SEC  Greenwashing Enforcement  Case Against Public Company | Proskauer - Regulatory & Compliance

The U.S. Securities and Exchange Commission (SEC) recently settled an enforcement case against Keurig Dr. Pepper, focusing on the company s disclosure regarding the recyclability of its K-Cup pods in its annual reports. The SEC alleged that Keurig Dr. Pepper failed to adequately disclose the uncertainty surrounding the commercial viability of recycling K-Cup pods, despite receiving negative feedback from two significant recycling companies. This case is significant as it may signal the SEC s increasing attention to Environmental, Social, and Governance (ESG) disclosures, even as the SEC s Enforcement Division has reportedly disbanded its ESG enforcement task force. The SEC s action emphasizes the importance of materially complete disclosures, particularly in relation to climate change and other ESG subjects. Companies are advised to exercise caution in their public disclosures, both filed and non-filed, and consider the potential for misleading interpretations. The SEC s view on the case was not unanimous, with SEC Commissioner Peirce dissenting, arguing that Keurig s disclosure should not be interpreted as an implicit assertion that the pods would be recycled. The SEC has been primarily focused on the strength of public companies disclosure controls and procedures, which are internal controls designed to ensure timely, accurate, and complete disclosure. Companies that can demonstrate adequate disclosure controls and procedures are in a stronger position vis-à-vis regulators, even if the SEC does not ultimately agree with their disclosure decisions. The SEC has also been reviewing companies sustainability reports and other non-filed disclosures to gain insights into filed reports. The SEC s new climate change rules, which were due to take effect for some companies for their 2025 fiscal years, have been temporarily stayed pending the resolution of several lawsuits consolidated in the 8th Circuit U.S. Court of Appeals. It is likely that the SEC will delay the effectiveness of these rules for at least one year due to the ongoing litigation and stay.

Source: jdsupra.com
Published on 2024-09-18