Energy company Drax Group is facing an investigation by the Financial Conduct Authority (FCA) over “historical statements” regarding its biomass sourcing.

The regulator’s probe will cover the period between January 2022 and March 2024 and examine three of the company’s annual reports for the 2021, 2022 and 2023 financial years.

Drax is a renewable energy generation, pellet production and carbon dioxide removal business, operating a portfolio of sustainable biomass, hydroelectric and pumped hydro storage assets across sites in England and Scotland.

The FTSE 250 listed company, which confirmed it would co-operate with the FCA as part of the investigation, saw its share price fall by over 10% in this morning’s trading.

In a statement, the regulator said: “We can confirm that the FCA has opened an investigation into Drax Group.”

The FCA’s investigation will put Drax’s claims that it is a sustainable and carbon-neutral company back under the regulatory microscope.

In 2023, Ofgem launched an investigation into whether Drax was in breach of its sustainability reporting requirements, although the energy regulator closed this probe last year, citing “an absence of adequate data governance and controls”. Drax accepted the Ofgem findings and agreed to pay £25m to the regulator’s Energy Industry Voluntary Redress Fund.

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