U.S. PHA polymer supplier Danimer Scientific, headquartered in Bainbridge, Georgia has seen its stock price drop again in the wake of a new report released by New York capital management firm, Spruce Point Capital.
Danimer, who, just recently announced plans to invest around 582 million euros ($700 million) in an expansion of its headquarters site, adding a new production hall and nearly quadrupling its workforce from the current 100 employees, was previously also the target of accusations of greenwashing in a March 20, 2021, Wall Street Journal article.
That article, entitled “Plastic Straws That Quickly Biodegrade in the Ocean? Not Quite, Scientists Say”, stated, among other things, that the claims made by Danimer about its material’s biodegradability, were ‘exaggerated and misleading’. Following this news, Danimer’s stock price fell approximately 13 percent on March 22, 2021, and has since continued to lose ground.
In a published response April 8 to the WSJ article, Danimer wrote that “Study results published by the University of Georgia state that the anaerobic degradation of PHA is similar to that of cellulose powder, which means PHA will degrade at a similar rate as plant matter in a waste treatment facility. The study also demonstrates that in seawater, PHA begins to biodegrade over the course of six months, while polypropylene pellets remain intact and unchanged. These results show that PHA is a legitimate biodegradable alternative to traditional plastic. The article points out that variable environmental conditions can influence the amount of time it takes for our material to biodegrade. We do not dispute this point, and we are very clear about this on our website.”
But according to the present Spruce Point report, which echoes the greenwashing concerns raised by the WSJ article, Danimer leveraged its financial backing of the University of Georgia’s lab and professors to obtain a favorable study that supports its biodegradability claims. The report raises numerous corporate governance ‘red flags’ and points to various inconsistencies in the information provided by the company, particularly regarding the size of the facilities and educational backgrounds of some of the company’s officers.
Danimer, according to Spruce Point, would appear to have no near-term path to profitability and growth plans that are highly dependent on manufacturing capacity expansion, unproven at scale and stable canola oil prices which have been materially increasing.
The authors state: “We believe Danimer is peddling an inconsistent, ever-changing story to investors which will likely fail to deliver on its promises.”
The report also suggests that Pepsi has sold its stake equity stake in Danimer, although Pepsi tweeted on 19 April from its official account that it is proud of its partnership with Danimer and "can't wait to see what the future brings."
As well, Spruce Point notes that it has a short position in the shares of Danimer. It has now issued a ‘strong sell’ research opinion.
Danimer has not yet officially responded to the allegations of the report.