Foreign banks and investors enable one of the “most liable Korean companies for climate change” to burrow deeper into fossil debt.

March 20, 2025 (SEOUL) – Korea Electric Power Corporation (KEPCO), South Korea’s largest utility company, has returned to the global bond market in February 2025. For the past decade, KEPCO only issued green- or sustainable-labeled bonds, meaning that their proceeds should be solely dedicated to green investments. However, after facing greenwashing claims, a major financial crisis, and potential insolvency, KEPCO and global Investment Banks (Citibank, JPMorgan Chase, HSBC and Bank of America) have abandoned labeled bonds in the utility’s recent global bond issuance.

KEPCO’s decision to raise funds through non-green bonds shows that the utility is backtracking on climate goals, and lacks a credible transition strategy. Unlike green bonds, these proceeds are no longer limited to sustainable investments but can also be used for debt repayment and fossil fuel expansion. Although the recent amount of financing decreased, it is clear that this funding reinforces KEPCO’s dependance on fossil fuels. Global underwriters and investors continue to support KEPCO’s unsustainable practices, despite misalignment with their own sustainability policies.

Image 1: Global financing for KEPCO decreased sharply in Q1 2025. (Source: Confidential sources, compiled by SFOC)

KEPCO’s continued dependence on coal has led to severe financial vulnerability. Coal accounts for 33.7% of the company’s imported power and 40.2% of its domestic power generation, making it highly exposed to fluctuations in global fuel prices. This issue has been intensified by the ongoing volatility in global fossil fuel prices, further increasing KEPCO’s need for capital. Nevertheless, the company has failed to adopt a credible transition strategy, and global financial players are continuing to support its fossil fuel investments, enabling the company to delay its necessary shift to sustainable energy.

In response, Solutions for Our Climate (SFOC), alongside 25 other civil society organizations, has sent co-signed letters to KEPCO’s underwriters and key investors. The letters call for immediate action to:

1.      Cease any new financial support in KEPCO bonds or those of its power generation subsidiaries, and

2.      Publicly commit to ending bond underwriting services and divesting from all clients that are involved in expanding fossil fuel production and related infrastructure.

Letters were sent to the following companies:

• Underwriters of the latest bond issuance: Citibank, JPMorgan Chase, HSBC and Bank of America

• Underwriters of previous bond issuances: Standard Chartered, Crédit Agricole CIB, UBS and Mizuho

• Investors including: TIAA-CREF, The Vanguard Group, MetLife Inc., BlackRock Inc. and Janus Henderson

Image 2: Underwriters of KEPCO bonds

Image 3: Bondholders in KEPCO

By continuing to provide financial services to KEPCO, these banks and investors are endorsing KEPCO’s heavy coal reliance, lending a sense of legitimacy to its operations and going against global climate goals. Additionally, they are exposing themselves to significant financial, legal, and reputational risks. Supporting KEPCO contradicts many of these institutions’ own environmental commitments, which often include:

• Exclusion policies prohibiting investment in companies that derive a significant portion of revenue from or generate a certain percentage of power from thermal coal,

• Requirements that new clients have a credible transition strategy aligned with the 2050 carbon neutrality goal, and

• Public pledges to uphold ESG principles, putting their integrity and credibility into question.

Previous key investors have already pulled out from KEPCO’s activities in objection to the utility’s coal-reliant business model. BNP Paribas has publicly announced it holds no positions in KEPCO in its open-ended funds and has no plans to purchase any, referring to KEPCO’s incompatibility with its coal policy. In 2021, APG divested from KEPCO due to the utility’s coal expansion plans, and in 2023, the Swedish Pension Fund AP7 made a similar decision, citing KEPCO’s large-scale coal operations.

A detailed report, "Capitalizing on Coal," further examines the role of key financial players in financing KEPCO’s fossil fuel operations. The report provides an in-depth analysis of how these institutions continue to facilitate KEPCO's unsustainable practices and delay its transition to a greener energy future. It also explores the broader implications for climate goals and financial risk management.

Ayleen Lippert, Climate Finance Researcher at SFOC, said: “The continued financial support of KEPCO’s fossil fuel-dependent business model does not only undermine South Korea's ability to meet its climate goals but also exposes the bonds’ underwriters and investors to significant reputational and financial risks. Financial key players should stay true to their own sustainability commitments and halt support for coal financing to foster a clean energy transition, not just in South Korea, but globally.”

ENDS.

Solutions for Our Climate (SFOC) is an independent nonprofit 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 Emma Nijssen, Communications Officer, emma.nijssen@forourclimate.org.