Toxic Bonds initiative sent letters to 51 major Adani investors - including Adani’s largest bondholders Blackrock, TIAA, PIMCO and abrdn - urging them to deny new debt to the Adani Group and to divest all current holdings from the conglomerate. 

This letter came shortly after the publication of Hindenburg Research’s explosive report, which alleged  “brazen accounting fraud, stock manipulation and money laundering” across the group and resulted in a free fall of more than [$140 billion](https://www.bloomberg.com/news/articles/2023-03-02/adani-group-stocks-climb-amid-series-of-block-trades) for Adani. It has led to investigations into the group’s finances and exposes about its murky dealings. 

One of the biggest skeletons tumbling out of Adani’s cupboard has been revelations - long speculated but now enumerated - regarding the heavily interconnected nature of Adani’s various businesses. Of particular concern for investors which operate with an ESG mandate is a recent [report](https://www.reuters.com/world/india/adani-group-firms-pledge-shares-lenders-flagship-company-sbicap-trustee-2023-02-11/) revealing that Adani is using stock from its green companies as [collateral](https://www.bloomberg.com/news/terminal/RPX9CET1UM0W) to finance the Carmichael [coal mine](https://www.bloomberg.com/news/articles/2019-07-08/billionaire-adani-doubles-down-on-controversial-aussie-coal-mine) in Australia. 

In recent years, Adani has been keen to portray itself as the green energy champion of India by announcing investment of [$70 billion](https://www.bloomberg.com/news/articles/2022-09-07/third-richest-adani-adds-more-detail-on-70-billion-green-push) in green projects. Generally sidestepped in the investor presentations about its green ambitions is the fact that it is investing far more in new fossil fuel projects. To fund these project Adani has issued more than $1.25 billion in green bonds in the global market in the last 3 years. 

However, [increasing evidence](https://www.bloomberg.com/news/articles/2023-02-27/jpmorgan-investment-arm-purges-its-esg-funds-of-adani-stocks) that Adani’s green ventures are being used to help prop up its coal mining activities should worry investors that that green investments are not safely ring fenced within the Adani group.

We decided to share a video with Adani’s investors to remind them that they can no longer keep sticking their heads in the sand.

<iframe src="https://www.facebook.com/plugins/video.php?height=314&href=https%3A%2F%2Fwww.facebook.com%2FEko.Movement%2Fvideos%2F1535318440279609%2F&show_text=false&width=560&t=0" width="560" height="314" style="border:none;overflow:hidden" scrolling="no" frameborder="0" allowfullscreen="true" allow="autoplay; clipboard-write; encrypted-media; picture-in-picture; web-share" allowFullScreen="true"></iframe>



The #StopAdani movement, frontline Indigenous communities, and environmental and human rights advocates have been warning about Adani’s dodgy corporate behaviour for years, and have been calling on financial institutions to steer clear of Adani due to their coal expansion, and violation of human rights. 

Furthermore, over [60,000 people](https://actions.eko.org/a/banks-and-investors-get-out-of-adani) have called banks and investors like Blackrock, TIAA, PIMCO and abrdn to drop Adani. The group's devastating coal expansion has only been made possible because of trillions in financing from the world's most prestigious financial institutions. It will only be stopped once these investors pull out.

**Investors who responded**

The responses we have so far received from a few investors such as Deutsche Bank AG, AXA IM and Jupiter Fund Management Plc can be seen below-

![](/images/uploads/wedo-not-comment-publicly-1-.jpg "Investors who responded")

**Investors who are yet to respond:**

![](/images/uploads/a-investors-no-resp.jpeg "Investors who are yet to respond")

Investors response on Adani

The Adani Group - the world’s largest private coal operator - has been on a coal expansion spree thanks to generous funding by the world’s leading banks and investors. Global bond investors have pumped $9 billion into the group in the last 5 years and it was planning to raise an additional $10 billion of debt this year to fund its aggressive expansion of new coal projects. Those plans now hang under a cloud. Why?

Today, Adani stands accused of pulling “the largest con in corporate history” by activist shortseller Hindenberg Research. Hindenburg's report describes “brazen accounting fraud, stock manipulation and money laundering” across the group and puts a dazzling spotlight on Adani’s humongous debt, showing the group’s seven listed entities as over-leveraged and over-valued. 

This is a company which already stands guilty of unabated coal expansion, fuelling climate change, destroying environment and natural wonders like the Great Barrier Reef and trampling on the rights of vulnerable, indigenous communities like Wangan and Jagalingou Traditional Owners in Australia and Adivasi people in Central India.

Since the report’s release, over USD $100billion has been wiped from the company’s value, with shares and bonds down amidst rampant selling and Gautam Adani has plummeted down the world's rich lists.  

But big questions remain for the investors, insurers and banks that have long been funding Adani’s coal expansion. It’s only through their support that Adani has pulled off his ‘miracle’ growth. Growth that now hangs under a cloud of suspicion.

**The Investors**

Our research reveals that Adani’s spectacular success has been bankrolled by some of the biggest names in finance. Adani keeps using this financial backing to justify its financial reputation, implying such investors would not have been involved in the company otherwise! It's a ploy that can no longer work for Adani and nor for the brands of the prestigious firms behind it. These investments have been exposed and some of Adani’s largest investors like TIAA, Blackrock, PIMCO and abrdn - can no longer justify their investments in Adani.    

![](/images/uploads/bar-graph-presentation-7-.png)

We wrote to 51 major investors including TIAA, Blackrock, PIMCO and abrdn, asking them to unequivocally stop buying Adani’s debt untill the company adopts a 1.5°C aligned energy transition plan. We are still waiting for them to break their silence on Adani.

As the scandal continues to spread we have seen action from a small number of investors like KLP (Norway’s largest pension fund) which has divested from Adani fearing it could “inadvertently finance the group’s coal investments” and S&P Dow Jones removed the group’s flagship company, Adani Enterprises, from its Sustainability Indices. This raises significant concerns whether investors like Blackrock, TIAA, PIMCO and abrdn-  are serious about climate change and financial fiduciary.

Adani Group’s flagrant disregard for even the most basic standards of good corporate governance and transparency has been unmasked. It has escalated investigations and actions into the group by various government regulators, credit rating agencies, banks, sustainability indices and investors. It is evidently clear that Adani cannot be trusted. Can banks and investors afford to continue to willingly keep their eyes and ears closed about Adani? 

**The Demand**

Members of the Toxic Bonds initiative sent letters to 51 major investors including Blackrock, TIAA, PIMCO and abrdn, urging them to deny debt to the Adani Group and divest all investments from the company, so that it cannot continue its reckless programme of coal expansion without a clear 1.5°C-aligned transition plan. 

**[U﻿pdates on Investors responses](https://adanitoxicbonds.org)**

**[L﻿etter to Bondholders](https://adanitoxicbonds.org/wp-content/uploads/2023/02/Toxic-Bonds-Adani-Letter-Hindenburg.pdf)**

**[Letter to Green Bondholders](https://drive.google.com/file/d/1Sk9RZiEi2vLw9ZgCoFMfguk7nznfZtTE/view)**

**The Petition**

The #StopAdani movement, frontline Indigenous communities, and environmental and human rights advocates have been warning about Adani’s dodgy corporate behaviour for years, and have been calling on financial institutions to steer clear of Adani due to their coal expansion, climate change escalation and violation of human rights. 

Over 60,000 people have called banks and investors like Blackrock, TIAA, PIMCO and abrdn to drop Adani. Adani’s devastating coal expansion has only been made possible because of trillions in financing from the world's most prestigious financial institutions.

**[S﻿ign the petition here](https://actions.eko.org/a/banks-and-investors-get-out-of-adani)**

Investors: Time to Get Out of Adani

At the end of last year, members of the Toxic Bonds initiative sent letters to 71 major investors urging them not to purchase bonds in KEPCO, South Korea’s largest utility company, until the company adopts a 1.5°C aligned energy transition plan.

Although not a household name across the world, KEPCO presents a useful case study in how global investors can use bond markets to positively influence companies who lag behind on climate commitments. Here’s why:

KEPCO is currently going through the worst financial crisis in its history, it is forecasted that KEPCO will experience a growing deficit this winter, with soaring energy demand and fuel prices.  

Without a Paris-aligned coal phaseout plan, KEPCO recently issued USD [800 million worth of green bonds](https://www.bloomberg.com/news/articles/2022-06-07/debt-saddled-kepco-turns-to-dollar-green-bond-after-losses-mount). This comes after issuing a steep USD [8 billion in corporate bonds](https://www.sedaily.com/NewsVIew/263LCCL8H6) in the first quarter of 2022 after reaching a [net debt of](https://www.hanaw.com/download/research/FileServer/WEB/industry/industry/2022/05/03/Utilities_2H22_.pdf) 40 trillion won (USD 31 billion) at the end of last year. 

According to newest GCEL data KEPCO has installed coal capacity of 74358 MW, with a current output of 97.5 million metric tonnes in coal production, with expansion plans of 20840 MW in total. A fossil fuel company that still has plans for expansion in coal, cannot be Paris aligned, no matter the green or SLB-linked bonds they generate. 

In short: **KEPCO is in financial strife because it has failed to invest in transition to renewable energy and is now relying on global bond markets to fund its operations. This gives bond investors a powerful opportunity to engage the company over its transition policies. And if KEPCO fails to deliver them - deny debt.**

Here are the responses from the handful that engaged:

* **a﻿brdn do not commit to deny dent to KEPCO.**

abrdn has absolutely no coal policy in place and confirms they will keep financing KEPCO.

> *Many thanks for your letter of 25 August 2022. I am very happy to reply on behalf of abrdn regarding our holding in KEPCO but before doing so it may be worth providing some wider context. As a global investor we manage and administer approximately £508bn (as of September 2022) of assets for clients. We undertake this activity based on investment mandates set by our clients who seek exposure to a specific asset class or a combination of assets as part of a diversified portfolio which meets their investment horizons and risk/return requirements (such as institutional investors or pension funds).*
>
> *Emerging Market Debt (EMD) is a widely used asset class in strategic asset allocation and portfolio construction. It is also a key source of finance for developing countries which require private sector capital to invest in economic and social infrastructure and other assets essential to long-term economic growth and stability.*
>
> *As stewards of our clients’ capital we have a fiduciary duty to ensure such investments are aligned to their requirements but also to our own values as a responsible investor and the Environmental, Social and Governance (ESG) considerations which are integrated into our decision making.* 
>
> *As part of our investment processes we research and analyse sustainability and other risks regardless of where an investment is located. We apply these principles to all asset classes in four ways:*
>
> 1. *Our investment processes – we integrate and appraise ESG factors in our investment processes to seek the best long-term outcomes for our clients.*
> 2. *Our investment activities – we actively take steps as stewards to deliver long-term, sustainable value.*
> 3. *Our client journey – we clearly define and report on how we act in our clients’ interests in delivering our stewardship and ESG principles.*
> 4. *Our corporate influence – we actively advance policy, regulation and industry standards to deliver a better future for our clients, the environment and society.*
>
> *In relation to our holding in KEPCO, we have continued engagement with KEPCO, [please see the attached Global ESG Investment Stewardship report for more detail](https://www.abrdn.com/europe/sustainable-investing#). We remain in frequent contact with KEPCO on ESG matters including climate and energy transition.* 
>
> *I hope this reply addresses the points you have raised in your letter. I can also give you an assurance that we will continue to act in accordance with our ESG principles and stewardship responsibilities.*

* **U﻿nion Investment commit to deny debt to KEPCO.** 

Union Investment divested from KEPCO, because KEPCO is still expanding in coal power plants and engagement with the company turned out to be ineffective and fall of stalling by KEPCO.

> *As part of this coal policy, Union Investment has decided to completely divest from all coal producers within five years. Since February 2020, we have no longer been buying securities from companies that regularly generate more than five per cent of their revenue from the extraction of thermal coal.*
>
> *In addition, Union Investment decided in February 2020 to withdraw from financing coal-fired power generation. To achieve this goal, Union Investment entered into dialogue with all relevant electricity suppliers in our investment universe to find out how these companies intend to achieve climate neutrality by 2050. Some of these companies were able to present us with a credible plan for phasing out coal-fired power generation and are therefore still investable for our funds. On the other hand, companies that generate more than 25 per cent of their energy with thermal coal and companies that have not been able to present a clear plan or have not achieved milestones in their transition to carbon neutrality have been excluded from our investment universe. We will regularly review the universe of eligible power generators and gradually reduce the allowable cap on coal-fired generation to zero by 2035.*
>
> *In this context, we have also initiated a corporate dialogue with Korea Electric Power Corporation (Kepco) and engaged with the company several times in 2021.* 
>
> *Although Kepco has committed to carbon neutrality, the company does not intend to phase out coal-fired power generation. Furthermore, Kepco is currently involved in the construction of new coal-fired power plants, which contradicts Union Investment’s coal policy. Unfortunately, Union Investment does not consider Kepco’s decarbonisation plans to be credible and therefore decided to exclude the company from our investment universe in January 2022. This exclusion also applies to all of Kepco’s subsidiaries, such as bonds issued by Korea Hydro & Nuclear Power.*

* **S﻿EB commit to deny dent to KEPCO.** 

SEB does not have any KEPCO bond holdings and would not as it generates energy from fossil fuel sources and its transition plans aren’t Paris 1.5°C aligned.  

SEB’s response relies on vaugueries like “clear goals” and “ongoing active conversion” to renewable energy sources. SEB’s coal policy updated in February 2021 is still insufficient, because it does not apply to underwriting.

> *Neither SEB’s asset management division SEB Investment Management nor the bank have any holdings of KEPCO bonds.*
>
>  *In addition, here is a statement from SEB Investment Management:
> SEB’s asset management division, SEB Investment Management, does not hold any bonds or other financial instruments issued by companies in the KEPCO group. [According to its Sustainability Policy,](https://webapp.sebgroup.com/mb/mblib.nsf/alldocsbyunid/42C98E0926AE620DC1258773002D4E4C/$FILE/Fondbolagets_Hallbarhetspolicy_feb22_eng_v2.pdf)* 
>
> *SEB Investment Management’s funds do not invest in companies which generate energy from fossil fuel sources, unless the company has clear goals and can refer to ongoing active conversion to renewable energy sources, in line with the Paris Agreement. This, among other things, also means that SEB Investment Management would refrain from investing in bonds issued by KEPCO.*

* **H﻿SBC AM commit to deny dent to KEPCO.** 

In spite of their non-committal written response to our request to deny debt to KEPCO. On a call, attended by senior executives HSBC confirmed that they won’t provide new finance, including via debt to companies involved in expansion. Including KEPCO, but even going beyond KEPCO. We welcome HSBC’s announcement and continuing dialogue with them. 

> *Through our stewardship and engagement team, we engage with companies in our portfolio on various aspects of ESG risks, opportunities and impact, on behalf of our clients.*
>
> *Our climate change policy is aimed at increasing the climate resilience of our clients’ investments, as well as contributing towards financing the transition to a net zero economy. We aim to:*
>
> *Deliver lower-carbon investment solutions that meet our clients’ investment criteria while meeting their risk and return objectives
> identify and integrate climate-related risks, opportunities and climate policy in our investment portfolios, using relevant data and analysis – including scenario analysis – to inform our investment decisions
> Engage with investee companies to better understand and support their disclosure and management of the risks and opportunities presented by climate change and climate policy. We engage directly and collaboratively, using our voting decisions to escalate issues where appropriate*
>
> *Today, HSBC Asset Management also announced its policy to phase out coal-fired power and thermal coal mining (‘thermal coal’) from its listed holdings.*
>
> *HSBC Asset Management will actively work with company boards to support the transition away from thermal coal in the EU and OECD markets by 2030, and globally by 2040.* 
>
> *Those companies who do not show credible plans to transition away from thermal coal within the timeframe will lose the support of HSBC AM, including voting against company chairs at AGMs or, ultimately, divesting.*
>
> *We are actively reviewing our policies that are critical to achieving our net zero goal. This includes a commitment to issue a refreshed and science based Energy Policy to address conventional and unconventional oil and gas, methane emissions, and potential impacts on environmentally critical areas such as the Arctic and the Amazon.*

* **E﻿urizon did not rule out denying debt to KEPCO.** 

  Whilst they currently don’t have KEPCO bond holdings, they don’t rule out future purchases because their coal policy is riddled with loopholes. 

  They must urgently adopt more robust exclusion thresholds to exclude all coal developers, there should be no criteria for developers, just a straight up exclusion. 

> *Thank you for your letter in which you urge us not to purchase any bond, including green bonds, issued by South Korea's Electric Power Corporation (KEPCO) and its power generation subsidiaries until they adopt and publicly disclose a 1.5°C-aligned energy transition plan.* 
>
> *Eurizon Capital SGR S.p.A., the asset management arm of Intesa Sanpaolo group, as a participant in the financial markets, integrates Environmental, Social and Governance (ESG) factors into its investment process and has a fiduciary duty towards its Clients, Investors and, more in general, its stakeholders that requires it to address sustainability-related issues. In that regard, Eurizon believes that issuers adopting high ESG standards and practices shall generate sustainable performance in the long term.* 
>
> *Therefore, in addition to the financial analyses on the risk - return profiles of the issuers in which the managed products are invested, our investment process relies on specific methodologies to select and monitor financial instruments aiming at integrating sustainability risks. In this regard, Eurizon's Sustainability Policy foresees specific restrictions for issuers considered "not socially responsible" that derive at least 25% of their turnover from mining or electricity production activities linked to thermal coal (so called "SRI Binding screening").*
>
> *Furthermore, as signatory of the Net Zero Asset Managers Initiative, Eurizon is committed to engage with investee companies to ensure that they adopt cleaner business models and decarbonize overtime in line with a 1.5°C-aligned transition plan.*
>
> *That said, with specific reference to KEPCO, Eurizon appreciates your detailed analysis and note that, based on our records as of 15 September 2022, Eurizon holds no bonds issued by KEPCO.*

* **B﻿NP Paribas commit to deny dent to KEPCO in active holdings, but not passive.** 

  BNP Paribas does not hold any active funds in KEPCO, nor do they plan to purchase any because they do not meet the requirements of their coal policy.

  They do however hold KEPCO within passive holdings; (minimal according to our research). 

> *Thank you for reaching out to us about KEPCO’s business strategy and transition plans. As you may be already aware, sustainability is at the heart of our business and investments strategies and so we read your letter with particular interest.*
>
> *We do not hold any positions in KEPCO in our open-ended funds, nor do we have plans to purchase any at this point, as KEPCO does not meet the requirements of our coal policy, which you will find within our Responsible Business Conduct Policy.* 
>
> *We hold relatively insignificant amounts of KEPCO within certain client mandates, where we do not have full discretion over the investments. This amounted to 5.2 million euros at market close on 22 September\*\* out of a total of approximately 500 billion euros of assets we manage, depending on market fluctuations.* 
>
> *If through your research, you have found a higher figure, it could be related to the custodial services division of our parent company.*
>
> *I encourage you to learn more about our approach to sustainable investment in our Global Sustainability Strategy and how we have embedded sustainability in our business and investment strategies in our latest Sustainability Report. We are also a signatory to the Net Zero Asset Managers initiative and we will be releasing our targets and plans by year’s end.*
>
> *We appreciate your efforts in moving the needle on the topic of climate change and the transition to a low/no carbon economy.*

* **A﻿PG commit to deny dent to KEPCO.** 

  In 2020 they sold their remaining holdings in KEPCO because of KEPCO’s expansions plans. 

> *Our answer to your question below is simple: On behalf of our clients, we do not have any holdings in KEPCO. In 2020 we sold our remaining holdings in KEPCO due to the fact that the company- despite our strong objections – continued to plan for new coal-fired power plants.*

The investors who responded on KEPCO

*The investors who ghosted Toxic Bonds when they were asked to rule out financing future KEPCO bonds.* 

Over the last couple of months, letters were sent by members of the Toxic Bonds initiative to 71 major investors urging them not to buy bonds issued by  KEPCO, South Korea’s largest utility company, until it adopts a 1.5°C-aligned energy transition plan.

Although we received encouraging responses from some -  58 of them failed to reply.

Why not rule out buying  bonds from a company whose green bonds have been[ described by analysts as“tokenism”](https://www.google.com/url?q=https://ieefa.org/articles/poor-investment-choices-and-corporate-governance-continue-cloud-kepcos-outlooks-and-green&sa=D&source=docs&ust=1666778480434335&usg=AOvVaw0wFfnfQ3w47qfi6S8b39iJ) and whose failure to plan for the energy transition will not only harm the client but the Korean public who will ultimately foot the bill. 

KEPCO is currently going through the worst financial crisis in its history, reporting its highest operating loss of 7.8 trillion won (USD 6 billion) in the first quarter of this year, which has since grown to US$12 billion as of 1H 2022. This loss mostly comes from the company’s over-reliance on coal and gas, with over 60 percent of its electricity generation capacity coming from fossil fuels.
It is forecasted that KEPCO will experience a growing deficit this winter, with soaring energy demand and fuel prices.

Questions remain as to the buyers and the price that these soon-to-be stranded assets could fetch, while KEPCO’s capability to decarbonize remains uncertain.

See here for the investors who did respond.

**KEPCO is a climate laggard, still heavily reliant on fossil fuels**
South Korea announced a moratorium on new public financing of overseas coal-fired power projects last year. Yet, KEPCO pursued coal projects in Indonesia and Vietnam, which were approved only weeks after issuing a $500 million green bond in 2020. 

With KEPCO’s domination of South Korea’s energy market and its overuse of fossil fuels, South Korea now has the second-highest coal power emissions per capita in the world. Meanwhile, KEPCO’s energy transition plan still falls far behind global standards, according to the Climate Action 100+ investor group’s assessment. 

For example, the power company does not have any decarbonization strategy to viably meet its long and medium-term greenhouse gas reduction targets. Instead, KEPCO has supported a prolonged role of fossil fuels, with its subsidiary Southern Power even opposing a coal phase-out by 2050.

Moreover, KEPCO has an ongoing track record of using its green bond proceeds towards projects with no clear positive impacts on the energy transition. Over 40 percent of the 5.2 trillion won (USD 6.8 billion) green bonds that KEPCO and its subsidiaries issued this past year also have no meaningful impact on emission reduction. In fact, 430 billion won (USD 327 million) was issued toward the construction of new LNG plants, which would hinder South Korea’s carbon neutrality through carbon lock-in.

According to a [new report by IEEFA](https://ieefa.org/resources/kepcos-clean-energy-transition-hangs-balance) uncovers KEPCO’s green bond issuances for what they are in reality; “To this date, KEPCO’s negligible renewable generation assets and questionable future generation mix suggest that its green bond issuances were merely tokenism.”

**KEPCO’s high exposure to fossil fuels is a massive financial risk**
While fossil fuel prices have continued to skyrocket, renewable power generation costs have steadily decreased, becoming the cheapest source of power. But KEPCO sources most of its energy from imported coal and gas, exposing it to price volatility. In fact, 90 percent of KEPCO’s electricity generation cost hike during the past year came from coal and gas.

Globally, governments are imposing higher carbon taxes and environmental costs, and fossil fuel companies are facing countless litigations. KEPCO’s continued pursuit of fossil fuels against global trends, especially coal, is causing the company huge losses. Recently, KEPCO lost in a landmark case in Australia, where the High Court stopped the company’s Bylong coal project from moving forward, costing the company over 800 billion won (USD 615 million).

Considering KEPCO’s plunging profitability, S&P recently downgraded the company’s stand-alone credit rating to a sub-investment grade. While its long-term credit rate remains at AA, based on the assumption of governmental support, this does not correctly reflect KEPCO’s risk profile. Recently, both the Prime Minister and Minister of Economy and Finance publicly criticized KEPCO’s lax financial management and signalled that reforms in public corporations will be needed.

There are clear precedents in bond markets of the financial risks associated with holding bonds that lose implicit government support, generating substantial losses for bond holders.

We expect KEPCO to keep bleeding losses as the cost and risk of fossil fuels continue to rise across the globe. The Dutch pension investor APG and Norway’s sovereign pension fund GPFG have even dropped KEPCO due to its fossil fuel dependency and many of its major shareholders are already criticizing KEPCO’s lack of climate action. BlackRock, LGIM, and the Church of England have publicly opposed the company’s new overseas coal projects.

**It’s about time we heard from the following investors on their commitments to rule out buying KEPCO’s bonds:** 
*Aegon NVAIA Investment Management HK Ltd
AllianceBernstein LP
Amundi
AXA Investment Managers
BANCO SANTANDER SA
Banque Degroof Petercam SA 
Barclays
BlackRock
BNY Mellon - Insight Investment
Brinker Capital LLC
Canadian Imperial Bank of Commerce*\
*Citi
Country Insurance & Financial Serv
Credit Suisse Group AG
Deutsche Bank AG
Doubleline Capital LP
Equitable Holdings Inc
Fidelity International
Fisch Asset Management AG
Generali Investments
Hartford Financial Services Group\
Horizons ETFs Management Canada In
Insurance Co of the West
Invesco
JP Morgan Asset Management
Kiwoom Investment Asset Management
Korea Investment Management Co Ltd 
LGIM
Loomis Sayles & Co
M&G Investments
Mediolanum International Funds Ltd
MetLife Inc
Morgan Stanley
New York Life Insurance Co
Nordea AM
Nuveen (TIAA)
Ohio National Life Group
Ostrum Asset Management
Pimco
Principal Financial Group Inc
Prudential Financial (US)
RiverNorth Capital Management LLC
Royal Bank of Canada
Schroders
SIF Swiss Investment Funds SA
Standard Chartered
State Street Corp 
Sumitomo Mitsui Trust AM
Temasek Holdings Pte Ltd* 
*TIAA
Transamerica Investment Services L
Truston Asset Management/Korea
UBS AG
Van Eck Associates Corp
Vanguard Group Inc/The
Western & Southern Financial Group
WisdomTree Investments Inc*

The investors who ghosted the Toxic Bonds coalition on KEPCO

South Korea’s state-owned power utility The Korea Electric Power Corporation (KEPCO) is haemorrhaging billions of dollars, as it faces skyrocketing fuel costs whilst relying heavily on coal and LNG (Liquified Natural Gas) for electricity generation. This week it continued its record breaking debt raising spree with a USD denominated green bond priced on October 6th. 

After KEPCO reported an unprecedented operating loss of 7.8 trillion won ($6.1 billion) in the first quarter, the government announced that it would raise the electricity rate for the July-September 2022 period to cover the utility’s record-setting loss. However, KEPCO and financial experts say that this increase is insufficient for recovery, and Prime Minister Han Duck-soo has called for KEPCO to reflect upon the cause of its losses. This is where the message from financial experts and climate activists from all over the world becomes relevant: fossil fuel dependency is a financial risk and one of the [major causes for KEPCO’s financial problems is its reliance on coal.](https://21220177.fs1.hubspotusercontent-na1.net/hubfs/21220177/%5BIssue%20Brief%5D%20Fossil%20Fuels%2c%20the%20Main%20Culprit%20behind%20KEPCO%E2%80%99s%20Deficit.pdf)

A structural cap on the amount the company can borrow from the market will likely mean that the borrowing limit will be reached before year’s end; this means that KEPCO will need a capital injection from the Government if it reaches this limit which onlookers have suggested will happen. In light of KEPCO’s challenges, S&P Global Ratings downgraded some KEPCO credit ratings. Even so, KEPCO has [continued borrowing](https://www.responsible-investor.com/bonds-loans-china-launches-low-carbon-transition-bond-programme/) and S&P believes that KEPCO [will need to borrow again before the end of the year,](https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/2844375) threatening that borrowing cap further still. KEPCO issued the bonds to stay afloat, and the market responded with optimism. Another leading rating agency Fitch Ratings then affirmed KEPCO’s AA- credit rating with a stable outlook. However, this calls into question whether investors are fully aware of the risks of investing in a fossil-fuel dependent company like KEPCO, and whether they are being given the right information; Fitch Ratings did not mention the company’s reliance on Coal once in their rating.

KEPCO is a core part of a South Korea that is still overly tied to the fossil-fuel sector. South Korea has the [lowest share of renewable energy usage](https://www.iea.org/reports/korea-2020) of all International Energy Agency (IEA) countries. New Prime Minister Han Duck-soo has [criticised KEPCO for its financial management](https://www.koreaherald.com/view.php?ud=20220622000267) as the company stands at odds with South Korea’s commitments to global climate-related targets, like those agreed as part of the Paris Accord. Seemingly in response to this criticism, KEPCO has announced that it will [sell all coal plants it owns outside of South Korea](https://www.enerdata.net/publications/daily-energy-news/kepco-will-sell-all-its-coal-fired-power-plants-outside-south-korea.html), which are considerable given the country’s reliance on coal. The current crisis engulfing KEPCO is made worse by the reality that the company cannot fully pass on the costs of the increase in fuel that it needs to, though that has not stopped the company from trying. The implication of this is that the South Korean Government may be forced to intervene. [In 2021 it increased the price of electricity in the country](https://borgenproject.org/renewable-energy-in-south-korea/), and it has[ recently announced ](https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/lng/093022-south-korea-outlines-crisis-response-for-winter-raises-gas-and-power-prices)that it will be implementing more price increases from October 1. KEPCO cannot pass on all of the cost increases it needs to (up to 50% more than usual) because of the [vulnerable financial position and age](https://borgenproject.org/renewable-energy-in-south-korea/) of many South Korean citizens. Yet, coal reliance is a much bigger issue for KEPCO and is proving costly. In 2021, major investors[ pulled away from KEPCO because of its commitment to coal](https://www.ipe.com/news/climate-roundup-apg-dumps-kepco-and-eight-others-over-coal-pursuit/10050402.article) and though the recent bond offerings have been nearly 10x oversubscribed, major sustainability-related funds have [shunned the bonds](https://ieefa.org/articles/ieefa-south-korea-why-leading-esg-investors-didnt-buy-kepcos-green-bond) because of the company’s connection to coal. In addition, KEPCO is finding that insuring its new coal-related ventures is becoming increasingly difficult, with [insightful research ](https://global.insure-our-future.com/wp-content/uploads/sites/2/2022/05/IOF-KEPCO-Briefing.pdf)showing that a recent plant in Vietnam needed more than 20 insurers, some of whom were not even A-rated by leading credit rating agencies, which is very unusual for transactions of this type. Coal is and will continue to be a massive problem for KEPCO, and by extension, South Korea.

South Korea must commit to its globally stated declarations of support for meeting global benchmarks concerning emissions. However, there is also something needed from credit rating agencies to achieve this goal. Though some investors and companies are shunning the fossil fuel industry, a lot more must be done. The investment market needs to know just how risky coal is, and how that risk is being understood by the leading credit rating agencies. Generally, credit rating agencies merely provide information on the development of a commodity such as coal and its investable position. What is also needed is a window into how the credit rating agencies see industry development, inclusive of risks and volatility when viewed against the development of renewable and sustainable energy sources. To that end, we call on the leading rating agencies to publish easy-to read, and easy-to-access (not behind a pay- or registration-wall) stand-alone reports that detail their views on the development of coal. The market will find this useful as it will be able to be incorporated into the question of the future of coal as we know it.


*Daniel Cash has started the Credit Rating Research Institute at the Aston University, and in January 2017 - he was awarded his PhD, with his doctoral thesis entitled ‘The Regulation of Credit Rating Agencies: An Analysis of the Transgressions of the Rating Industry and a measured proposal for reform’. Daniel’s research is exclusively concerned with the regulation of the credit rating industry, with a wider focus on the financial regulation of financial service providers, and the relationship between the financial sector and its impact upon society.* 

*Bill Harrington is a Senior Fellow at Croatan Institute. His work centers on boosting the sustainability of the world financial system with the dual aims of rationalizing economic decision-making and avoiding bailouts. He focuses on governance decisions in the financial sector that establish the capitalization and regulation of complex finance, particularly credit rating, derivative contracts and structured finance products. Bill has evaluated products in the international financial markets since 1987, most recently as a research journalist at Debtwire ABS and before that as a senior vice president and derivatives analyst at Moody’s Investors Service (Moody’s).*

Why credit ratings agencies need to do more and explain how risky coal is

Out of the largest 100 emitters – responsible for almost 75% of global greenhouse gas emissions – only 30 are listed on equity markets, **but all are dependent on bond markets for access to capital.**

Therefore fixed income investors are uniquely positioned to influence the transition to a carbon-neutral economy through their investment strategies, engagement and by raising the cost of capital for fossil fuel companies that are not on a path to transition.

T﻿he Toxic Bonds Initiative is a network of civil society organisations. We are calling on investors to: 

* Adopt coal, oil and gas phase-out policies that stop all new investments in companies expanding fossil fuel output and infrastructure. These policies must cover passive holdings and third-party assets.
* For companies expanding fossil fuel output and infrastructure, investors must deny new debt and plan to divest from existing bond holdings.
* Use their position as capital providers to engage companies in advance of the bond issuance process to inform investment strategy and decisions and to set clear expectations of companies regarding their alignment to a robust 1.5˚C climate scenario
* Plan divestment from fossil fuel companies (share and bond holdings), unless the company ceases development of new fossil fuel projects and announces a complete phase-out strategy aligned with principles of equity and a 1.5˚C timeline that is certified by globally recognised science-based professionals. 

B﻿ond investors have significant power to steer the green transition. It's time this power was exercised for good.

Every time investors buy Toxic Bonds they are helping a new coal plant, or a new oil and gas pipeline come on line. It's the fuel that drives the expansionary system - but it can be put out.

How fixed income investors can speed up the transition to a carbon neutral world

Major global banks are standing in the way of climate targets with new data showing just 7% of their financing for energy companies went to renewables between 2016 and 2022. 

The data, produced for Sierra Club, Fair Finance International, BankTrack and Rainforest Action Network, indicates major failings by financial institutions to help meet global commitments on net zero emissions by 2050 since it shows shockingly low financial support through loans and bond underwriting for clean energy. It calls into question pledges from the industry-led Glasgow Financial Alliance for Net Zero (GFANZ), whose commissioned research shows low carbon energy investments need to account for at least 80% of energy investments compared to fossil fuels (4:1) by 2030 to reach climate goals.

However, no bank looks set to reach this very minimum requirement. Across the world, the picture is dismal: at $181 billion Citi and JP Morgan Chase each pumped the most into the energy companies examined between 2016 and 2022 but just 2% went to renewables. Similarly, only 2% of Barclays’ financing of the energy companies examined went to renewables. Royal Bank of Canada is at just 1%, Mizuho 4% and HSBC 5%. The figure stands at 7% for French bank BNP Paribas. 

Bank loans and bond underwriting for renewables went from 7% in 2016 of the overall financing of the energy companies examined to a high of 10% in 2021 but virtually stagnated between these years, rather than showing any positive trend. The total amounts of clean energy financing in these years remained abysmally low: $23.2 billion in 2016 and $34.5 billion in 2021.

Overall the 60 banks saw $2.5 trillion in loans and bond underwriting provided to the companies examined for energy activities between January 2016 and July 2022. Of that, $2.3 trillion was related to the production of fossil fuel energy and just $178 billion was related to clean energy activities such as wind and solar.

Surprisingly, the data reveals that banks that are members of GFANZ actually provide less financing for renewable energy, on average, than their counterparts that are not in the alliance. Leaders of the industry-led group, which is committed to accelerating the energy transition by the finance sector, are vocal about the need for funding for low-carbon energy to quadruple that of dirtier energy like coal, oil, and gas, by the end of this decade. 

When asked this week whether Citi had ever refused to fund new fossil fuel projects, CEO Jane Fraser responded during a session at the World Economic Forum in Davos: “We need to have energy security and we need to be operating on cleaner technologies and the two, as we are seeing right now, cannot be mutually exclusive.” But today's data demonstrably proves that Citi is prioritising fossil fuel proliferation and status quo relationships over the very clean technologies that she recognises we need.

Climate finance groups have criticised banks over the data and questioned the climate commitments many have made. 

Maaike Beenes, campaign lead at BankTrack said: 

“Given that GFANZ co-chair Mark Carney has publicly recognised the need to rapidly increase the ratio of green financing to at least 4 times that of fossil fuel financing, it is alarming that GFANZ members have in fact financed less green energy than those outside the alliance. To stop the climate crisis from further unfolding, banks must stop dragging their feet and start shifting their financing away from fossil fuels towards green energy.”

Adele Shraiman, campaign representative with the Sierra Club’s Fossil-Free Finance campaign said:

“Many banks claim that they continue to provide financing for fossil fuel clients in order to help those clients in their climate transition. This data calls into question that claim, and gives proof that banks must get serious about financing the clean energy transition. In order to reach the goals of the Paris Agreement, we know that investments in renewable energy must dramatically increase this decade. Banks must take bigger strides to scale up their financing for renewable energy and phase out their financing for fossil fuels — and fast.”

April Merleaux, research manager at Rainforest Action Network said: 

"Financial institutions love to speak about their purported climate leadership, but the data speaks louder: Banks are seizing the windfall profits from fossil fuel expansion and shorting the investments we need in clean energy development. To avert climate disaster, financial institutions need to take every measure to align their financing activities with science-based targets, not wishful thinking and false solutions."

Kees Kodde, project lead at Fair Finance International said: 

“Banks will continue to exacerbate the climate crisis unless regulators and governments intervene. Banks need to be forced to align their portfolios with 1.5 degrees and commit to a just energy transition that takes into account the interests of workers and affected communities.” 

Rémi Hermant, policy analyst at Reclaim Finance said:

“Scaling up financing to clean energy and phasing out support for fossil fuels are the two sides of the climate equation. Yet, numbers once again don't lie and banks are dramatically failing on both. With all doubts allowed on the sincerity of their net-zero pledges, it's high time for banks to stop supporting fossil fuel expansion and commit to massive 2025 and 2030 clean financing targets.”



Notes for editors:

* The data compiled by Profundo examines lending and bond underwriting by 60 banks to 377 companies operating in the global energy sector (fossil fuels, electricity, and renewable energy) which collectively represent around 75% of the global production volumes in the past three years. The methodology is based on reports in the [Netherlands](https://eerlijkegeldwijzer.nl/media/497252/2021-10-praktijkonderzoek-fossiel-versus-duurzame-energie.pdf) and [Sweden](https://fairfinanceguide.org/ff-international/case-studies/2018/laegg-om-vaexelnchange-the-gear/) commissioned by Fair Finance International.Financing transactions were examined for the period January 1, 2016 to 31st July 2022.
* Financing transactions were examined for the period January 1, 2016 to 31st July 2022.
* Data for loans and underwriting for renewables does not include nuclear, blue hydrogen, carbon offsetting or carbon capture and storage. 
* Data for fossil fuels focuses on the financing of exploration, extraction, drilling and refining of coal, crude oil and natural gas as well as power generation, pipelines and oilfield services.
* The findings on individual financial institutions were shared with the banks for their comments.

Banks underwriting: Just 7% of global banks' energy financing goes to renewables between 2016 and 2022

In [a new report](https://shareaction.org/reports/nzba-round-1-an-assessment-of-banks-decarbonisation-targets#finding6), ShareAction, the responsible investment NGO, has analysed the targets of 43 global banks that are members of the Net Zero Banking Alliance (NZBA) and top financiers of the fossil fuel industry.   

The results are damning, revealing that despite these banks’ green claims, crucial gaps remain. 

A key finding was that most banks exclude a major source of oil and gas funding from their targets – Capital markets. This is a significant financial activity for banks. Banks can give companies access to these markets to raise long term funds, for example through bonds, providing them a safe haven for funding. 

80% of banks that have oil and gas targets exclude capital markets activities, despite these typically forming the bulk of financing provided by banks to the oil and gas industry.  

[In a previous report,](https://api.shareaction.org/resources/reports/Oil-Gas-Expansion-lose-lose.pdf) ShareAction found that 57% of financing to the top 50 oil and gas expanders by European banks came from through capital markets rather than from traditional lending.  

What’s worse is that for some banks this was far more. For UBS, 94% of the bank’s financing to oil and gas expanders was in the form of bonds and other capital markets transactions. This raises the question - how much can we trust decarbonisation targets that cover less than 10% of their actual financial support to an industry?  

By not including capital markets financing, UBS and many other banks are underreporting their risks and impact on climate to investors.  

One excuse banks often make is that there is no common methodology for how to include capital markets in their targets. Despite this, six banks including Barclays, Goldman Sachs and JP Morgan have included in their targets emissions resulting from capital markets activity.  

In is also interesting that banks are far less cautious about including capital markets when it comes to promoting their green finance; a sure sign that all banks should move to set targets for their full financed emissions covering lending and capital markets.  

Crucial to the fact that only 6 out of 43 banks covered capital markets in their targets is that the NZBA, the alliance of banks set up to support a transition to Net Zero, does not yet require its members to include this in its guidelines. This is a significant omission on the part of the NZBA which is resulting in billions of finance to the worst emitting sectors being unaccounted for in banks’ targets.  

The solution – the NZBA must swiftly act to require member banks to incorporate capital markets facilitation and underwriting activities, including bonds, into their targets. This is aligned with latest guidance from the head of UN to tackle greenwashing. 

ShareAction also found other worrying trends in the targets of the NZBA members. Many have used emissions intensity rather than absolute emissions, and only 16% have set an overarching target for 2030, none of which cover capital markets.  

On a broader level, ShareAction’s report highlights the failure of voluntary initiatives for their lack of bound requirements or accountability measures. Ultimately, we should be looking to governments to enact the regulation needed to ensure that financial institutions decarbonisation targets are robust – that means covering all their financed emissions.

Top banks neglect bonds in climate targets

**Danish pension funds are seen as worldwide frontrunners when it comes to responsible investments related to the climate crisis.** [**However, our investigations show that 13 out of 16 are invested in the #Dirty30 fossil fuel expansionists identified by #ToxicBonds.** ](https://www.fossilnofuture.com/oil--gas-expansion.html)

The plans for reduction in fossil fuel exposure among Danish pension funds began years ago. 
However, our investigations have led to revelations of the pension sector's lenient handling of the ambitions of fossil fuel exclusions and lower fossil fuel exposure. 

Last year, when the Danish Financial Supervisory Authority (FSA) asked Danish climate frontrunner AkademikerPension to assess its divestment from fossil fuel assets on an ongoing basis it was viewed as too harsh and conservative, which reveals the general sluggish behavior of the financial sector when it comes to changing the business model in favor of climate considerations.

[Further investigation revealed ](https://ugebrev.dk/samfundsansvar/ansvarlige-investeringer/pensionskasser-finansierer-selskaber-paa-egen-eksklusionsliste/)that PensionDanmark, PFA, Danica and Velliv invested in bonds issued by fossil companies that appear on the pension funds' own exclusion list. Apparently, the liability aiming at these funds only applies to equity investments, but not to loan financing via the purchase of corporate bonds. More examples are found in our new report. 

Until recently, several pension funds did not include bonds in their reduction plans, either because they forgot to reduce the fossil exposure in the bond portfolio. Or likely, they forgot to inform the world that its climate actions only included investments in stocks. 

Through stock and bonds investments, 16 Danish pension funds are involved in 93 oil and gas expansion projects in 38 countries. Our report highlights that fossil fuel expansion is neither part of the pension funds’ exclusion policies, nor active ownership policies. [13 of the 16 Danish pension funds investigated in the report are investors in companies on the Toxic Bonds Dirty 30 list:](https://www.fossilnofuture.com/oil--gas-expansion.html)

* 10 Danish pension funds are invested in TotalEnergies. TotalEnergies is identified to be responsible for fossil expansion projects in several countries: for example, exploration in Lake Albert Development and building the East African Crude Oil Pipeline (EACOP).
* 8 Danish pension funds are invested in BP. BP is identified to be responsible for fossil expansion projects in several countries: for example, development plans for the Caspian Pipeline Consortium Expansion – a pipeline from Kazakhstan to Russia. 
* 8 Danish pension funds are invested in Equinor. Equinor is identified to be responsible for fossil expansion projects in several countries, for example, development of the Wisting Oil Field in the Barents Sea.

Investments in companies that are planning new fossil expansion are one of the most pressing issues for financial institutions to decide on. Further fossil burning from fields that have not yet been developed will cause more CO2 emissions resulting in dire consequences for the already escalating climate crisis. 

By 2050, the demand for coal, oil and gas must be reduced by 98, 75 and 55 percent, respectively, compared to 2021 levels, if the IEA's net zero scenario is to be realized. Fossil expansion is simply incompatible with a credible climate policy. 

We must stop the funding of fossil expansion. 

*Action Aid Denmark is very proud to be part of the Toxic Bonds initiative. Apart from raising general public awareness of the bond market’s role in fuelling the climate crisis, Action Aid Denmark wants to raise awareness of the topic in a Danish context where it until now has received only little scrutiny.*

Lessons learned from Danish pension funds

Mitsubishi Heavy Industries, Ltd. (MHI) will issue its [first transition bonds on September 8th](https://www.mhi.com/news/220902.html), via a public offering in the domestic market.

Whilst MHI would have investors believe such finance is a key part of Japan’s strategy to a decarbonized society, its financing of “blue” hydrogen and ammonia, in fact extends the life of coal and gas assets. Packaging up what are fossil fuels by any other name into so-called transition bonds represents a risk to investors looking to decarbonize their portfolios.

Transition bonds are an emerging market phenomenon and Japan has the world’s largest number of issuers of transition bonds. [But some investors are rightly unsure of how to evaluate them](https://anthropocenefii.org/afii-coal#fb673197-de30-40f0-9a45-9f863458ed1b).

“Blue” hydrogen and ammonia are risky and polluting technologies; “blue” hydrogen is typically made from fossil gas and its manufacture results in significant greenhouse gas emissions. It’s more emission intensive and costly than renewable energy, whilst the cost-effectiveness and climate credibility of these technologies is being vastly overstated. It is no cleaner than simply burning fossil fuels.

Investors keen to proceed with these bonds therefore face significant potential risks, including lower returns, stranded assets and [failing to meet their own net-zero commitments.](https://www.marketforces.org.au/campaigns/international/investors-left-blue-by-fossil-hydrogen-and-ammonia/) 

There is [already precedent for investor scrutiny of the transition bonds](https://www.bloomberg.co.jp/news/articles/2022-05-26/RC2JYMT1UM1101) coming out of Japan, in the case of JERA - the largest power generation company in Japan. 

*JERA Finance Manager Makoto Sakabe, who issued the bonds on the same day as Kyushu Electric on 18 May, said that some investors were still unsure how to evaluate transition bonds. "As a result of worrying, there were quite a few investors who decided not to invest".*

The Toxic Bonds Coalition demands investors steer clear of dodgy brown bonds in the coming days and across emerging markets.

Mitsubishi Heavy Industries Upcoming Transition Bonds: fossil fuels by another name?

*That’s right, updated research from group Market Forces reveals that Adani’s words and actions simply don’t match up.* 

While Adani is rapidly expanding in several directions (including renewable energy, cement and airports), most importantly it is still building and planning new fossil fuel projects, particularly thermal coal mines and power stations. So much so that according to Global Energy Monitor data the Adani Group is the private sector company with the most proposed new thermal coal mining capacity in the world, second only to state owned Coal India. 

The company's actions are not compatible with the goals of the Paris Agreement and the net-zero emissions by 2050 target. 

If all of Adani Group’s known extractable coal reserves are burned, [Market Forces estimate 10.1 billion tonnes of CO2 will be emitted,](https://www.marketforces.org.au/update-adani-expansions/) with a further 1.6 billion tonnes CO2 from inferred resources in Adani’s three newly acquired coal exploration blocks. Together this is 32% of global energy-related carbon emissions in 2021.

Last year Market Forces compiled a non-exhaustive list of Adani’s new and expanded fossil fuel projects to highlight the hypocrisy between Adani’s words and actions. 12 months later, an update to this research reveals the following:

* None of the new or expanded fossil fuel projects listed in 2021 have been shelved, and several, like the Carmichael and Suliyari thermal coal mines and the Godda coal-burning power station have advanced.
* Adani Power completed its purchase of Essar Power’s 1200 MW Mahan coal fired power project in March 2022, adding another coal power station to its fleet. On 19 August 2022 it announced another 1200MW coal-fired power station purchase due to be finalized in October 2022. All six of the new or expanded coal-burning power station projects highlighted last year (totalling 12 GW) are still on its books.
* Adani Enterprises has purchased five new coal blocks since July 2021 (the Khargaon, Jhigador and Gondkhari coal blocks purchased in August 2021 and the Bijahan and Gondbahera Ujheni East coal blocks purchased in March 2022).
* Adani has shown it is serious about its highly polluting coal-to-plastics proposal, first proposed in 2021. In 2022 Adani approached the State Bank of India to underwrite a loan to fund the development of the project.
* An increase in crude oil capacity at Mundra port and a proposed upgrade to the Haldia dock complex in West Bengal, in order to handle an increased amount of dry bulk goods reported to primarily be coal.

Investors, bankers and insurers of the Adani Group need to be aware of the risks associated with financing a company with fossil fuel plans of this scale. Adani Group’s bond arrangers, lenders including Citibank, HSBC, Barclays, Deutsche Bank and investors TIAA, BlackRock, Loomis Sayles and Apollo Global are playing a critical role in helping, directly or indirectly, fund new thermal coal projects, and now an operating Carmichael thermal coal mine, which Adani hopes to expand into Australia’s biggest.

Adani: Could be responsible for 32% of the global energy-related carbon emissions

#### *With nearly half a trillion bonds outstanding the ‘Dirty 30’, draws focus to some of the top companies using the bond market to finance coal, oil and gas expansion.* 

The Intergovernmental Panel on Climate Change (IPCC) has signaled a 'code red for humanity'. But climate change is already here. From heatwaves in India, to floods in Australia we are seeing the impacts of inaction. And it is already impacting hardest those with the fewest resources to combat it. 

The science is clear: emissions from fossil fuels are the dominant cause of global warming and climate change and to limit climate change to 1.5 degrees fossil fuel expansion cannot continue. But in spite of these warnings, the world's largest fossil fuel companies have not only continued with business as usual, but in many cases are also aggressively expanding their operations and are clearly out of sync with the landmark Paris Agreement. 

**How the bond market fuels the fire**

As bank lending, particularly for coal, has tightened, the bond market has become a safe haven for dirty fossil fuel companies to fund their expansion. 

Coal companies with the biggest expansion plans raise 2.5x more capital through bond issuance than through bank loans, and bonds have become the single largest source of financial support for coal in China and India, according to Sunrise Project analysis of the [Global Coal Exit List](https://www.coalexit.org/) and data from company financial statements.

And despite not facing the same lending pressures as coal, since the Paris climate talks in 2015, $2 trillion oil and gas bonds have been issued. That’s half of the total in circulation. More than $600 billion is set to mature after 2030, according to [Greenwatch](https://twitter.com/JeffDColgan/status/1519797677030055942). 

Every time investors buy fossil fuel debt they are helping a new coal plant, a new oil and gas pipeline come on line. It's the fuel that drives the expansionary system. It needs to be put out.

This is why the global bonds market needs to become a crucial  frontier for the climate movement. 

As a first step towards this, the initiative has revealed our list of 30 of the top corporations using the bond market to obtain cash to expand coal, oil and gas operations - despite repeated warnings from the IPCC, IEA and others that the world must urgently move away from fossil fuels. 

**Enter the Dirty 30**

The Dirty 30, compiled by the Toxic Bonds initiative, are thirty of the worst fossil fuel expansionists in the world. In some cases their bond market exposure is large (as in Total Energies which has USD/EUR bonds worth nearly $50 billion that are outstanding). In other cases, such as Whitehaven Coal, the company is only set to make their debut bond issuance this year.

In all cases the companies on the Toxic Bonds Dirty 30 list are all planning major expansion and are using the bond market to help finance these plans. 

The companies were primarily chosen based on information in the [Global Oil and Gas Exit List](https://gogel.org/) and [Global Coal Exit List](https://www.coalexit.org/) The list currently only considers the companies’ USD/EUR denominated bonds.

These companies are:

* Adani Group
* BP
* Chevron
* China Energy Investment Corp (China Energy/ CHN Energy) 
* China Huaneng Group
* CNOOC
* Coal India
* Equinor
* Exxon Mobil
* Gazprom
* Glencore
* KEPCO
* NTPC
* Peabody
* PEMEX
* Petrobras
* PetroChina
* Power Finance
* PT Perusahaan Listrik Negara (Persero) (PLN)
* PT Bumi Resources Tbk
* Qatar Energy
* Saudi Aramco
* Shandong Energy Group (YanCoal)
* Shell
* Sinopec
* State Power Investment Corp (SPIC)
* SUEK
* Total Energies
* Whitehaven
* Woodside Petroleum

Our research shows the “Dirty 30” currently have more than $491 billion — nearly half a trillion – in total EU/USD bonds that are outstanding. Non-USD or Euro denominated bonds are not currently tracked by the Toxic Bonds initiative, meaning the total amount is likely to be much higher.\
\
**Among the Dirty 30, Adani, Exxon, TotalEnergies and the Korea Electric Power Corporation (KEPCO) are noteworthy given their large expansion plans and/or reputational risks.**

Adani has over $8 billion USD/EUR bonds outstanding, and is building the largest coal mine in Australia's history. The Adani Group’s history shows that it operates as a single entity shifting money within the group as needed, and as such, any financing or investment in any Adani Group company frees up capital that could be used to fund the Carmichael mine and its associated infrastructure.

* ExxonMobil has over $41 billion in USD/EUR bonds outstanding. ExxonMobil’s short term upstream expansion plans amount to 7 billion barrels of oil equivalent (bboe), making it one of the biggest developers of new oil and gas in the world. ExxonMobil is also one of the top ten companies with the highest annual capital expenditures on oil and gas exploration. [The company’s projections](https://carbontracker.org/exxonmobil-is-planning-on-climate-failure-despite-advancing-climate-solutions/) used for its business planning show a 2050 future where fossil fuels still provide over 70% of primary energy, reflecting that Exxon’s core business model is still highly reliant on the release of CO2 into the atmosphere.
* TotalEnergies has USD/EUR bonds worth nearly $50 billion that are outstanding. Buying TotalEnergies’ new bonds was recently denounced, as the French oil and gas major’s current climate strategy does not prevent it from implementing [fossil fuel expansion plans](https://reclaimfinance.org/site/en/financial-institutions-must-stop-totalenergies-oil-and-gas-plans/): More than 70% of TotalEnergies’ capital expenditures will be dedicated to fossil fuels, including €2.6 to €3.2 billion per year for new projects.
* The Korea Electric Power Corporation, also known as KEPCO, has $2.3 billion USD/EUR bonds outstanding according to the toxic bonds list. KEPCO is reported to have already issued $8 billion USD worth of corporate bonds in Q1 2022; a figure that includes both domestic and international bonds. This colossal amount is close to the company’s total bond issuance in 2021 and three times the $2.5 billion issued in 2020. If KEPCO’s bond issuance trend continues, the amount the company raises via the bond market is expected to reach $32.8 billion this year. KEPCO is still developing [new coal-fired power plants](https://reclaimfinance.org/site/en/coal-watchlist/) in South Korea, Vietnam and Indonesia. Although the company announced a coal-power phase out by 2050, global coal phase-out should take place by 2040 .

**Every time investors buy new debt from the Dirty 30 they are helping to drill new oil wells or open new coal mines. We can no longer afford to dismiss the bond market when taking on fossil fuel expansion.**

*[View the Dirty 30 list here](https://www.toxicbonds.org/toxic-bonds)*

[](https://www.toxicbonds.org/toxic-bonds)*Notes:*

1. *GreenWatch Team: Andreas Hoepner, Matthew McQuade and Fabiola Schneider. Data collected 23 February - 23 March 2022 <https://www.greenwatch.ai/>*

Introducing The Dirty 30

1. **1. Bonds are a critical source of finance for coal, oil and gas companies**

Since the Paris climate talks in 2015, $2 trillion oil and gas bonds have been issued. That’s half of the total in circulation. More than $600 billion is set to mature after 2030, according to [Greenwatch](https://twitter.com/JeffDColgan/status/1519797677030055942). Coal companies with the biggest expansion plans raise 2.5x more capital through bond issuance than through bank loans, and bonds have become the single largest source of financial support for coal in China and India, according to Sunrise Project analysis of the [Global Coal Exit List](https://www.coalexit.org/) and data from company financial statements.

Altogether, the “[Dirty 30](https://www.toxicbonds.org/toxic-bonds)” – a list – of 30 of the world's top expansionary fossil fuel companies who are using the bond market to finance new coal, oil and gas projects and includes some of the most well-known fossil fuel companies worldwide such as Exxon, TotalEnergies, Shell, BP, Chevron, Saudi Aramco, and Adani – compiled currently by the Toxic Bonds initiative, have more than $491 billion (nearly half a trillion) in total EU/USD bonds that are outstanding. This number does not include bond issuances in local currency, which would make the amount much larger!

*“As bank lending for coal has tightened, the bond market remains a safe haven for fossil fuel companies to fund expansion. Dirty energy companies are using the corporate bond market as the back door to secure large amounts of cash for expansion projects.  This has so far received too little scrutiny,” said Nick Haines, SumofUs*.

1. **2. Sustainability markets are on the rise - but so is greenwashing**

There is a growing demand from the market  for Green Bonds and Sustainability Linked Bonds (SLBs) - and bond issuers are recognising this opportunity to secure cheaper debt. The difference as highlighted by Christina Ng from IEEFA is that green bond issuers are meant to be allocating proceeds from green bonds only to green projects, thus making them project specific bonds; whereas SLBs do not have that project specific use of proceeds, and instead don’t require requires issuers have a credible targets in place. As a result, SLBs can be used to finance just about anything the company would like to. 

With that, one of the trends that we are seeing globally is an increase in greenwashing. And if this remains unchecked risks undermining the credibility of these emerging sustainable debt markets. The other trend that is that investor activism is growing, which is definitely a positive trend and needs to be intensified. Unfortunately though despite this uptick in engagement, big asset managers are still investing billions into fossil fuel companies. And indeed a A number of asset managers are actively  pushing back against adopting exclusion criteria for their portfolios, arguing that engagement is more useful to support the transition of companies towards a net zero world. Yet, almost none of these asset managers have adopted the public policies to make engagement meaningful. You can read more on this in the [Asset Manager scorecard here](https://reclaimfinance.org/site/en/2022/04/20/scorecard-which-asset-managers-are-pushing-back-on-fossil-fuel-expansion/) (Reclaim Finance).

3. **3. Challenges in engaging with the bonds market for civil society**

There are a couple of challenges with three being specifically highlighted which were:

* Timing- short window of time for engagement as there is a very small gap between the announcement of a new bond and its investment, 
* Market capacity- Information gap as the bonds market is quite opaque, and, 
* Coordination- The need for civil society to work together to coordinate their activities. 

*“The challenges of tackling bonds for fossil fuel expansion is the lack of visibility we have on the bond market”, says Pablo Brait, Market Forces*

**The Toxic Bonds initiative aims to  help fill some of this gap by sharing information and  bringing together advocates to help draw attention to the role the bond market plays in fuelling the climate crisis.**

1. **4. Campaigning Opportunities**  

There are so many potential targets and so many areas of impact. The exciting areas that could be covered are:

* Refinancing of bonds on the horizon especially for well-known companies like Adani and KEPCO. Campaigners could use maturity dates that are on the horizon for those companies ([compiled in the Toxic Bonds website](https://www.toxicbonds.org/toxic-bonds)), to engage bondholders and commit to deny debt to expansionary fossil fuel companies. 
* Bank arrangers are key pressure points. Notably, underwriting activities may be considered by banks an off-balance sheet activity, so a bank may have a climate policy which covers lending but that same policy doesn't apply necessarily to underwriting activities.
* The index providers are another target and crucial for the influence over the passively managed funds of the major asset managers. Previously, work has been done on MSCI and S&P, specifically on sustainability indexes and climate indexes.One achievement was when Adani Ports was kicked off the Dow Jones Sustainability Index. 
* Very often asset managers don't apply exclusion criteria to passive bond investments. Asset managers need to do much more to engage index providers to remove companies from indices.
* Credit rating agencies and providers of second party opinions are another key player in the market.Credit rating agencies need to include substantial risk of coal assets they evaluate.
* We need Governments to ban new fossil fuel projects and implement transition at a nation-wide level.
* We need to engage with central banks and regulators to ensure better policies settings are in place to regulate the bonds market.

*"Governments take pride in having little intervention in the market, but there are many ways for governments to tighten and give clarity on bonds e.g. with green taxonomies”, says Christina Ng, IEEFA*

1. **5. Partner with us**

Bond markets are a really important corner of the economy that continues to channel funds to fossil fuel expansionist companies, despite the climate change warnings. It is critical that civil society comes together to engage with different players and ensure all financial institutions deny debt to Toxic Bonds!

**If you would like to be a part of this network of organizations and are interested in working on the bond markets, please get in touch with us at [toxicbonds@sumofus.org](<>), and  follow us on [Twitter](https://twitter.com/toxic_bonds) or on [LinkedIn](https://www.linkedin.com/company/toxic-bonds-sumofus/)**

5 key takeaways from the Toxic Bonds - Launch Webinar

**South Korea’s majority state-owned utility, Korea Electric Power Corporation (KEPCO)1 [issued](https://www.sedaily.com/NewsVIew/263LCCL8H6) a staggering USD 8 billion in corporate bonds in the first quarter of 2022.**  This amount comes close to KEPCO’s market value of USD 11 billion and to its total bond issuance in the previous year.   

If this trend continues, KEPCO’s annual bond issuance is expected to reach USD 32.8 billion. Meanwhile, KEPCO's expected operating loss for the first quarter of 2022 is between USD 3.9 to 4.7 billion, leading to a predicted annual loss of USD 16.4 billion. The company’s actual operation loss in February 2022 reached a record high of USD 1.5 billion.  

Concerns over KEPCO's vicious cycle of bond debt facing limitations are escalating. With the South Korean government's decision to freeze the electricity rate for Q1 of 2022 amid rising inflation, KEPCO is financing most of its necessary funds to supply electricity below actual costs.   

Aside from controversies around KEPCO’s electricity pricing, KEPCO’s high dependency on fossil fuel assets and soaring fossil fuel prices are found to be the leading [causes](https://n.news.naver.com/article/003/0011133330) of exacerbating financial instabilities. **In stark contrast to the 1.5°C pathway, and at a high financial risk, KEPCO is still developing fossil fuel-based power generation facilities at home and abroad.** 

Despite South Korea being the first among the ‘big 3’ Asian coal financiers – China, South Korea, and Japan – to announce a moratorium on new public financial support for overseas coal-fired power investments in April 2021, KEPCO did not retract its plans to build the 2,000MW Jawa 9 & 10 in Indonesia and 1,200MW Vung Ang 2 in Vietnam. The same year, South Korea and KEPCO also added another 3.1GW of newly built coal power plants for operation, further regressing the country’s climate ambition. In fact, according to the recent coal plant capacity [report](https://globalenergymonitor.org/report/boom-and-bust-coal-2022/) by Global Energy Monitor (GEM) and nine other international environmental groups, South Korea was found to have the world’s [third-largest](http://world.kbs.co.kr/service/news_view.htm?lang=e&Seq_Code=169256) operating coal capacity expansion in 2021.   

**This backwards expansion of coal power plants has all been possible through debt financing.** Through purchasing corporate bonds issued by GENCOs2, which are KEPCO’s power generation subsidiaries, and private coal power project companies such as Samcheok Blue Power (the last coal power project in South Korea), domestic financial institutions [funneled](https://drive.google.com/file/d/1IK6jMMSuhwasRfiUFKGe-0UfheGyckGu/view) about USD 23 billion (KRW 25 trillion) into coal in 2020. 

What is noteworthy, though, is that the shunning of coal bonds like those of KEPCO’s, is already taking place.  As of February 2021, South Korea’s top asset management companies, accounting for [nearly 90%](https://zdnet.co.kr/view/?no=20210205140534) of the Korean bond market, committed to not invest in bonds supporting the remaining construction of the 2,100MW Samcheok Blue Power project. In December 2020, APG, a Dutch pension investment company, [sold](https://apg.nl/en/publication/apg-sells-korean-energy-giant-due-to-coal-expansion/) all its stake and bonds in KEPCO due to its coal expansion. KEPCO's subsidiaries, too, are facing [difficulties](https://news.einfomax.co.kr/news/articleView.html?idxno=4209165) in raising cash through bond issuance, due to investors’ coal divestment trends and surging raw material costs.  

**Even when KEPCO’s USD 500 million of green bonds were oversubscribed in June 2020, the world’s leading ESG investors, like Allianz SE and BlackRock INC, [opted out](https://www.toxicbonds.org/blogs/kepco-green-bond-failed-the-esg-market-test), unconvinced with KEPCO’s high coal ambition revealed in its pipeline.** Not surprisingly, a few weeks after the issuance of those green bonds, KEPCO announced its investment plans in Jawa 9 & 10 and Vung Ang 2. 

With mounting concerns both at home and abroad over its growing financial vulnerabilities and climate risks, it is critical that KEPCO and GENCOs cut their reliance on highly volatile fossil fuels.  

Unless KEPCO revamps its current portfolio, which in every perspective reveals that KEPCO is essentially a coal asset-based company, and announces an earlier coal phase-out date, its continued bond issuance will be understood as a desperation under its coal addiction. Investors may cut ties with KEPCO before the company cuts ties with fossil fuels, as the remaining investment in KEPCO will be a direct negation of the investors’ own climate efforts.  

*Notes:* 

1. *Korea Electric Power Corporation (KEPCO) is a majority [state-owned](https://home.kepco.co.kr/kepco/EN/A/htmlView/ENACHP00301.do?menuCd=EN010403) electric utility company in South Korea that also holds the country’s five major power generation companies as subsidiaries.*  
2. *KEPCO’s subsidiaries are often referred to as generation companies [GENCOs](https://home.kepco.co.kr/kepco/EN/A/htmlView/ENACHP00301.do?menuCd=EN010403) – Korea South-East Power (KOSEP), Korea Midland Power (KOMIPO), Korea Western Power (KOWEPO), Korea Southern Power (KOSPO), and Korea East-West Power (EWP). GENCOs operate most of the coal power fleet and nearly half of fossil gas plants in Korea.* 

Read more articles on KEPCO bonds’ instability and its lasting coal addiction here (please Google translate): 

1. “[KEPCO’s interlocking of electricity bills and fuel costs found nominal – soaring cost snowballs KEPCO’s deficit](http://www.seoulwire.com/news/articleView.html?idxno=457511)”, Seoul Wire, December 20, 2021 
2. “[Freezing electricity bills leaves KEPCO to issue USD 8bn in corporate bonds – raising debts to pay off debts](https://www.sedaily.com/NewsVIew/263LCCL8H6)”, The Seoul Economic Daily, March 28, 2022 
3. “[Coal exclusion policies & soaring raw material costs – bond issuance for power generation companies also face a long and winding road](https://news.einfomax.co.kr/news/articleView.html?idxno=4209165)”, Yonhap News, April 18, 2022 
4. “[A record-high deficit forecasted for KEPCO in 2022 Q1 – USD 1.5 billion (KRW 2 trillion) loss in February](https://n.news.naver.com/article/003/0011133330)”, Newsis, April 22, 2022 
5. “[Unbreakable ‘coal addiction’ shakes Korean economy](https://n.news.naver.com/article/056/0011253537),” KBS Broadcast TV, April 22, 2022 
6. “[18.2GW increase in world’s operating coal power plant capacity and South Korea ranks the world’s third-largest](https://news.kbs.co.kr/news/view.do?ncd=5449084&ref=A)”, KBS Broadcast TV, April 26, 2022

KEPCO issues USD 8bn of corporate bonds in 2022 Q1 alone, 72% of its market value 

Financial research on the coal sector shows that a total of $228 billion is being invested, as of December 2021, in the coal industry via bonds. While climate science is calling for an annual decrease of global coal production and a swift exit of the sector, over a quarter of this amount – $60 billion – is being invested in companies that are expanding their coal operations.

Who are the top coal bond holders? In line with the wider analysis, a small number of financial institutions play an outsized role when it comes to investing in coal bonds. The top five investors in coal bonds account for 20% of all coal bond holdings.

**Which investors are the most hypocritical?**

While being among the biggest bondholders of coal companies is a problem in itself, the financial research also reveals glaring contradictions between the amounts being invested in coal bonds and the net-zero commitments made by the same institutions.

**Allianz**

Allianz is one of the biggest insurers worldwide and is a member of the Net Zero Insurers Alliance, Net Zero Asset Owners Alliance and the Climate Action 100+. It has recently updated its coal policy and, while it aims for a coal phase-out worldwide by 2040, the criteria are still loopholed, including on bonds. More importantly, Allianz does not apply its divestment policies to the more than $1 trillion in third party assets which it manages (via its branches Allianz GI and PIMCO). This results in the institution being right at the top of the tables as the fourth largest holder of coal bonds ($7.6 billion) and one of the largest investors in coal development via the most Toxic Bonds (i.e. linked to coal expansion), in complete contradiction with its commitments.

**HSBC**

HSBC is a member of the Net Zero Banking Alliance and, under pressure from shareholders, made a commitment to a total phase-out from the coal sector by 2040 worldwide. Yet HSBC is still supporting the expansion of the industry – including via investment of nearly $650 billion in the most Toxic Bonds, meaning the bonds linked to coal expansion.

**BlackRock**

BlackRock adopted in 2019 a very weak coal policy. Because of its many loopholes, BlackRock still has over $9.8 billion in coal bonds, $ 2.7 billion of which is invested in the most Toxic Bonds, meaning the bonds linked to coal expansion. BlackRock is also one of the biggest buyers of new fossil fuel bonds worldwide and has not committed to stop buying future debt issued by coal developers. Despite these appalling figures, BlackRock is still a member of the Net Zero Asset Manager Initiative.

Bonds are a critical source of funding for the coal industry and might make their holders the last resort for companies looking to expand their coal operations. Financial institutions must deny any future debt to these companies and divest from their existing coal bond holdings. Beyond the obvious dramatic indirect climate impacts of such investments, investors will also risk losing money if they don’t rapidly move away from fossil fuels.

[➔ Read more here](https://reclaimfinance.org/site/wp-content/uploads/2021/10/Media-Briefing_GCEL_ENG_07102021.pdf)

Financing the Global Coal Exit List 2021

SUEK is the largest coal producer in Russia and one of the world’s largest exporters of seaborne thermal coal in the world. Whilst 2021 marked dire warnings from scientists and experts, with the latest IEA report ‘Net-Zero by 2050’ clarifying that no new coal mines can be built if we are to have a chance of staying under the crucial 1.5°C global warming limit. It also marked [the year the company opened its first ever international public debt offering](https://www.responsible-investor.com/articles/net-zero-by-2050-banks-line-up-debut-usd-bond-for-russia-s-largest-coal-company), with a debut US$500m five year offering that was oversubscribed by three times. With investors coming from across Europe, the US, the Middle East, Asia and Russia.

Coal is the most carbon intensive fossil fuel and phasing it out is absolutely critical to limiting global warming to 1.5°C. As more and more banks and financial market players ramp up their commitments to climate action and net zero targets, you would think that the bonds issued by the Russia’s largest coal producing company would be left untouched by big banks. Unfortunately some of the largest banks including Citigroup, Bank of America securities and Commerzbank are lead arrangers of this bond even when they have made 'Net Zero' pledges.

These banks are a part of the consortium of bookrunners for this bond, which includes other financial institutions such as Alfa-Bank, Bank of China, Sber CIB, Renaissance Capital, VTB Capital, Gazprombank. 

A number of companies invested in the SUEK bond, and this bond was oversubscribed. To illustrate, Fidelity invested in the inaugural SUEK bond issue only a few weeks prior to COP26, a time when financial institutions, including [Fidelity](https://www.fidelity.co.uk/markets-insights/investing-ideas/esg-investing-articles/why-cop26-matters/), were actually clamoring to have a say on why climate action matters! 

Commenting on this, [Katrin Ganswindt, financial campaigner of Urgewald](https://urgewald.org/en/medien/commerzbank-citi-and-bank-america-issue-new-deal-russian-coal-giant-suek-just-two-months) says: *"SUEK plays a central, if not THE central role in Russia’s scheme to profit as much as possible from the coal industry before the fossil era ends. It is outrageous that US and German banks are still helping to raise money for one of the world’s largest coal companies only two months before COP26 in Glasgow. The results of the conference are crucial for mankind, especially in light of the new IPCC report published in August.”*

*Photograph taken by Erik McGregor at the New York City mobilization to defund climate chaos.*

To note: this article was written before the Russia-Ukraine war, since then due to changes in the political scenario, the figures mentioned may have changed.

Soaking up the Suek, without a care for the world

In June 2020, KEPCO took what appeared to be a positive step forward and issued a green bond, raising US$500m from overseas financial markets. According to its Green Bond Framework, the company’s new strategy involves “focusing its resources on creating a clean and efficient energy ecosystem as part of its effort to cut down greenhouse gas emission\[s]”.

ESG Investor Advocates See Through Greenwash

While KEPCO’s green bond was oversubscribed, [IEEFA’s analysis found](<https://ieefa.org/wp-content/uploads/2020/11/KEPCO-Green-Bond-Failed-ESG-Market-Test_November-2020.pdf)2020.pdf>) that the mix of bondholders lacked breadth compared to other recently issued utility company green bonds, and many seasoned environmental, social and governance (ESG) investors passed on the issuance.

Based on holdings data and IEEFA’s own market engagement, it appears that the leading green investors were unconvinced by the state-owned company’s overall strategic direction related to climate risk management, with its recent track record of inconsistent and ambiguous investments and policies. Experienced ESG green bond investors are particularly reluctant to fund a company’s “green projects” while the company has significant new coal projects in the pipeline.

Only a few weeks after the green bonds were oversubscribed, KEPCO confirmed it would be investing in new coal power plants, Jawa 9 and 10 in Indonesia and Vung Ang 2 in Vietnam.

Coal is the worst kind of fossil fuel in terms of its contribution to the climate crisis. KEPCO’s ongoing investment in fossil fuels is not only inconsistent with the company’s green ambitions but also damages the credibility of the Korean government’s Green New Deal which was announced in July 2020 and which is supposed to phase out coal financing.

[➔ Read IEEFA's full analysis here](https://ieefa.org/ieefa-south-korea-why-leading-esg-investors-didnt-buy-kepcos-green-bond/)

KEPCO's Green Bond failed the ESG market test

The Anthropocene Fixed Income Institute has published their 2022 Market Trends in the Fixed Income Market.

Here are our three top picks, but it’s well worth reading the full report [here](https://img1.wsimg.com/blobby/go/946d6aac-e6cc-430a-8898-520cf90f5d3e/AFII_Themes_2022-0002.pdf):

* Asset owners regularly hold both debt and equity in the same company. From a valuation perspective, there are interesting contrasts between how climate risks are priced in these markets, especially in companies such as the oil majors. We still lack a full model to allocate the carbon footprint between bonds and stocks, which will be helpful both in terms of carbon footprinting. 
* It is clear that the broader philanthropic community is paying greater attention to climate risks and fixed income markets. The impact of this is a new breed of activism, where fixed income investors can also be targeted in campaigns that traditionally used to be deployed directly towards companies or equity backers of controversial activities.
* One of the great events during COP26 happened away from the actual conference. A large bank stepped back from providing a substantial loan to the aforementioned coal mine on what appears to have been considerable pressure from clients, rather than investors.



[➔ Read the full report here](https://img1.wsimg.com/blobby/go/946d6aac-e6cc-430a-8898-520cf90f5d3e/AFII_Themes_2022-0002.pdf)

2022 Market Trends in the Fixed Income Market

***The campaign to get Deutsche Bank to walk away***

Deutsche Bank’s withdrawal from Whitehaven’s bond issue follows a concerted public campaign by Market Forces and other community and civil society groups in Australia and Germany. After the potential bond deal was uncovered, Market Forces coordinated two hard-hitting newspaper advertisements in major media outlets, thousands of their supporters wrote to Deutsche Bank about the deal, many more sent Christmas cards directly to the bank’s CEO, and hundreds of comments were left on the bank’s social media posts.

Ahead of Deutsche Bank’s annual general meeting (AGM), they also commissioned [legal advice](https://www.marketforces.org.au/wp-content/uploads/2022/05/2022-Deutsche-Bank-Legal-Advice.pdf) confirming Deutsche Bank would breach its internal coal exclusion policy by proceeding with the Whitehaven bond deal. This followed publication of a [shareholder statement](https://agm.db.com/files/documents/2022/AGM_2022_Statements.pdf) in Deutsche Bank’s AGM papers, drawing further attention to the bank’s cosy relationship with Whitehaven.

With the pressure building, we now have confirmation Deutsche Bank is out of the bond deal, capping off the end of an almost eight-month campaign that has united activists across two continents.

***What’s next for the campaign to stop Whitehaven’s new coal mines?***

Although Deutsche Bank has ruled out Whitehaven’s bond issue, it remains exposed to the coal corporation through its debt lending. Whitehaven has signalled it will seek to refinance that loan later this year. Market Forces will be keeping a close eye on Deutsche Bank and making sure it upholds its stated commitments on climate action.

Meanwhile, the other key banks still remaining in Whitehaven’s credit syndicate are based in Australia, China and Japan. Australian banks NAB and Westpac play an important role – jointly providing over 20% of the funds in 2020 and helping to organise other banks’ participation in the deal. Market Forces and partners will be turning up the heat on NAB and Westpac this year and making sure they walk away from Whitehaven. 

[You can get more information here, and also support by contacting the banks linked to Whitehaven Coal by filling out the action form on this page](https://www.marketforces.org.au/win-deutsche-bank-abandons-whitehaven-coals-bond-issue/).