Samsung C&T Targeted by Activists Over Vietnam Coal Project

(Bloomberg) -- Activist climate investors warned Samsung C&T Corp. over its potential involvement in a new coal power plant in Southeast Asia amid mounting global pressure to halt use of the dirtiest fossil fuel.

Investment arms of Legal & General Group Plc, the U.K.’s biggest manager of corporate pension schemes, Norway’s KLP Kapitalforvaltning AS and Helsinki-based Nordea Bank Abp, have urged the South Korean company not to participate in the construction of the controversial plant in Vietnam, which it’s currently considering.

The project “poses significant reputational and climate related risks,” said Meryam Omi, the head of sustainable investing at Legal & General Investment Management Ltd. “We have asked the company to commit to no involvement in construction of new coal plants and will continue to engage with them on this matter.”

While the shareholders own just a tiny fraction of the de facto holding company of the Samsung empire, such public pressure is an increasingly common tactic by funds to put fossil fuel-engaged companies under the spotlight amid the global push against climate change.

The funds are focused on Samsung’s potential role in constructing the Vung Ang 2 project, which may come after state-run utility Korea Electric Power Corp. finalizes an impending investment in the venture.

The scrutiny comes as global investors are increasingly voicing concerns over the risks associated with South Korea’s overseas coal financing. BlackRock Inc., the world’s top asset manager, has urged Korea Electric to provide clear strategic rationale for its investment in several coal projects, including Vung Ang 2. Domestic pressure is also growing after the country unveiled a $35 billion plan to boost low-carbon power sources and foster green industries.

Legal & General Group holds a 0.02% stake in Samsung C&T, according to data compiled by Bloomberg. KLP Kapitalforvaltning AS and Nordea Bank Abp both own 0.01% of the Seoul-based company and investment arms associated with the two firms urged Samsung C&T not to participate in the engineering, procurement or construction of the Vung Ang 2 power plant.

Korea Electric, known as Kepco, is seeking to buy a 40% stake in the Vung Ang 2 project for an estimated $2.24 billion. While the stake purchase remains subject to a board decision, it wasn’t on the agenda for a meeting that took place Friday, according to Kepco.

In June, Kepco’s board of directors approved its involvement in the Jawa 9 and 10 coal project in Indonesia, despite warnings from investors and activists. The utility’s spokesman said it’s unlikely to make new coal-financing plans given the global transition to cleaner energy, but Indonesia and Vietnam projects follow strict international environmental standards and feasibility studies have proven their profitability.

“It’ll be inevitable for South Korea to avoid criticism from both home and abroad if it joins the Vung Ang 2 project,” South Korea National Assembly member Kim Sung-whan said. “It’s also expected to have a catastrophic impact on the government’s brand-new environmental initiatives.”

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