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, 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, were actually clamoring to have a say on why climate action matters!
Commenting on this, Katrin Ganswindt, financial campaigner of Urgewald 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.