Oatly Faces Claims of Greenwashing and Inflated Revenue from Short Seller Spruce Point

4 Mins Read

Oatly shares have taken a tumble amid fresh allegations of greenwashing and overstated revenue from Spruce Point Capital. The activist short seller has taken a short position on the Swedish vegan milk maker. It says Oatly is using misleading accounting practices and is “cherry-picking” sustainability data. 

After Spruce Point published its report, shares of Oatly fell by as much as 7% on Wednesday (July 14). In the report, the activist short-seller accused the famous oat milk brand of shady accounting practices and misleading consumers about its green credentials. 

Malmö-based Oatly went public in the U.S. in May with a market value of around $13 billion. Best known for its oat milk, the company also makes a range of oat-based dairy alternatives including ice cream, yogurt and creamers. They sell their products in more than 20 markets across Asia, the U.S. and Europe. 

Oatly is known for its vegan oat milk and dairy alternatives. (Image: Oatly)

Overstated revenue 

Spruce Point alleges that Oatly has been manipulating its financials in its prospectus. The firm is taking a short position with its belief that the company will never be profitable. 

“We think this is a strong sell, and the stock price could be 70% overvalued,” said Spruce Point founder and CIO Ben Axler, as reported in CNBC

According to the firm’s 124-page investigation into Oatly, the brand has exaggerated its success in the Chinese market. Building their factory in Utah may cost 100% more than its initial budget, and apparently, Oatly has had 3 accounting auditors in just 6 years. 

“Investors should also be concerned that its CFO and Audit Chair both obscure their roles at prior corporate accounting scandals,” wrote Spruce Point. 

Spruce Point founder and CIO Ben Axler. (Image: Spruce Point Capital Management)

“We believe Oatly has acted recklessly in pursuit of profits to race towards an IPO to sell its stock at an inflated valuation.” 

Spruce Point further cautioned that Oatly’s valuation is more than half of the entire plant-based milk market, which is estimated to be $21 billion by 2026. The firm believes it is “unlikely…that Oatly ever captures this percentage of the market.” 

According to data from S3 Partners, around 1% of Oatly’s shares are being shorted as of Tuesday (July 13). 

Alleged greenwashing

Spruce Point also claims that Oatly is misleading investors on its sustainability credentials. Oatly famously brands itself as a climate-friendly alternative to not only cow’s milk, but also other plant-based alternatives. 

But in the report, the short seller says that the company’s June 2021 presentation used data from a 2013 study. That means the data does not factor in the environmental impact of Oatly’s recent expansion into the U.S. and Asia. 

Spruce Point claims Oatly is “cherry-picking” its sustainability data. (Image: Oatly)

Spruce Point further highlighted Oatly could be omitting certain data points, such as its water consumption. According to Oatly’s own 2019 report, its New Jersey factory was using 55% more water for every litre it churned out compared to its Sweden and Dutch facilities. 

“Through a FOIA request, we learned that Oatly’s production process also generates dangerous volumes of wastewater that requires it to build its own treatment facilities. Oatly is even out of compliance with EPA regulations in New Jersey,” Spruce Point detailed. 

Another greenwashing instance Spruce Point spotlighted was its connection to deforestation. It further builds on the controversy Oatly faced when it received investment from deforestation-linked Blackstone in 2020. 

Oatly’s chocolate-flavoured oat milk drink. (Image: Oatly)

“Oatly took flack for the investment [from Blackstone],” said the report. “However, Spruce Point also points out Oatly uses Olam International for its supply of Cocoa. Olam has often been criticized for not being transparent and contributing to deforestation and endangerment of species in Africa.” 

Some of Oatly’s products use cocoa, such as its chocolate-flavoured oat milk drinks. 

Oatly’s response

Responding to the allegations, Oatly said in an emailed statement to CNBC: “Oatly rejects all these false claims by the short seller.” 

“This short-seller stands to financially benefit from a decline in Oatly’s stock price caused by these false reports,” the company continued. “[We] stand behind all activities and financial reporting.” 

Oatly’s brand has been tarnished across social media of late due to its ongoing trademark infringement lawsuit with small-time UK-based oat milk producer Glebe Farms.

Lead image courtesy of Oatly.


  • Sally Ho

    Sally Ho is Green Queen's former resident writer and lead reporter. Passionate about the environment, social issues and health, she is always looking into the latest climate stories in Hong Kong and beyond. A long-time vegan, she also hopes to promote healthy and plant-based lifestyle choices in Asia. Sally has a background in Politics and International Relations from her studies at the London School of Economics and Political Science.

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