Recycling giant Bingo Industries has defended its environmental credentials ahead of a potential takeover by a consortium of investors after a mysterious short seller questioned its recycling record.

The ASX listed company received a bid from private equity outfit CPE Capital and Macquarie Infrastructure and Real Assets (MIRA) in late January, valuing the company at $2.6 billion.

Following the bid, Bingo was hit by a short seller report from a firm called SnowCap in February that questioned whether Bingo was recycling the amount of waste it claimed and raised concerns about its valuation.

A spokesman for Bingo said the company had a strong environmental record and pointed to its sustainability report which highlighted the importance of environmental, social and governance (ESG) principles to its key stakeholders.

“The SnowCap report is full of factual errors and has drawn a series of conclusions based on historical information and incomplete or inaccurate data assumptions,” he said. “We did not release any formal response to the report because it lacked credibility and our investors were aware of this.”

The release of SnowCap’s report into Bingo has had little impact on the company’s share price but a spokesman for SnowCap said the market had failed to pick up on the concerns raised in the report about Bingo’s ESG credentials.

The short seller published a report into Freedom Foods last year but otherwise is little known and raised eyebrows for the unusual move of publishing a report on a mergers and acquisitions target.

SnowCap’s spokesman said environmental concerns should be front and centre for CPE and MIRA which both advocated the application of ESG principles to investments.

In its report, SnowCap alleged the waste management company’s reported 83 per cent recovery rates were vastly overstated and Bingo’s own sustainability filings indicated it actually treated less than half the waste SnowCap estimates it receives.