Fortune - USA (2021-10 & 2021-11)

FORTUNE OCTOBER/NOVEMBER 2021 51

ESG STOCKS

Shaky Foundations

for Eco-Investors

A controversy involving alt-milk

favorite Oatly raises an awkward

question: How can shareholders tell

which companies are truly “green”?

BY KATHERINE DUNN

ON A WEDNESDAY IN JULY, less than

two months after going public,

the cult-favorite Swedish oat-milk

maker Oatly reached a different mile-

stone: It got clobbered by a short-

seller’s report, one that accused it of

leged that Oatly “doesn’t

practice what it preaches”

when it comes to ESG—

environmental, social, and

governance measures—and

especially to sustainability.

The world’s hottest vegan

milk, it insinuated, just

isn’t that green.

In a world awash in

buzzy, venture capital–

backed companies pitching

themselves to young,

socially conscious custom-

ers, Oatly has distinguished

itself by building a quirky,

off-the-cuff brand that

puts its green mission front

and center—ceaselessly

spreading “Oat-LIES.”

The report’s author,

New York–based invest-

ment firm Spruce Point

Capital Management, ran

readers through a litany

of critiques: allegations

of revenue inflation and

bad accounting, attacks

on Oatly’s leadership, and

questions about whether

Oatly could compete with

heavyweight rivals like

Nestlé and Chobani in

the fast-growing oat-milk

market. But its most

headline-grabbing attack

struck at the core of Oatly’s

brand. Spruce Point al-

THE BRIEF

PHOTO
ILLUSTRATION BY
ANDREW B. MYERS