York Times, September 10, 2024; Jacklyn Diaz, “Keurig Misled the Public over Claims Its K-Cup Pods Are 100% Recyclable, the SEC Says,” NPR, September 12, 2024; Justine Calma, “Keurig Caught Making ‘Inaccurate’ Recycling Claim About Its Coffee Pods,” The Verge, September 13, 2024