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MSCI to drop Adani Ports from four climate indices on Carmichael link; Adani Group "disappointed" with move

Environmental groups claim that the Carmichael mine will produce 200 million tonnes of carbon dioxide in 60 years.

November 29, 2021 / 07:58 AM IST
Gautam Adani | Representative image

Gautam Adani | Representative image

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The MSCI Climate Change Index will drop Adani Ports and Special Economic Zone (APSEZ). This comes as the Carmichael project had been termed ‘severe’. MSCI will also drop REC and IPCA Laboratories from the index while adding six new companies to the list.

Adani Enterprises owns the Carmichael project. Adani Ports became a wholly-owned subsidiary in August 2020 for haulage operations from the Carmichael mine to Adani’s North Queensland Export Terminal (NQXT). Earlier in March, the BRC ownership was transferred to Adani Global Pte.

The Carmichael mine is expected to produce about 10 million tonnes of coal a year.

The Carmichael project has evoked sharp criticism from environmental groups and locals, who claim that the mine would produce 200 million tonnes of carbon dioxide during its 60-year life.

In March itself, Bank of New York Mellon Corp pulled out of providing financial services to Adani Group and its Carmichael coal mine in Australia. It said that the venture was incompatible with its environmental, social and governance rules.

In a statement, BNY Mellon said it had reviewed its relationship with the Adani Group and "has decided to resign from all legacy transactions with Adani in Australia and will not pursue additional transactions with Adani in Australia."

MSCI spokesperson Lara Hudson confirmed to Fortune India that Adani Ports would be removed from the MSCI ACWI IMI Climate Change Indexes.

“In September 2021, MSCI revised the ESG Controversy Assessment for Adani Ports and, as a result, the company does not meet the eligibility criteria for the index. Adani Ports will be removed from these indexes effective December 1, 2021,” Hudson said.

“The MSCI Global Low Carbon Target Indexes are focused on tilting towards companies with lower carbon intensities and fossil fuel reserves. It tilts away from those with higher carbon intensities and exposure to fossil fuel reserves, rather than excluding companies,” Hudson added.

Adani Group on Sunday clarified on Adani Port being dropped from the index, saying it was disappointed with the move. It said it is committed to achieving carbon neutrality by 2025.

"In response to an ESG Controversy Report from MSCI in Q3, APSEZ had clarified to MSCI that it never had any shareholding in the Carmichael mine, and that it had already divested its stakes in both Bowen Rail and NQXT (North Queensland Export Terminal)," the company said in a media release.

"We had also sent a reminder to MSCI on the matter. However, MSCI has not bothered to either incorporate the facts or provide an appropriate response to APSEZ," the statement added.

The group claimed that the MSCI is "playing into the hands of forces that want to subvert the green initiatives" and said it is "taken aback by the untransparent methodology MSCI has adopted".

In November 2020, French giant Amundi warned the State Bank of India (SBI) that it would sell its SBI green bonds if the bank granted Rs 5,000 crore loan to Adani's Carmichael coal mine in Australia.

Adani Ports has a market cap of Rs 1.47 lakh crore.

Moneycontrol News
first published: Nov 28, 2021 09:56 am