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

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

Samsung Hearth & Marine and Samsung Life have supplied greater than Won16tn ($13.8bn) in backing for the coal business via undertaking financing, bonds and insurance coverage underwriting since 2009, in response to information supplied to the Monetary Occasions 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 business hyperlinks has drawn the ire of international pension funds, together with those who put money into Samsung Electronics, the group’s crown jewel. Environmental, social and governance points are an growing focus for institutional buyers, a lot of that are in search of to cut back their publicity to fossil fuels.

“It’s deplorable that Korean monetary establishments — together with Samsung — are enormous buyers in coal energy initiatives,” stated Karl Yang, the KSIF’s government director. “They’re doing so just for making a living within the short-term, no matter public well being threats and international warming.”

Samsung C&T, a development affiliate, is presently 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.

Traders 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 gasoline business 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 and Marine and Samsung Life have beforehand promised to not take part in any additional direct financing of coal initiatives or refinance current investments. However these pledges don’t prolong to monetary assist by way of bonds or insurance coverage underwriting.

One particular person aware of the insurance coverage teams’ insurance policies stated the Won16tn determine was “exaggerated” by purchases of company bonds from teams together with Kepco. Such notes — purchased and offered as a part of an organization’s monetary administration actions — don’t rely as direct investments in fossil fuels and are “very laborious to disentangle” given the small scale of South Korea’s capital markets, the particular person stated.

Samsung’s possession construction is advanced 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 “totally conscious of the seriousness of local weather change and is dedicated to minimising the environmental influence of its enterprise”.

The corporate stated it was “on observe” to succeed in 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 positioned.

Park Yoo-kyung, an adviser at APG, stated international buyers had been increasing their scrutiny of coal financing in South Korea.

“Traders 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 whole world is shifting 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 constructive signal of change. KB Monetary Group, one in every of South Korea’s greatest banks, final month introduced it could stop financing coal initiatives, together with by way of the acquisition of bonds.