The vice president of Samsung Electronics, maker of the Galaxy range of smartphones, has told a South Korean government hearing that its brand had been hurt by its construction subsidiary’s involvement in building a heavily polluting coal power plant in Vietnam.
And the vice president of the construction subsidiary, Samsung C&T, acknowledged international boycotts of its parent company over the project, as well as shareholder unhappiness about it, before telling the hearing that Samsung C&T would not build any more coal plants after this.Â
Earlier this year, protests were held outside Samsung’s flagship electronics stores in California, London, Seoul, Manila and Tokyo because Samsung C&T is being lined up to build the the 1,200-megawatt Vung Ang 2 plant in Vietnam.
"Embarrassing and worrisome"
The National Assembly member questioning the two executives called the decision to participate in Vung Ang 2 "embarrassing and worrisome", and suggested it was irrational.
The remarkable exchange took place yesterday during a government audit hearing in the Trade, Industry, Energy, SMEs and Startups Committee.
In it, National Assembly legislator Soyoung Lee, of the ruling Democratic Party of Korea, questioned Samsung Electronics vice president, Kim Suk-ki, and Samsung C&T vice president, Oh Se-chul.
Their dialogue was reported verbatim in Korean national media and translated for GCR by Solutions for our Climate, a South Korean environmental campaign organisation that opposes South Korea’s prolific financing of coal projects.
The hearing followed the announcement on Monday, 5 October by majority state-owned Korea Electric Power Corp (Kepco) that its board had approved the company’s purchase of a substantial stake in the Vung Ang 2 scheme.Â
Samsung C&T and South Korea’s Doosan Heavy Industries & Construction are being lined up to build it.
"We cannot say that there aren’t any"
"It seems that international boycotts on Samsung Electronics products are occurring due to Samsung subsidiaries’ overseas coal power projects and that this could damage the brand image of Galaxy phones," prompted assembly member Lee.
"Yes that is true. I think that could happen," replied Samsung Electronics vice president, Kim Suk-ki.
Lee: "This is both embarrassing and worrisome. What does Samsung Electronics think of this?"
Kim: "We think it’s important to consider the surrounding circumstances in the decision-making process."
Lee: "Is the brand image of Samsung being affected by the coal power projects of Samsung subsidiaries? Can you say that there are no effects?"
Kim: "We cannot say that there aren’t any."
No more after this
Lee then called Samsung C&T vice president Oh Se-chul to the floor.
In questioning, Lee asked: "What is the reason that you are carrying on with this project even as various Samsung affiliates are being boycotted?"
"I agree with your criticisms," replied Oh. "There is much concern around this. We will communicate with the related personnel in order to ensure that this project does not incur any negative effects on related subsidiaries."
Lee then pointed out that Samsung C&T’s institutional shareholders did not want Samsung C&T to participate in the project, "especially since it is not that profitable".
"Isn’t it right to not cause damage to the affiliates and stop this project?" Lee asked.
"There was much concern about that," replied Oh, "yet the process of carrying out this project has involved the country, as well as government agencies, investors, businesses, and EPC constructors, so from our position, we cannot exclusively make a decision on the project as EPC constructors."
Lee said he understood, but added: "This decision does not seem like a rational decision. Are there any other overseas coal power plants in the pipeline besides Vung Ang 2?"
To which Oh replied: "We plan to not get involved in any coal power plants in the future."
"Deplorable", "devastating", and hypocritical
Vung Ang 2 is expected to emit more than 200 million tons of greenhouse gas emissions over its 30-year lifespan.
This week, critics decried Kepco’s decision to invest in it as "deplorable", "devastating", and hypocritical in light of the new South Korean government’s recent declaration of a climate emergency, and its commitment to a Korean Green New Deal, which is intended to avert 12.3 million tons in emissions.
South Korea has been named among the world’s top three financiers of overseas coal power, providing some $10bn between 2008 and 2018.
The South Korean government’s own overseas investment auditor, the Korea Development Institute (KDI), has warned that Vung Ang 2 could lose money as the cost of renewables falls, leading to a loss for Kepco that would be borne by Korean taxpayers.
In June, the KDI calculated that Vung Ang 2 was at risk of losing around $158m over its lifetime, which translates into a net loss for Kepco of some $80m.Â
Image: Protests have been held outside Samsung’s flagship electronics stores in Palo Alto, California, London, Seoul, Manila and Tokyo because Samsung C&T is being lined up to build the Vung Ang 2 plant in Vietnam (Photograph supplied by Solutions for Our Climate)