The U.S. Securities and Exchange Commission (SEC) announced that it has charged Keurig Dr Pepper Inc. over claims by the company that its coffee pods could be recycled, despite not being accepted by major U.S. recycling companies.

Alongside the announcement, the SEC said that Keurig has agreed to pay a civil penalty of $1.5 million to settle the charges, without admitting or denying the Commission’s findings.

According to the SEC, Keurig had stated in its fiscal year 2019 and 2020 annual reports that testing with recycling facilities indicated that its K-Cup coffee pods “can be effectively recycled,” although the Commission said that the company failed to disclose that two of the largest U.S. recycling companies “expressed significant concerns” to the company at the time about the commercial feasibility of curbside recycling of the pods, and had indicated to Keurig that they did not intend to accept the pods for recycling.

The Commission noted that the claims by the company followed research conducted by a Keurig subsidiary that found that consumers considered environmental concerns as a significant factor when deciding whether to purchase a Keurig brewing system.

John Dugan, Associate Regional Director, Enforcement Division, of the SEC Boston Regional Office, said:

“Public companies must ensure that the reports they file with the SEC are complete and accurate. When a company speaks to an issue in its annual report, they are required to provide information necessary for investors to get the full picture on that issue so that investors can make educated investment decisions.”

Keurig announced in 2020 that it had achieved making 100% of its K-Cup pods recyclable, after converting more than 100 manufacturing lines to produce new recyclable format pods made from polypropylene #5 plastic. The company also said at the time that it had intensified its efforts to ensure that recycling facilities across the U.S. have the capability to recycle polypropylene.