Czech Energy Group EPH Issues Second €500M Green Bond Despite Heavy Reliance On Fossil Fuels, IEEFA Flags Transparency Concerns

Investors in Czech energy group EPH’s green bonds could be facing unclear fossil fuel exposure and potential carbon lock-in, as new research from the Institute for Energy Economics and Financial Analysis (IEEFA) raises questions about the company’s lack of transparency over how bond proceeds are being used. The report suggests that EPH’s approach to green bond financing does little to address its core emissions challenge, which lies in fossil fuel-based power generation.

EPH, whose business remains heavily reliant on coal, lignite, and gas, issued a seven-year €500 million green bond on July 2, 2025. This comes after its debut in May 2024, when it also raised €500 million through a similar issuance. According to IEEFA, both bond issuances follow the same pattern, with proceeds allocated mainly to refinancing non-power generation assets. This, the analysis notes, reduces clarity for investors on the specific projects financed and the measurable environmental benefits of such investments.

Kevin Leung, a sustainable finance analyst at IEEFA and author of the research, said the latest green bonds are unlikely to contribute meaningfully to EPH’s climate strategy. He warned that the bonds lack coherence with decarbonisation goals and urged investors to closely examine the company’s green credentials and whether the use of proceeds delivers clear and attributable environmental outcomes.

Fossil fuels account for more than 90% of EPH’s power generation capacity, with plants spread across several European countries including Germany, Italy, the Netherlands, and the United Kingdom. Despite committing to a net-zero target by 2050, the company has not yet demonstrated a comprehensive strategy for shifting towards renewable energy, which exposes it to growing climate transition risks. The report highlights that, unlike many other high-emitting European utilities, EPH does not currently have a defined renewables expansion plan, further complicating its ability to reduce emissions.

One of EPH’s planned decarbonisation steps involves transferring the bulk of its coal assets to a sister company. However, this shift is expected to make the performance of those assets less transparent, while the associated climate risks will continue to weigh on EPH’s credit profile.

At the same time, the issuance of the new seven-year notes has extended EPH’s debt maturity profile, showing that the company can still access the bond market. Yet 2028 remains a critical refinancing year, with several large loans and bonds scheduled to mature. Leung noted that as financial markets increasingly prioritise credible transition planning, EPH may encounter tightening funding conditions if it fails to demonstrate meaningful progress in reducing its reliance on fossil fuels.