MSCI will be releasing the results of a quarterly review for its ESG and climate indices this week, a Bloomberg report suggested. All eyes would be on Adani group companies such as Adani Green Energy and Adani Total Gas. As per MSCI's ESG Ratings & Climate search tool, MSCI's ESG rating for Adani Green Energy is ‘A’, which has stayed unchanged since August 2022. The rating is third highest, and counted as 'average' for 140 MSCI ACWI Index's utility constituents. Adani Total Gas, on the other hand, also enjoys ‘A’ rating. It was last upgraded to A rating in November, 2022 from BBB rating.
The global index aggregator reduced the free-float designations for the four Adani stocks recently, but did not remove any of the stocks. The move analysts said impacted $428 million in flows.
It a recent investor presentation, Adani group noted it has planned initiatives for integrating environmental aspects in all business operations, with reduction in GHG emissions by 50 per cent by 2030 and achieving Net Zero target by 2050. Adani Total Gas plans to plant to 2 lakhs-plus trees, water neutrality by 2023, installation of 1.2 MW rooftop solar plants by 2023, set up 1,500 EV charging stations and 100 per cent decarbonisation of fleets by 2023. A total of 11 million tonne CO2 emission was cut by Adani Green Energy in the first nine months of FY23, the group said.
As per the Bloomberg report, passive ESG funds held more than 9.7 million shares in Adani Green worth $81 million as of Monday. The second-most popular Adani holding for ESG index funds is Adani Total Gas, with almost 1.2 million shares worth $17 million, Bloomberg reported.
Valuation Guru Aswath Damodaran in his Blog on February 4 said: "If you review the Adani website and sales pitch, it is quite clear that the company learned to play the ESG game well, creating an entire ESG universe to underpin its companies, and exploiting the green bond market, presumably for its green energy business."
He said the notion that a family group that build ports, airports and gas transmission lines qualifies for green bond issuance, tells you less about the group making the issuance, and more about the emptiness of the green bond promise.
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