Early last year the SEBI announced guidelines for ESG investments in India and mandated that the top companies adhere to the framework. A review a year later found the ESG guidelines lacking on several fronts in the Indian context.
Now today we have the news that the Adani saga continues with the a few ESG funds are pulling out of Adani.
The question to ask is why did 90 ESG funds put money into Adani in the first place and how 59 of the still continue to have investments in the companies (news excerpts and link below)? Adani despite its foray into the renewable energy has a dismal record on the environmental issues with several concerns being raised in their projects in Indian coast as well as Australian mines.
ESG is the fastest growing investment framework globally and is bound to grow. India needs to have tighter checks and balances as to who attracts these funds and on what basis and how is the same being regulated. To have a higher entry barrier, to use the same rating agencies that are already involved, to have copy-pasted and not locally evolved framework has meant that we may have a poor diluted version of a investment framework and there is no way we will be able to become the vishwa guru that we often claim to be on greening the world.
Goldman funds registered as promoting environmental, social and governance goals under European Union rules sold about 11.7 million shares in Adani companies in February, according to data compiled by Bloomberg. Following the retreat, Goldman Sachs Asset Management’s actively managed ESG fund exposure to Adani was limited to a stake of roughly 400,000 shares in Ambuja Cements Ltd., the data show.
Other asset managers cutting Adani from ESG funds include Northern Trust Corp. and Storebrand ASA, according to Bloomberg data, which doesn’t include exchange-traded funds and is based on an analysis of the latest available filings. In all, 13 actively managed ESG funds scaled back their holdings in the conglomerate, selling a total of 12 million Adani Group shares, with Goldman accounting for the largest sales in the Bloomberg data.
Overall, the number of ESG funds, including ETFs, with direct holdings in Adani companies dropped to 59 from 90 at the beginning of February, according to Bloomberg data.