September 15th, 2020 by Guest Contributor
By Yu Sun Chin, Solutions for Our Climate, Seoul, South Korea
2020 has been called a defining moment to fight the climate crisis, and many tech companies are amping up their efforts to do so. This year, Apple announced that it would cut its emissions by 75 percent and become carbon neutral by 2030. Amazon made a similar pledge, saying it would become carbon neutral by 2040, and set a goal of running 100% percent on renewables by 2025.
Samsung, however, is decidedly lagging in its climate efforts. Despite global efforts to phase out coal — the single largest contributor to emissions worldwide — the South Korean multinational conglomerate is still heavily involved in the construction and financing of coal power projects across Asia.
In South Korea, Samsung’s construction and trading affiliate Samsung C&T is currently building the 2,080 megawatt Gangneung Anin coal power project, and Samsung Fire & Marine Insurance and Samsung Life Insurance contributed approximately $500 million in loans for the 2,100 megawatt Samcheok coal power project. These plants, if completed, are expected to emit hundreds of million tons of greenhouse gases over their lifetimes.
This year, it was also revealed that Samsung C&T is considering becoming involved in the construction of the 1,200 MW Vung Ang 2 power plant in Vietnam. The project would have significant climate and economic consequences, emitting more than 200 million tons of greenhouse gas emissions in total for the next 30 years, and potentially incurring a $168 million loss, according to independent analyses.
Samsung C&T’s potential involvement in the Vung Ang 2 coal power project has already drawn criticism from both global investors and environmental leaders. That list includes KLP, Norway’s biggest pension fund, and Legal & General Investment Management, the UK’s largest asset manager. Both Christiana Figueres, former Executive Secretary of the United Nations Framework Convention on Climate Change, and Nigel Topping, the COP26 Climate Action Champion, sent a letter to Samsung Electronics vice chairman and de facto head of the Samsung Group Jay. Y. Lee, asking him to withdraw from the Vietnamese coal power project and to get all affiliates out of coal financing, construction, and trading. However, Samsung Group has not provided a response.
The issue is not that Samsung does not have a proper policy in place. In fact, Samsung Electronics’ 2020 Sustainability Report stated that it considers climate change “an important challenge,” and that it would make efforts to reduce greenhouse gas emissions during both the manufacturing and product use stage. The company also committed to using 100% renewables in its operations in the United States, Europe, and China by 2020.
However, such flashy commitments mean little in light of the significant coal involvement by various Samsung affiliates, which is out of line with global trends. According to IEEFA, more than 138 globally significant financial institutions have already exited from coal, which is quickly losing out to renewables in price. In the case of Vung Ang 2, financiers such as CLP and Standard Chartered Bank, as well as constructors such as General Electric have already withdrawn their involvement, presumably due to the risk of incurring major financial losses. If Samsung continues its involvement in Vung Ang 2, it will not only damage its “sustainable” brand image, but also stand out as an outlier in the corporate transition away from fossil fuels.
Samsung’s involvement in Vung Ang 2 also stands to damage South Korea’s position in the international community. The country has already been dubbed a “climate villain” for its continued investment in overseas coal projects. Major political figures including Al Gore and Ban Ki-moon has openly criticized South Korea’s involvement in coal financing. Global investors like BlackRock and LGIM have called on KEPCO, the state utility leading these coal projects, to stop such risky investments.
Samsung is one of the most powerful conglomerates in South Korea. It makes up 17 percent of the country’s GDP and is heralded as the champion of Korea’s economy. However, Samsung needs to start listening to the voices from the global market. This July, Samsung Securities pledged to withdraw from the controversial Adani-owned Abbot Point coal port in Australia after local youth climate activists launched a boycott on Samsung products. Samsung’s involvement in Vung Ang 2 is also resulting in demonstrations and social media campaigns around the world.
For Samsung, there is much more to be lost than gained from its involvement in Vung Ang 2 — especially if it wants to make good on its public pledges to sustainability and climate. Otherwise, socially conscious global consumers may choose to purchase from “cleaner” companies that aren’t as involved in coal — a hit that may be difficult for Samsung to recover from.
Top photo by Kyle Field/CleanTechnica
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