Wednesday 15 February: A complaint has been lodged with the Singapore Exchange outlining how Japan’s largest power company JERA has failed to disclose critical information on financial and legal risks in relation to a US$300 million bond issued in April 2022.
The complaint by environmental finance organisation, Market Forces, highlights that JERA has omitted key information about the risks of investing in Liquified Natural Gas (LNG), when the Russia-Ukraine war has increased LNG price volatility and global climate goals are accelerating the transition from fossil fuels to renewable energy.
Formally lodged to the Singapore Exchange Whistleblower Office, the complaint also highlights a serious failure to disclose legal action by Australian Indigenous Tiwi Islanders over a major gas project, which could have a material effect on JERA’s financial prospects.
Dr. Sachiko Suzuki, Japan Senior Climate Finance Analyst, Market Forces, said:
“It is of grave concern that JERA has failed to disclose key financial and legal risks on its fossil gas investments while attempting to raise hundreds of millions of dollars.
“There are clear duties of disclosure under the rules of the Singapore Exchange and JERA has been fooling investors by providing just part of the picture of the risks associated with its dirty dealings on fossil fuels.”
The complaint outlines that the fossil fuel industry, including LNG, is prone to risks including major geopolitical events and climate change. JERA has omitted material details from its public disclosures regarding key risks faced by its LNG business.
JERA has also failed to produce an analysis demonstrating the risks and its alignment with decarbonising on a pathway to net zero emissions by 2025. JERA’s omissions deny investors sufficient information to form a full and proper understanding of the Japanese power giant’s business, financial conditions and prospects.
JERA’s lack of transparency has been of mounting concern over recent years. JERA has a 10 per cent stake in Indonesian power company, PT Cirebon Energi Prasarana and its Cirebon coal power plant contractor has been facing corruption allegations since 2019. Yet JERA has not communicated with investors on how the company plans to mitigate this type of risk.
“JERA has failed to disclose major legal risks, with litigation underway in Japan and Australia relating to a new coal power project outside Tokyo and the Australian Barossa gas field opposed by Tiwi Islands First Nations leaders,” said Dr. Suzuki.
“It’s vital that JERA comes clean with investors and is held to account for hiding the growing risks posed by its investments in fossil fuels.”
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