The Commissioner of Competition (commissioner) recently sent a jolt (possibly fueled by caffeine…) to the business community that recyclability claims may face increased scrutiny as part of the Competition Bureau’s efforts to combat misleading environmental claims (AKA “greenwashing”). In a consent agreement entered into on January 6, 2022, Keurig Canada Inc. agreed to pay $3 million monetary penalty for false or misleading environmental claims made to consumers about the recyclability of single-use Keurig® K-Cup® pods.
The agreement also requires Keurig to pay $85,000 to cover expenses for the case, donate $800,000 to an environmental charity, and take a number of corrective measures, including improving its corporate compliance program to prevent future deceptive marketing issues and changing its recyclability claims in its advertising and packaging.1
This case highlights the potential compliance concerns for companies who want to make broad claims to consumers regarding the ability of a product or packaging to be recycled. This issue is exacerbated by the fact the ability to recycle certain materials differs from province to province and even from municipality to municipality. Given the increasing importance of this type of claim to consumers and the prevalence of claims of this nature in the marketplace, we expect to see ongoing enforcement by the commissioner in this area.
After investing significant time and resources to consult with waste management firms, Keurig began manufacturing the pods out of polypropylene because this plastic is generally widely accepted in municipal recycling programs in Canada. Keurig stated on its website, social media and K-Cup packaging that, if consumers remove the metallic lid and empty the pod, K-Cups are recyclable.
However, the commissioner’s investigation found that Keurig’s instructions did not sufficiently prepare the pods for recyclability under many local recycling programs and K-Cups are not actually widely accepted in recycling programs outside Quebec and British Columbia.
The commissioner found that Keurig’s claims regarding product recyclability created the general impression that K-Cups are recyclable in every location where these claims were made to the public. Given the differences in local recycling programs, the commissioner concluded that such marketing is false or misleading in all areas where K-Cups are not recyclable in municipal recycling programs or where consumers must take additional steps to prepare the pods for recycling beyond the instructions provided by Keurig.
As part of the settlement, Keurig will pay a $3 million administrative monetary penalty, pay $85,000 to cover the costs of the commissioner’s investigation and, by next December, donate $800,000 to a Canadian charitable organization focused on environmental causes approved by the commissioner. Keurig has also agreed to the following corrective measures:
- change its recyclable claims and the K-Cup packaging;
- publish notices on its websites and social media about the recyclability of K-Cups as well as disseminate said notices in national and local news media, in the packaging of all new brewing machines, and via e-mail to Keurig subscribers; and
- improve its corporate compliance program as necessary to prevent future deceptive marketing issues and promote general compliance with the laws.
Still, this may not be the end of the story for Keurig. Though details have not yet been made public, last month Keurig settled a class-action case in the United States brought on similar grounds and, in Canada, though nothing has been launched, it appears at least one firm is looking for class members.2
Takeaway: Beware of greenwashing
Consumers are increasingly concerned about the environment and climate change. Companies have responded by increasing their use of claims portraying their products as “green” or otherwise environmentally sustainable.
The commissioner has specifically stated that, "Portraying products or services, as having more environmental benefits than they truly have is an illegal practice in Canada. False or misleading claims by businesses to promote ʽgreener’ products harm consumers who are unable to make informed purchasing decisions, as well as competition and businesses who actually offer products with a lower environmental impact."
It is interesting to note that, in November 2021, without ceremony, the Bureau archived its 2008 guidance document publication, Environmental claims: A guide for industry and advertisers, which was published in partnership with the Canadian Standards Association.3 This guide provided detailed information regarding environmental claims, including recyclability claims. The Bureau now directs the public to a webpage that broadly discusses environmental claims and greenwashing, but does not provide meaningful compliance guidance.4
While the general takeaway is that companies should ensure any environmental claims they make are accurate, the more specific takeaway is that companies who make broad claims regarding recyclability (or similar claims such as compostability or biodegradability) should revisit those claims to prevent potential regulatory enforcement and civil liability.