Drax (LON:DRX) shares plunged more than 9% on Thursday after the UK’s financial regulator opened a formal investigation into the energy group’s biomass disclosures.
The Financial Conduct Authority is reviewing statements made between January 2022 and March 2024, including whether the company’s 2021, 2022 and 2023 annual reports complied with listing and transparency rules.
The probe follows allegations from a former Drax lobbyist who claimed the company misled government and regulators over pellet sourcing. Last year Drax paid £25 million after Ofgem found it had misreported data due to poor controls.
The company said it will cooperate fully with the investigation.
The sell-off reflects the scale of the risk. Biomass sits at the centre of Drax’s green narrative and subsidy stream. Questions over governance and sourcing go straight to the heart of its credibility with investors, policymakers and the public.
With the FCA circling, shareholders face months of uncertainty over whether this is a compliance check or something that cuts deeper into the business model itself.