Buyers hit out at Samsung over $14bn in coal financing

Investors hit out at Samsung over $14bn in coal financing

South Korea’s Samsung has been criticised by traders and environmentalists after analysis recommended its insurance coverage items financed $14bn of fossil gas initiatives and investments over the previous 10 years.

Samsung Hearth & Marine and Samsung Life have offered greater than Gained16tn ($13.8bn) in backing for the coal trade by way of challenge financing, bonds and insurance coverage underwriting since 2009, in keeping with information offered to the Monetary Instances by a ruling social gathering lawmaker and the Korea Sustainability Investing Discussion board, a non-governmental organisation.

The 2 Samsung items are South Korea’s largest property and life insurers, respectively.

The alleged extent of the conglomerate’s coal trade hyperlinks has drawn the ire of overseas pension funds, together with people who spend money on Samsung Electronics, the group’s crown jewel. Environmental, social and governance points are an growing focus for institutional traders, lots of that are in search of to scale back their publicity to fossil fuels.

“It’s deplorable that Korean monetary establishments — together with Samsung — are large traders in coal energy initiatives,” stated Karl Yang, the KOSIF’s govt director. “They’re doing so just for earning money within the short-term, no matter public well being threats and international warming.”

Samsung C&T, a building affiliate, is at present contemplating whether or not to take part in a brand new coal-fired energy station in Vietnam, alongside state-backed Korea Electrical Energy Corp (Kepco).

These expressing concern over Samsung’s involvement in such initiatives embody KLP, Norway’s largest pension fund; Dutch pension investor APG Asset Administration; and Denmark’s MP Pension. Collectively they handle greater than $700bn in retirement funds.

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Buyers need monetary establishments not solely to publicly disclose local weather change associated commitments but in addition to align enterprise practices with the commitments

Critics say South Korean firms’ assist of the fossil gas trade has additionally undermined President Moon Jae-in’s “Inexperienced New Deal”, an financial coverage seen as essential to the federal government’s response to the coronavirus pandemic.

Samsung Hearth & Marine and Samsung Life have beforehand promised to not take part in any additional direct financing of coal initiatives or refinance present investments. However these pledges don’t prolong to monetary assist through bonds or insurance coverage underwriting.

One individual accustomed to the insurance coverage teams’ insurance policies stated the Gained16tn determine was “exaggerated” by purchases of company bonds from teams together with Kepco. Such notes — purchased and bought as a part of an organization’s monetary administration actions — don’t depend as direct investments in fossil fuels and are “very laborious to disentangle” given the small scale of South Korea’s capital markets, the individual stated.

Samsung’s possession construction is complicated with cross-shareholdings between group associates, subsidiaries and items however management in the end rests with Lee Jae-yong, the vice-chairman of Samsung Electronics.

Samsung Electronics, the world’s greatest producer of smartphones and laptop chips, stated it was “absolutely conscious of the seriousness of local weather change and is dedicated to minimising the environmental affect of its enterprise”.

The corporate stated it was “on monitor” to achieve a goal of utilizing solely renewable power within the US, Europe and China this yr. It declined to reveal the proportion of renewable power it utilized in South Korea or Vietnam, the place its greatest factories are situated.

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Park Yoo-kyung, an adviser at APG, stated international traders have been growing their scrutiny of coal financing in South Korea.

“Buyers need monetary establishments not solely to publicly disclose local weather change-related commitments but in addition to align enterprise practices with the commitments,” she stated. “What a disappointment Samsung C&T is.”

Wonyoung Yangyi, the South Korean lawmaker who helped conduct the analysis, stated funding of coal was damaging the popularity of the nation’s monetary establishments and growing their publicity to funding threat.

“As the complete world is transferring in direction of stronger greenhouse fuel discount targets for 2030 and net-zero by 2050, the viability of coal energy initiatives will decline even quicker,” she stated.

Nevertheless, APG’s Ms Park pointed to a optimistic signal of change. KB Monetary Group, one among South Korea’s greatest banks, final month introduced it will stop financing coal initiatives, together with through the acquisition of bonds.

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