Utility Kepco's climate risk disclosures called into question by an anonymous tip-off to SGX
In the world of global energy corporations, Korea Electric Power Corporation (Kepco) has found itself under the spotlight, with allegations of misleading climate-related disclosures in its bond offerings.
Recent reports suggest that Kepco's generation subsidiary spent US$233.7 million of green bond revenue on fossil gas projects in 2023, a move that has raised eyebrows among ESG investors. This revelation comes as Kepco grapples with the impact of major LNG project delays and cancellations, leading to supply constraints.
The climate advocacy group, Non-profit Solutions for Our Climate (SFOC), has lodged a complaint with the Singapore Exchange (SGX) against Kepco, accusing the corporation of failing to disclose material climate-related risks in its US$11 billion bond issued earlier this year.
Singapore, known for its stringent climate-related disclosure requirements, mandates such disclosures in bond offering memorandums primarily through its sustainability and financial regulatory framework linked to the SGX and Monetary Authority of Singapore (MAS). These requirements align with international standards such as the IFRS Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB).
Starting fiscal year 2025, all SGX-listed companies are required to disclose climate information in accordance with IFRS S1 and S2 standards, replacing the earlier Taskforce on Climate-related Financial Disclosures (TCFD) framework. Listed firms, particularly in high carbon-emitting sectors, have had mandatory TCFD-based disclosure since the 2022 fiscal year, expanding to all by 2025 under ISSB standards.
Disclosure requirements are comprehensive, covering governance, strategy, risk management, and metrics/targets related to climate risks and opportunities. Scope 1 and 2 greenhouse gas emissions reporting with limited external assurance becomes mandatory starting fiscal 2027, with Scope 3 disclosure rules beginning in 2026.
However, enforcement details or regulatory actions involving Kepco in Singapore have not been disclosed or reported in the current search results. The MAS and SGX system emphasise transparency, third-party review, and gradual enhancement of climate-related finance disclosures but do not publicly highlight specific enforcement cases for these entities.
The controversy surrounding Kepco's green bond practices is not isolated. Out of the US$1.6 billion of green bonds issued by Kepco as of 2022, there have been no records of how US$783.4 million of the proceeds were allocated. SFOC states that these omissions obscure the broader climate implications of Kepco's energy strategy, risking violation of SGX's listing rules.
The corporation has also been accused of greenwashing through its global green bond issuances, with the 2020 green bond shunned by many ESG investors. Kepco has been accused of omitting disclosure of its continued reliance on coal power until 2050 and financial exposure to volatile liquefied natural gas (LNG) prices.
As the world moves towards a more sustainable energy future, the scrutiny of corporations like Kepco is a necessary step towards transparency and accountability. The case of Kepco serves as a reminder for corporations to adhere to climate-related disclosure requirements and to ensure that their green initiatives align with their stated commitments.
[1] MAS. (2022). Sustainability Reporting Requirements for Listed Issuers. Retrieved from https://www.mas.gov.sg/-/media/MAS/News-and-Publications/Publications/Sustainability-Reporting-Requirements-for-Listed-Issuers.pdf
[2] ISSB. (2022). IFRS Sustainability Disclosure Standards. Retrieved from https://www.ifrs.org/issb/standards/
[3] SGX. (2022). Sustainability Reporting Guide for Listed Issuers. Retrieved from https://www.sgx.com/-/media/Files/SGX/Regulation/Listing/Listing-Rules-and-Guidance/Listing-Rules/SGX-Listing-Rules-and-Guidance/SGX-Listing-Rules-and-Guidance-2022/SGX-Listing-Rules-and-Guidance-2022-Sustainability-Reporting-Guide-for-Listed-Issuers.pdf
[4] ICAEW. (2022). Scope 3 Greenhouse Gas Emissions: A Guide for Companies. Retrieved from https://www.icaew.com/-/media/files/technical/sustainability/scope-3-greenhouse-gas-emissions-a-guide-for-companies.pdf
[5] SFOC. (2023). Complaint against Kepco and Jera for Climate-related Disclosure Failures. Retrieved from https://sfochighway.org/complaint-against-kepco-and-jera-for-climate-related-disclosure-failures/
