Informant alerts Singapore Exchange regarding Kepco, a South Korean utility company, for failing to disclose climate-related risks
In a significant development, environmental law NGO Solutions for Our Climate (SFOC) has lodged a complaint with the Singapore Exchange (SGX) against Korea Electric Power Corporation (Kepco). The complaint alleges that Kepco failed to disclose material climate-related risks in its US$11 billion bond issued earlier this year.
The Kepco case could serve as a test of SGX's regulatory posture on climate disclosure. SGX has acknowledged receipt of the complaint and intends to raise the matters highlighted in SFOC's complaint with Kepco's board. As of press time, Kepco has yet to reply to queries regarding the complaint.
Kepco's bond was underwritten by Citigroup, HSBC, JPMorgan, and Bank of America. The offering memorandum, according to SFOC, contains virtually no meaningful climate-related disclosure. SFOC alleges that Kepco omitted disclosure of its continued reliance on coal power until 2050, its financial exposure to volatile liquefied natural gas (LNG) prices, and its spending of green bond revenue on fossil gas projects.
SFOC's focus on Kepco's climate accountability is not new. A recent report by SFOC estimated that Kepco's emissions caused approximately $72.9 billion in cumulative climate-related damages. SFOC and other groups have taken various climate action routes related to Korean heavy emitters and financiers, including litigation against project funders and banks financing coal projects.
However, there is no direct information available about the specific current status of the climate-related disclosure complaint lodged by SFOC against Kepco with the SGX. The complaint is part of ongoing activism and regulatory scrutiny but without publicly available status or resolution details at this time.
The Kepco case is not the first instance of climate-related concerns in the financial sector. In FY2024, out of the 49 whistleblowing reports that the SGX RegCo received, 18 were regarding disclosure-related matters. Another complaint was made by campaign group Market Forces against Jera, alleging that the Japanese power giant had not properly disclosed systemic risks over its LNG investments.
The use of hydrogen-LNG and ammonia-coal blends, labelled as "carbon-free" by Kepco, has also raised concerns. SFOC claims that such labelling could mislead stakeholders. The word "climate" appears only once in the memorandum, which does not provide a sufficient account of the financial risks associated with climate change and climate-related legislation.
The decline in ESG shareholder proposals, which hit a record low in 2024, may reflect a growing ESG backlash in the US. However, the Kepco case underscores the importance of climate disclosure, especially in the context of large-scale bond offerings.
It is unclear which specific funds in these investment entities hold the latest SGX-listed bond offering. Out of the US$1.6 billion of green bonds issued as of 2022, there have been no records of how US$783.4 million of the proceeds were allocated.
In conclusion, the climate-related disclosure complaint against Kepco highlights the need for improved transparency and accountability in the financial sector, particularly in the context of large-scale bond offerings. The outcome of this complaint could set a significant precedent for future climate disclosure regulations in Singapore and beyond.
- The Kepco case, involving a failure to disclose material climate-related risks, could set a precedent for climate disclosure regulations in Singapore and beyond.
- Greenwashing, such as labeling hydrogen-LNG and ammonia-coal blends as "carbon-free," could mislead stakeholders, as alleged by SFOC in the Kepco case.
- Climate finance, including the US$11 billion bond issued by Kepco earlier this year, needs transparency and accountability to ensure the funds are not contributing to climate change.
- The SFOC complaint against Kepco highlights the importance of corporate responsibility in the net zero energy transition, especially in industries heavily dependent on fossil fuels.
- The SDGs (Sustainable Development Goals) emphasize climate action, including reducing greenhouse gas emissions and fostering climate-resilient infrastructure.
- Personal finance, home-and-garden, and business investments should consider climate change risks before allocating funds to companies like Kepco that continue to rely on coal power.
- Climate change will have significant impacts on various aspects of life, including weather patterns, travel, sports, shopping, and lifestyle choices.
- Data and cloud computing, technology, and science are essential tools in understanding and mitigating the effects of climate change, as well as managing climate risks in business and industry.
- The decline in ESG (Environmental, Social, and Governance) shareholder proposals may indicate a growing ESG backlash in the US. However, the Kepco case underscores the need for continued focus on climate disclosure, especially in large-scale bond offerings.
- The SGX RegCo received 18 out of 49 whistleblowing reports related to disclosure-related matters in FY2024. Another complaint was made about Jera's systemic risks over its LNG investments.
- The spending of green bond revenue on fossil gas projects, as alleged by SFOC against Kepco, raises questions about the effectiveness of such initiatives in promoting a sustainable energy transition.
- Future climate-related disclosure regulations could benefit from lessons learned from cases like the SFOC complaint against Kepco, aiming to improve the transparency and accountability of the financial sector in the face of climate change.
