Swedish dairy-alternative company Oatly is in the process of settling a lawsuit for $9.25 million, brought forth by investors who accused the company of greenwashing.
Oatly disclosed that it reached the agreed terms on 9 November 2023 in its Q3 filing. In a statement, the company wrote: “In October 2023, the parties reached a settlement in principle of both matters that would require the Company to pay $9.25 million, which is contingent upon court approval, among other things”.
The lawsuit, first filed in July 2021, alleged that Oatly overstated product demand and misrepresented its environmental impact. Investors claimed that the company’s promotional efforts led to an inaccurate portrayal of its environmental sustainability. This agreement was outlined in a motion for preliminary approval of the settlement.
Kai Jochims, one of the investors involved in the lawsuit, claimed that Oatly’s actions resulted in a 9% decline in the trading price of its US shares after a short-seller (Spruce Point Capital Management) accused the company of greenwashing shortly following its $1.4 billion initial public offering (IPO).
Jochims accused Oatly of fraudulent behaviour, citing misleading claims in the company’s IPO registration statement and investor presentations, including assertions about its finances, environmental practices and growth in the Chinese market.
The lawsuit, initially filed by Jochims, prompted several other investor cases in 2021, which were later consolidated. The settlement, if approved by the court, would resolve the allegations against Oatly related to greenwashing practices.
The settlement agreement, which was reached after a mediation session in October, is now awaiting court approval. When approached by The Plant Base, an Oatly spokesperson commented: “As the settlement is still pending approval by the court, we cannot comment on it at this time”.
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