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Major banks fail to stop underwriting KEPCO’s bonds

On April 24, the Toxic Bonds Network and Solutions for our Climate (SFOC) sent letters to four major banks – Citigroup, Mizuho Financial Group, Bank of America, and Standard Chartered – urging them to stop facilitating any new bonds issued by KEPCO, South Korea’s largest utility company responsible for 32% of the country’s greenhouse gas emissions.

Standard Chartered is the only bank that responded to the letter, but has failed to commit to halting underwriting services for KEPCO.

The letter highlighted the greenwashing of KEPCO’s green bonds due to the company’s poor business practices and corporate governance, and lack of transparent reporting mechanisms on the allocation of green funds. In 2023, KEPCO’s subsidiary faced criticism for misleading investors by using $233.7 million (KRW 320 billion) of domestic green bond revenue on fossil gas projects.

Out of $1.6 billion in green bonds issued globally by KEPCO in 2022, there were no records of how $783.4 million was spent or allocated.

Meanwhile, KEPCO continues to rely heavily on coal-fired generation, with coal accounting for 33.7% of imported power and approximately 40.2% of domestic generation, while its renewable generation assets accounted for a mere 2.0% in 2023.

Its fossil fuel-dependent energy mix, in addition to its lack of a credible, Paris-aligned transition plan, suggests its green bond issuances are merely tokenism. Hence, banks underwriting KEPCO’s bonds face significant risks. By continuing to support KEPCO, these banks contradict their own public commitments to sustainable practices and expose themselves to potential legal and financial consequences.

  • The following banks failed to respond: Mizuho Financial Group, Bank of America, Citigroup
  • The following bank responded, but did not commit to deny debt: Standard Chartered
KEPCO Bank of America Citi Mizuho Standard Chartered