Food and Beverage Business

Settlement reached for $9.3m in Oatly greenwashing lawsuit.

Settlement reached for $9.3m in Oatly greenwashing lawsuit. Oatly Food and Beverage Business

According to a court filing this week, investors suing Sweden’s Oatly have requested a federal judge to approve a $9.25m settlement after alleging that the oat dairy-alternative business engaged in greenwashing. The settlement follows a mediation session in October, but court approval is still pending. The lawsuit filed in July 2021 claimed that Oatly artificially inflated its shares by over-promoting product demand and misrepresenting its environmental impact.

Kai Jochims, an investor in Oatly, initiated the lawsuit, alleging that the company’s trading price fell by approximately 9% following accusations of greenwashing made by a short-seller. Jochims claimed fraud due to misleading information included in Oatly’s IPO registration statement, as well as an investor presentation on its website. Oatly’s misleading claims involved its finances, environmental practices, and expansion in China.

Several other investor cases followed in 2021 after Jochims sued Oatly, and the matters were consolidated later that year. The company has yet to comment on the settlement, as the court’s approval is still pending; however, a conference for court approval is scheduled to take place today.

In August 2023, the plaintiffs filed their third amended complaint in the suit after their previous complaint was dismissed, with US district judge Alvin K. Hellerstein instructing the plaintiffs to avoid repetition and to improve the complaint’s clarity when re-filing the case.

The case is not the first time Oatly has faced challenges related to its marketing. In January 2022, the Advertising Standards Authority banned a UK advertising campaign for Oatly’s alternative milk products, deeming the company’s environmental claims “misleading.” The oat-drink maker’s financials for 2023 indicated rising revenues but a widening EBITDA loss.

In conclusion, Oatly has confronted legal and marketing battles in recent years, reflecting the scrutiny that food and beverage companies face in the face of consumer demands and environmental concerns. Industry players must navigate these complexities to forge a sustainable path forward.

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