On the heels of a damning report by Blue Orca Capital, a class action lawsuit has been filed against Enviva, the world’s largest supplier of wood pellets. The case alleges that Enviva made materially false and misleading statements about the environmental sustainability of their wood pellet production and procurement, as well as misleading statements about their cash flow and business model. According to the plaintiff, “the Company’s public statements were materially false and misleading at all relevant times.”
Blue Orca’s investigation found extensive evidence of forest clear-cutting by suppliers to Enviva, belying its claims of sustainable wood harvesting, as well as evidence the company is perpetuating various other misrepresentations.
The report concludes:
“We believe that Enviva is the latest ESG farce, a product of deranged European climate subsidies which incentivize the destruction of American forests so that European power companies can check a bureaucratic box. In an Orwellian twist, even though burning wood emits more CO2 per unit of heat generated than any major energy source (including coal), an arcane carbon accounting loophole subsidizes European power companies to replace coal with wood pellets derived from deforestation in the United States. All in the name of climate activism.”
Blue Orca notes that “any legitimate ESG investor or allocator should be embarrassed to own this stock.” Enviva stock fell 13% the day the report was released.