Backlash to State Bank of India’s potential Adani coal loan spreads through finance sector

22 December 2020

The State Bank of India (SBI) is facing a growing backlash from finance sector firms, after news broke last month that it is seriously considering a A$1 billion loan to the controversial and destructive Adani Carmichael coal project. SBI’s potential support for a new thermal coal mine no other bank on Earth is willing to fund, could see its ability to raise capital impacted.

While SBI is majority Indian Government owned, the bank frequently issues bonds (including green bonds) in the global market, receives loans from foreign banks and is minority owned by investors across the world. 

Disclosures to the Bombay Stock Exchange reveal a significant increase in companies engaging with SBI in the month since the news on Adani Carmichael broke, when compared to the previous month. While the content of meetings are not disclosed, many of the companies listed are those that have been called upon by the #StopAdani campaign to take a stand against SBI loaning to Adani. Companies including, Amundi, JP Morgan, Jupiter AM, Credit Suisse, GIC Singapore, Sun Life and BNP Paribas were all contacted by people concerned about the impacts of SBI’s potential Carmichael loan and met with SBI in the last few weeks. 

Revealing the depth of feeling on this issue, many investors are also speaking out publicly. The first heavyweight to express public concern was Europe’s largest asset manager, Amundi, who labelled the potential loan from SBI as a total contradiction of the green bonds SBI has issued, and threatened to divest its holding if the loan goes ahead. Then, the world’s largest asset manager, BlackRock, also weighed in on the Adani coal concerns, as did Norwegian Storebrand. AXA went as far as selling off its green bond holding in SBI and most recently, Amundi followed through with its threat by divesting from SBI. 

Dutch giant NN Investment Partners also downgraded SBI’s green bonds to “non-green”, resulting in divestment, and called the green bonds a form of “greenwashing” due to SBI’s openness to funding a new thermal coal mine.

This unprecedented backlash presents significant risks for both SBI and for the Indian Government. SBI’s funding of a climate-wrecking project that is also economically risky, in the face of global investor opposition, will damage its reputation and possibly impact its ability to raise capital on global markets. The Indian Government under Prime Minister Narendra Modi is attempting to project an image of climate responsibility abroad while fighting off accusations at home that it is introducing laws that favour its billionaire allies. An SBI loan to Adani Carmichael, a climate-wrecking project promoted by billionaire Gautam Adani, will set back both those aims.

However, more pressure is needed. SBI still hasn’t revealed its intention on the Adani loan and so it needs to hear from more investors. HSBC is one of SBI’s green bond arrangers and a major lender. 

Help build the pressure by telling HSBC that it must speak out too. Find out more about HSBC’s role here.