Investors suing Sweden’s Oatly have asked a federal judge to approve a $9.25m settlement, after accusing the oat dairy-alternative business of greenwashing.

The settlement notice said Oatly and those suing reached an agreement to settle following a mediation session in October. The settlement is however still subject to court approval.

The suit, which was launched in July 2021, alleged Oatly’s shares were “artificially pumped” because the company had over-promoted demand for its products and claimed it was more environmentally sound than it was.

Kai Jochims, an investor in Oatly, first filed the suit and alleged the trading price for the company’s US shares fell by around 9% after a short-seller accused the group of greenwashing months after its $1.4bn initial public offering (IPO).

Jochims accused Oatly of fraud due to certain claims included in the business’ IPO registration statement and an investor presentation on its website. According to the investor, Oatly’s misleading claims include assertions about its finances, general “greenwashing” and falsehoods about its growth in China.

Several other investor cases followed in 2021 after Jochims sued Oatly, and the matters were consolidated later that year.

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An Oatly spokesperson told Just Food today (21 February): “As the settlement is still pending approval by the court, we cannot comment on it at this time.”

Just Food understands the conference for court approval will take place later today.

In August 2023, the plaintiffs filed their third amended complaint in the suit after their previous complaint was dismissed.

At the time of dismissal, US district judge Alvin K. Hellerstein said: “Plaintiffs’ failure to plead a legally sufficient and plausible set of allegations… cause me to grant the motion to dismiss with leave to replead, except as to count II, which is dismissed with prejudice.

“In repleading, plaintiffs shall avoid repetition and free its complaint from superfluous verbiage, unnecessary allegations, puzzle pleading… inactionable statements of opinion… and mere puffery.”

Meanwhile, in January 2022, Oatly saw a UK advertising campaign for its alternative-milk products banned after the company was judged to have made “misleading” environmental claims.

The Advertising Standards Authority (ASA) investigated television and press adverts, as well as social-media posts, after receiving 109 complaints from members of the public and the campaign group A Greener World. The complainants challenged whether Oatly’s claims could be substantiated.

In the oat-drink maker’s full-year results for 2023, reported revenue rose 8.5% to $783.4m, with volumes up 3.1% and price/mix 5.6%.

An EBITDA loss widened to $405.2m versus the $347.4m in fiscal 2022 and, in adjusted terms, narrowed to $157.5m from $267.9m.

Losses before tax were $408.2m, compared to $397.3m a year earlier.