A climate advocacy group has lodged a complaint with the Singapore Exchange (SGX) over Korea Electric Power Corporation (Kepco), accusing South Korea’s largest power utility firm of failing to disclose material climate-related risks in its US$11 billion bond issued earlier this year.
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Non-profit Solutions for Our Climate (SFOC), which filed its complaint with SGX’s whistleblowing office last Monday, alleged that Kepco had omitted disclosure of its continued reliance on coal power until 2050, as well as financial exposure to volatile liquefied natural gas (LNG) prices. Major LNG projects have been hit by delays and cancellations, resulting in supply constraints that have impacted Kepco.
Kepco’s labelling of hydrogen-LNG and ammonia-coal blends as “carbon-free” could also mislead stakeholders, SFOC said in a statement. Experts have warned that co-firing ammonia and hydrogen alongside fossil fuels in power plants – which Japan and South Korea are heavily relying on as part of their emissions-reduction strategy – is costly, and may be worse than burning coal directly.
“These omissions obscure the broader climate implications of Kepco’s energy strategy,” stated SFOC, risking violation of SGX’s listing rules, which require issuers to disclose sufficient information in the offering memorandum to ensure that targeted investors have a “full and proper understanding” of a firm’s “business, financial conditions, prospects and risks”.
“Disclosure of climate-related risks and opportunities is widely recognised as material for investors. This is supported by the adoption of mandatory climate-related disclosure requirements in Singapore, as well as in other jurisdictions such as the European Union… The offering memorandum contains virtually no meaningful climate-related disclosure,” said SFOC in a written statement to Eco-Business.
“In fact, 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,” it said.
While Kepco’s United States’ annual filing, which the offering memorandum referred investors to for additional risk disclosures, had more discussion on climate-related risks, SFOC said that “it nonetheless fails to provide the level of details required for investors to make informed decisions” and therefore falls short of expectations under SGX’s security laws.
Based on the listing prospectus circulated to investors in February, Citigroup, HSBC, JPMorgan and Bank of America were the lead underwriters of the bond. As of February, BlackRock, Vanguard, MetLife, TIAA-CREF and Janus Henderson are the five largest global investors in Kepco’s bonds, based on Bloomberg Terminal data. But it is unclear which specific funds in these investment entities hold the latest SGX-listed bond offering.
Kepco has yet to reply to Eco-Business’ queries as of press time.
In response to Eco-Business, an SGX Group spokesperson said: “As with any whistleblowing complaint, we will review and take the necessary action.”
It did not provide further details on a timeline for review.
SFOC told Eco-Business that the bourse has acknowledged receipt of the complaint and informed the group that it intends to raise the matters highlighted in its complaint with Kepco’s board.
The activist group said that the Kepco case “could serve as a test of SGX’s regulatory posture on climate disclosure, at a time when international markets are stepping up enforcement against greenwashing, stranded asset risks and fossil fuel dependencies.”
“This goes beyond one company’s climate blind spots – it’s about protecting the integrity of the financial system,” said Ayleen Lippert, a climate finance researcher at SFOC. “When issuers like Kepco misrepresent fossil fuel-related risks, they distort the market and erode investor trust. Backing such opaque bonds enables poor financial stewardship and obstructs the shift to a more resilient, sustainable economy.”
In 2023, a similar whistleblower 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 in the issuance of a US$300 million bond in Singapore. Jera maintained that it had made sufficient disclosures with the issued bond, while SGX has yet to issue any public updates on the complaint.
Mak Yuen Teen, professor of practice and director of the Centre for Investor Protection at the National University of Singapore (NUS) Business School, told Eco-Business that the only other case of greenwashing complaint linked to bonds on SGX’s platform he is aware of is climate finance watchdog Anthropocene Fixed Income Institute’s allegation that energy firm Sembcorp Industries had committed “carbon footprint arbitrage” in its proposed sale of an Indian coal subsidiary in 2022 to meet its decarbonisation targets. The sale ultimately went through, though bondholders were urged to vote against it.
Mak also referenced a “somewhat different” case in 2022, where rubber glove giant Top Glove, which is dual-listed in Malaysia and Singapore, drew flak for reporting a negative figure for its Scope 3 emissions, by including avoided emissions from recycling. But he noted that both cases he raised were not whistleblower complaints.
“Although [its whistleblowing office] covers disclosure-related matters… SGX Exchange Regulation (SGX RegCo) has not been that active in enforcing clear disclosure-related breaches related to very specific listing rules,” said Mak. “Climate-related disclosures are not explicitly covered and this is for bond securities too, so I think SGX RegCo is unlikely to do anything more than just refer to the company.”
In FY2024, out of the 49 whistleblowing reports that the SGX RegCo received, 18 were regarding disclosure-related matters. Among the 14 cases where investigations were completed in FY2024, only one resulted in direct disciplinary action by the exchange’s regulatory arm.
In its statement, SFOC also pointed out that Kepco’s increasing shift away from issuing green bonds to conventional financing casts doubt on the utility’s energy transition strategy, raising concern among environmental, social and governance (ESG) investors.
SFOC and other civil society groups had previously accused Kepco of greenwashing through its global green bond issuances, which doubled between 2019 and 2022. According to campaigners, 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, while Kepco’s generation subsidiary was exposed to have spent US$233.7 million of green bond revenue on fossil gas projects in 2023.
In 2020, Kepco came under pressure from major investors over its funding of overseas projects. Notable shareholders in the entity, including BlackRock and the Church of England, publicly urged it to cancel its new coal-fired power projects. The green bond Kepco issued that year raised US$500 million, but it was shunned by many ESG investors.
Kepco has not directly commented on these issues, but the mounting scrutiny has had an impact on its operations. Months after global investors called for it to drop overseas coal projects in 2020, then-Kepco president Kim Jong-gap announced that it will either scrap or convert two of its planned coal projects in the Philippines and South Africa. “KEPCO and its subsidiaries will not be pursuing new overseas coal power projects,” he said at a state hearing.
A growing ESG backlash in the US in recent years has led to a decline in ESG shareholder proposals, which hit a record low in 2024.
Ahead of the inauguration of US president Donald Trump earlier this year, many Wall Street banks – including the underwriters of the Kepco bond Citigroup, JPMorgan and Bank of America – quit the United Nations-convened Net Zero Banking Alliance.
Another alliance – the Net Zero Asset Managers – also suspended its activities in January, following the exit of BlackRock, which alongside Vanguard, put a pause to corporate meetings after the US financial regulator issued new guidance on investor activism in February.
