Home > Adani Ports kicked off MSCI indices due to Carmichael coal link

Adani Ports kicked off MSCI indices due to Carmichael coal link

26 November 2021

Finance research and ratings company MSCI wrote to its clients on Tuesday informing them that Adani Ports and Special Economic Zone (Adani Ports, also referred to as APSEZ) is about to be kicked off four MSCI climate indices, after its links to the Carmichael thermal coal project in Australia escalated its assigned controversy score to “severe”.

MSCI is used by investors all over the world. It creates a whole range of ESG (environment, social, governance) focused indices which allow investors to put their money into sets of companies that meet certain criteria. MSCI uses a complex methodology to rate the ESG performance of companies, which includes an overall ESG rating and a controversy score. Adani Ports already has the lowest possible ESG rating of “CCC”, and its controversy score is now “severe”, the second-worst possible.

This “severe” controversy score means it will be removed from four Climate Change branded indices on 1 December 2021. Funds managed by major investors that rely upon these indices have now been divested from Adani Ports!

MSCI’s told clients the four indices are:

726305 – EM (EMERGING MARKETS) CLIMATE CHANGE
726314 – AC ASIA PACIFIC CLIMATE CHANGE
726316 – ACWI CLIMATE CHANGE
734327 – ACWI IMI CLIMATE CHANGE

In a separate email, MSCI informed Market Forces that Adani Ports’ setting up of Bowen Rail Company, the haulage company for the Carmichael coal mine, is the reason why the Carmichael coal project has been added as a controversy with which Adani Ports is associated.

Adani Ports set up the Bowen Rail Company in 2019 and announced in January 2021 that it would transfer ownership across to Adani Enterprises (completed in July 2021). Adani Ports admitted in its annual report (see page 129) that this transfer was in order to “fulfil the Carbon Neutral Commitments” of the company (despite intending to increase the amount of coal it transports and its plans to build new coal and LNG terminals, Adani Ports claims it will be carbon neutral by 2025).

Therefore, by Adani Ports’ own admission, it attempted to avoid being held accountable for its role in the climate-wrecking Carmichael project by using the Adani Group’s complex corporate structure to shift a dirty businesses onto one subsidiary in order to claim carbon neutrality in another. Meanwhile the Carmichael coal mine and rail line continues to be built. Thankfully MSCI has finally seen through this farce, and more ratings agencies, banks and investors need to follow its lead.

(This is not the first time Adani Ports has been removed from an ESG index, with S&P removing it from the Dow Jones Sustainability Index in April 2021, due to its business links with the Myanmar Military. State Street Global Advisors also have Adani Ports and Adani Enterprises on its exclusion list for some ESG indices it uses.)

In any case, even after shifting ownership of Bowen Rail Company, Adani Ports still has a direct link to the Carmichael project via its operation of the North Queensland Export Terminal (NQXT, formerly Adani Abbot Point Terminal) in the Great Barrier Reef World Heritage Area, via which Carmichael coal will be exported.

MSCI may have joined the dots and shifted its controversy score, but many financiers are still avoiding the reality that financing one part of the Adani Group risks freeing up funds, either directly or indirectly, for Carmichael and other new thermal coal projects.

BlackRock, Barclays, Deutsche Bank, Citi, DBS, Standard Chartered and JP Morgan have all publicly distanced themselves from the Carmichael coal project but continue to finance Adani Group companies. If they are genuine about their commitment they must cut all ties with the Adani Group now.

Additionally, Sustainalytics, another major ESG ratings company, needs to urgently review its questionable “low risk” ESG rating for Adani Ports, taking the Carmichael project into account.

Take action. Fill out the form to call for Sustainalytics to carry out an immediate reassessment of Adani Ports’ rating considering its serious climate, ecological and human rights impacts.

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Call for Sustainalytics to carry out an immediate reassessment of Adani Ports’ questionable “low risk” ESG rating considering its serious climate, ecological and human rights impacts.

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Dear Sustainalytics management and ESG Risk analysts, I am writing because I am concerned your “low risk” ESG Risk Rating for Adani Ports and Special Economic Zone (Adani Ports) does not accurately represent the company’s controversial and destructive track record, which I outline below. I urge Sustainalytics to immediately review Adani Ports’ “low risk” ESG Rating. Clients using Sustainalytics ESG products need to be made aware of the risks that come with investing in Adani Ports and any Adani Group company. Sustainalytics’ ESG Risk Ratings are influenced by a company’s involvement in controversial events that have an impact on the environment and society. Adani Ports has taken a number of controversial actions that Sustainalytics should consider, including: 1. Maintaining business ties with a sanctioned Myanmar military-owned company in breach of the UN Global Compact Principles, of which Adani Ports is a signatory. These ties were retained even after the Myanmar military’s 1 February 2021 anti-democratic coup and subsequent murder of hundreds of peaceful protesters. It took Adani nine months after the coup to announce a plan to cut ties with the Myanmar military, which it could delay doing until mid-2022; 2. Adani Ports set up Bowen Rail Company, which plans to transport coal for Adani Group’s massive greenfield Carmichael thermal coal mine in Australia, undermining global efforts to curb emissions in line with the climate goals of the internationally accepted Paris Agreement. Adani Ports also operates the North Queensland Export Terminal (NQXT) in the Great Barrier Reef World Heritage Area, via which Carmichael thermal coal will be exported; 3. Adani Ports has been responsible for severe environmental damage at a number of its ports in India, destroying ecosystems and causing economic impacts on local communities; and 4. Adani Ports is supplying land, power and water for a proposed US$4 billion, 2 mtpa coal-to-polyvinyl chloride (PVC) plant [1]. Coal-to-plastics plants produce around eleven tonnes of carbon dioxide emissions for every tonne of product produced, more than triple the emissions from oil-to-plastics production [2]. To have a company with a track record like Adani Ports rated as “low risk” indicates a need for you to carefully examine your methodology, your application of the methodology or both. Investors need to be aware of the many controversies Adani Ports is mired in, in order to make an informed decision as to whether to invest in the company. Please commit to me personally and announce publicly that you will, as a matter of urgency, thoroughly review your ESG Risk Rating for Adani Ports, and provide a timeline by which I can expect the outcome. [1] https://www.theguardian.com/business/2021/jun/17/adani-blasted-over-toxic-4bn-plan-to-use-australian-coal-to-make-plastic-in-india [2] https://www.woodmac.com/news/editorial/the-opportunities-and-challenges-of-cto-mto-development/ Sincerely,
Yes, I want to hear more from Market Forces about this campaign
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