Climate Finance Global banks under fire for facilitating coal company’s opaque green bond issuance 2024-07-05

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Major global banks assist South Korean coal power producer in issuing billions of dollars in green bonds, exposing themselves to greenwashing risk  

 

April 24, 2024 (SEOUL) – Today, the Toxic Bonds Network, a global coalition of climate organizations, sent letters to the CEOs of Bank of America, Citigroup, Standard Chartered and Mizuho, urging the banks to stop facilitating new bond issuance for Korea Electric Power Corporation (KEPCO), a South Korean state-run power utility that generates 40 percent of its electricity from coal.

 

KEPCO relies heavily on fossil fuels and has incurred a total loss of $36.5 billion (KRW 50 trillion) over the last three years amid rising fuel prices. The company depends on bonds as a significant source of revenue to maintain its coal business. As of December 2023, it issued a total of $58.4 billion (KRW 80 trillion) of bonds. Between 2019 and 2024, KEPCO more than doubled its global green bond issuance.

 

 

Image 1. More than 100 campaigners gathered in front of Citigroup's headquarters in New York to demand an end to its fossil fuel investment (Source: Stop the Money Pipeline)

 

“Without any concrete plans to transition away from fossil fuels, KEPCO’s relentless bond issuance will only last so long. Despite issuing green bonds under the guise of climate action, KEPCO and its generation subsidiaries still only generate 2 percent of its electricity from renewables,” said Evgeniya Lee, Climate Finance associate at Solutions for Our Climate.

 

The letter underscores the greenwashing risk of KEPCO’s global green bonds. According to KEPCO’s 2023 Green Bond Report, out of $1.6 billion of green bonds globally issued in 2022, there were no records of how $783.4 million was spent or allocated. In 2023, KEPCO’s generation subsidiary came under fire for using $233.7 million (KRW 320 billion) worth of domestic green bond revenue on fossil gas projects.

 

“This lack of transparency prompted greenwashing complaints to be filed against KEPCO in Korea this March. The legal claim centered around exaggerated and deceptive advertising regarding its global green bond issuances," said Gwanhaeng Lee, Senior Foreign Counsel at Solutions for Our Climate.

 

 

Image 2. Campaigners from Solutions for Our Climate gathered in front of Citibank Korea to urge the bank to end its support for KEPCO-issued green bonds (Source: Solutions for Our Climate)

 

"Financial institutions should carefully consider the potential legal implications and reputational risks associated with underwriting KEPCO’s green bonds. Supporting such bonds could inadvertently contribute to misleading practices and undermine the integrity of their own environmental and social policies and declarations.”

 

As a result of KEPCO’s continued reliance on coal, major shareholders, including the Dutch APG and Sweden’s AP7, have divested from the utility. Additionally, BNP Paribas, a multinational bank, no longer holds any positions in KEPCO in open-end funds as it fails to meet the bank’s coal policy.

 

“By underwriting KEPCO’s global bonds, despite the utility’s lack of climate efforts, they are disregarding their own climate commitments and legitimizing greenwashing bonds. They must stop supporting this major coal power producer, which is responsible for almost one-third of South Korea’s emissions,” said Lee.

 

To access photos from today’s action, check this 240424_Citi Action(KEPCO Bond).

ENDS.

 

Solutions for Our Climate (SFOC) is an independent non-profit organization that works to accelerate global greenhouse gas emissions reduction and energy transition. SFOC leverages research, litigation, community organizing, and strategic communications to deliver practical climate solutions and build movements for change.  

 

For media inquiries, please reach out to:

Euijin Kim, International Communications Officer, euijin.kim@forourclimate.org