A Chinese state-owned company that trumpeted its green credentials when listed on the London Stock Exchange has quietly acquired a development in Indonesia that scientists warn threatens the world’s rarest great ape.
SDIC Power signed plans to invest in Indonesia’s $ 277 million Batang Toru hydroelectric power plant less than two months after completing a listing in 2020, backed by large Western banks and heavily backed by the LSE.
But conservationists argued that the dam is unnecessary and wondered if the project was approved for political reasons in support of China’s Belt and Road Initiative. They also said the development threatened the extinction of the endangered orangutan Tapanuli.
SDIC Power’s acquisition of a 70% stake in the project, so far unreported except in corporate disclosures, has also fueled concerns about companies overestimating their environmental credentials in the growing market for responsible investing.
Activists have called on Beijing to withdraw from development in Sumatra, western Indonesia as it prepares to host the United Nations Conference on Biodiversity this year.
“We had high hopes that China would become a responsible financier on the global stage,” said Amanda Hurowitz, director of the Mighty Earth election group. Now “a Chinese state entity is involved in this project which could lead to the extinction of a species. I just have my heart in my mouth. “
SDIC Power, part of the State Development and Investment Corporation, listed in the UK in October 2020 via the London-Shanghai Stock Connect, a program launched the previous year to strengthen links between financial centers. HSBC, Goldman Sachs and UBS were bookrunners for its London debut. LSE’s then interim CEO, Denzil Jenkins, hailed the listing as a “milestone for [SDIC Power’s] business”.
The group said around 70% of the proceeds would be used to invest in renewable energy projects overseas.
Batang Toru Dam is considered part of China’s Belt and Road Initiative, one of Xi Jinping’s major foreign policy projects, designed to build infrastructure and gain political influence around the world.
Opponents, however, are skeptical of the merits of the development. A 2020 report commissioned by Mighty Earth and co-authored by a Stanford University lecturer found that there was no energy deficit in north Sumatra, the region the hydroelectric dam would provide, where construction or development of 80 new plants in the next decade.
The takeover could be “geopolitical,” said one environmentalist. “We wonder if SDIC is involved because the Chinese state wants it.”
Critics said the project has been shrouded in secrecy since it was launched in 2015 by North Sumatera Hydro Energy, a China-backed company in which SDIC Power acquired a majority stake last October. Activists began targeting the development when up to 800 rare Tapanuli orangutans were discovered in the region in 2017.
Tensions escalated in 2019 following the “extremely suspicious” death of an environmental lawyer in Sumatra. Golfrid Siregar, who opposed the dam, died three days after he was found beaten on the side of a road, environmentalists said.
The lack of awareness of SDIC Power’s participation in the project highlighted “how complicated it is [responsible investing] it is, “said Serge Wich, a professor of primate biology at Liverpool John Moores University who opposed the dam. Although investors often” hope to do the right thing “, they may still” invest in questionable projects. “
SDIC Power and HSBC did not respond to a request for comment. The LSE, Goldman Sachs and UBS declined to comment.