The move, captured by an analysis of data compiled by Bloomberg, comes as several major investment firms such as Black stones Inc. and Deutsche Bank AG’s fund manager, DWS Group, continue to hold Adani’s stake in ESG funds that track indexes developed by MSCI Inc.
Spokespersons for JPMorgan and BlackRock declined to comment. A DWS spokesperson said when it comes to its MSCI-tracking ETFs, “no proprietary DWS ESG assessments are used,” in an emailed response to inquiries. MSCI said by email that the results of a regular review of the ESG and climate indicators “will be available” by the end of this month. The company has not adjusted anything Adani ESG ratings.
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The JPMorgan’s Global Emerging Markets Research Enhanced Index Equity ESG UCITS ETF sells more than 70,000 cement producer shares ACC . Co., Ltd., exits the shares it holds as of May 2021, according to a Bloomberg data review that looks at movements following the release of the Hindenburg report on Jan.
The data shows that the second fund, the JPMorgan AC Asia Pacific ex Japan Research Enhanced Index Equity ESG UCITS ETF, has sold about 1,350 shares it holds in the company since last July. According to Bloomberg data, the moves mean that JPMorgan, which already holds a 0.04% stake in ACC, no longer has exposure to any parts of the Adani group through ESG funds.
Both funds are registered under Article 8, which EU regulations mean they are required to “promote” ESG goals. JPMorgan continues to hold Shares of Adani in non-ESG funds.
For many fund managers whose investment decisions are not anchored by the MSCI indices, Adani became too toxic to hold following a January 24 report by short seller Hindenburg Research, which accused the group of committing a crime. fraud and market manipulation. The Adani Group has denied the claims and hired lawyers and media experts in an effort to restore its image.
Currently, the 10 companies that make up the Adani consortium are continuing to bleed money, having lost about $150 billion in combined market capital since Hindenburg’s discovery was announced, according to data compiled by Bloomberg.
Tim Buckley, director at Australia’s climate energy finance consultancy, described the investor’s loss as an “absolute failure” for regulators and index providers.
Regulators need to stay on top of “the biggest systemic risks and, for me, one of the big systemic risks are index funds and the lack of clarity and definition of regulation.”
About 500 ESG funds in Europe hold Adani stock, according to the latest data available compiled by Bloomberg. Most of the holdings are contained in funds registered under Article 8, meaning that they are required to “promote” environmental, social and governance goals under European Union rules. Some of the so-called Article 9 funds, which are required to target 100% sustainable investments, also hold Adani stock.
Funds with at least $10 billion in assets under management that track the MSCI ESG indices have held shares in Adani . Enterprise Company Limited. alone when the Hindenburg report was published, according to an analysis by the Anthropocene Fixed Income Institute, which has studied the Adani Group since mid-2020.
While MSCI still holds Adani stock in its ESG indexes, asset managers like BlackRock are reducing their exposure to the group through other indices. S&P Global Inc. said this month they removed Adani Enterprises from its Dow Jones Sustainability Index. Sustainalytics has downgraded the ESG scores of several Adani companies.
MSCI has made no changes to the ESG ratings of Adani companies since the Hindenburg report. Total Gas Adani Ltd. and Adani . Green Energy Company Limited. both are rated A. Three entities — Adani Enterprises Ltd., Adani . Energy Company Limited. And Port of Adani & Special Economic Zone Ltd. — holds the lowest ESG rating of MSCI, CCC.
A spokesperson for MSCI said: “Many of Adani’s companies have performed poorly in terms of corporate governance. The person said that MSCI had previously assessed a series of ESG controversies tied to Adani, including “community resistance to specific projects and questionable business relationships”.
In addition to allegations of fraud and market manipulation, ESG fund managers also had to analyze documents showing that their green dollars were indirectly funding coal, the dirtiest fossil fuel.
Norway’s largest pension fund, KLP, has sold all of its shares in Adani xanh Green Energy Ltd. after Hindenburg’s report was published. Since then, public filings dated February 10 have made clear that Adani is using shares of companies marketed as “green” as collateral in a credit facility that helps finance the coal mine. Carmichael in Australia, through Adani Enterprises Ltd.
Sharon Chen, credit analyst at Bloomberg Intelligence, said: “Concerns around using equities to back loans to sister companies in the Adani Group could hinder access to capital and undermined the technical support for their dollar bonds.” “The Adani Group’s complex debt structure and poor transparency, as evidenced by the use of Adani Green Energy’s stock to back its coal unit, could add to ESG concerns and hinder access to capital.”
