Value context and insight. lkm@koreatimes.co.kr
Hana Financial under fire over anti-green biz
Hana Financial Group Chairman Kim Jung-tai Korea Times file
By Lee Kyung-min
Hana Bank's W200 bil. coal investment in Indonesia violates IFC's green principles
By Lee Kyung-min
Hana Financial Group is coming under mounting criticism for making a hefty investment in coal power plants in Indonesia, financed by its flagship affiliate, Hana Bank. Hana is the only one among Korea's top five financial groups that has yet to renounce investing in fossil fuels.
According to Solutions for Our Climate, a Seoul-based climate change advocacy group, Recourse, its Amsterdam-based non-profit peer organization (NGO), filed a petition with International Financial Corp. (IFC), claiming the Korean lender violated the Green Equity Approach (GEA), a key IFC principle of green investments. The GEA calls for financial services firms to outline a low-carbon initiative in return for IFC investments, with the long-term goal of reducing coal-related assets to zero by 2030.
The petition was to contest a 200 billion won ($179 million) investment made through the lender's Singapore and Indonesian subsidiaries to finance the Jawa 9 and 10 plants in Banten Province, Indonesia, a decision which the Dutch group considers highly problematic since Hana received a $15 million investment from the IFC for the promotion of GEA in 2019.
“Hana Bank has invested in a variety of coal projects, including the Jawa plants, that are accelerating climate change,” Recourse director Kate Geary said according to the local advocacy group. “Hana Bank should abandon its coal-driven business portfolio as soon as possible, since its investor of over 50 years, IFC, has adopted a de-carbonization move.”
An official from the local group said Hana is “clinging” to the fossil fuel business already renounced by its four local competitors, as well as large firms responding to global initiatives to advance environmental, social and corporate governance (ESG).
“The Indonesia project led by Korea Electric Power Corp. (KEPCO) has already been found to be unprofitable in a feasibility study commissioned by the Korea Development Institute (KDI). Hana's refusal to join the green movement is highly worrisome with its investments still expanding in coal-related businesses.
Hana Bank CEO Ji Sung-kyoo Korea Times file
According to Bank Track, a European climate finance NGO, KEB Hana Bank invested about $63 million in the Indian multinational conglomerate Adani Group, China's Chemical Group Corporation, Hwayun Electric Power, Korea's Daewoo Engineering & Construction and Japan's Marubeni over three years from 2014. KEB Hana Bank is no longer a participant in Vietnam's Bungang-2, another coal power project pushed by KEPCO.
Hana's controversial coal-heavy business portfolio remains a central point of criticism. According to data submitted by the Financial Supervisory Service (FSS) to Rep. Kwon Eun-hee in September 2020, Hana has invested 188 billion won in domestic and foreign coal power projects over the past six years.
The National Assembly National Policy Committee member said the data also showed Hana and its four major competitors ― KB Kookmin, Shinhan, Woori and NongHyup ― spent 917.2 billion won to finance coal power businesses between 2015 and June 2020.
Woori topped the list having spent 227.3 billion won on seven projects, followed by Shinhan (223.9 billion won), KB Kookmin (205.2 billion won), Hana (188 billion won) and NongHyup (123.9 billion won).
The Export-Import Bank of Korea (Eximbank) spent a combined 428.8 billion won to finance two coal plants, 292.3 billion won in Indonesia in April 2017 and 136.5 billion won in Vietnam in April 2018.
The Korea Development Bank (KDB) has invested 372.1 billion won in similar projects since 2015 including 16.5 billion won for refinancing involving the Saemangeum Seawall in Gunsan. The IBK financed 22.6 billion won in fossil fuel-related projects including 21.1 billion won in equity investments.
"We will continue efforts to reduce investment in coal-powered businesses," a Hana official said.