"JICA faces US Securities complaint over allegations of ‘misleading’ investors on coal" 24 November 2021

[...] [T]he Japan International Cooperation Agency (JICA) faces a first-of-a-kind complaint to the US Securities and Exchange Commission (SEC). The complainants claim that JICA stated its bond issued on US markets was coal-free, when in fact, proceeds will likely flow to coal-fired power stations in Bangladesh. 

“JICA included this clause in its bond prospectus to convince investors concerned about the devastating climate impacts of coal to purchase the bond,” said Yuki Tanabe, Program Director, JACSES. “The agency can’t be allowed to get away with such flagrant greenwashing.”

Japan’s overseas development agency issued a US dollar bond in April 2021, explicitly stating in its prospectus that JICA “will not knowingly allocate any proceeds from the sale of the bonds to activities related to coal-fired power generation.” However, the complaint points to reports indicating that JICA will continue to fund coal power generation projects in Bangladesh and Indonesia, and to JICA’s own financial statements which suggest that the bonds will be used, at least in part, to fund new coal power projects.

JICA is currently lending to an under construction 1,200 MW coal project in coastal Bangladesh, Matarbari, and just yesterday made an additional loan to this project.  

JICA is also reportedly looking to finance a further 1,200 MW coal power project in the same region by March 2022. The Matarbari project has come under fire for faulty environmental and social assessments and inadequate compensation. Moreover, JICA has not ruled out providing finance to a 1000MW coal power station in Indramayu, Indonesia. 

“We hope global bondholders take this as a warning they may still be backing new coal power if they buy JICA bonds, despite what JICA’s been telling them,” said Julien Vincent, Executive Director of environmental finance group Market Forces. [...]

Executives from five global and Japanese NGOs (Friends of the Earth Japan, Friends of the Earth US, JACSES, Market Forces, and Mighty Earth) have collaborated to bring this complaint, and are represented by US securities lawyer, Kevin Galbraith.

“As far as we’re aware, this complaint is the first time a governmental organization has been the target of a whistleblower complaint filed with the SEC, but given the SEC’s crackdown on disclosures of climate-related risk, we don’t anticipate that this will be the last,” said Mr. Galbraith. “The SEC’s September 2021 guidance indicates that truthful and complete disclosure of climate related risk is non-negotiable for companies seeking to comply with their obligations to ensure that their statements are not misleading.”

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