Adani Green, Transmission and Ports Lose UN Backed Climate Group Endorsement
Adani Green Energy Ltd, Adani Transmission Ltd, and Adani Ports & Special Economic Zone Ltd, three companies belonging to the Adani Group, have lost their endorsement from the Science Based Targets initiative (SBTi), a UN-backed arbiter of corporate green goals. The move represents a major setback for the Indian industrial conglomerate, which is trying to reposition itself as a leader of India's energy transition. The companies were removed in late April from the list of "companies taking action" published by the SBTi, which helps companies establish concrete plans to reduce emissions consistent with the Paris Agreement's target on limiting global warming.
The Adani Group, along with two other publicly listed independent firms, have been excluded from the Science Based Targets initiative (SBTi) due to their failure to comply with the organization's standards and policy requirements. The SBTi conducted an internal assessment based on publicly available and submitted information before reaching this decision. While the Adani Group has sought justification for the exclusion, they remain optimistic that the SBTi will review and reverse the decision. Notably, the excluded companies have committed to the SBTi and have been working on their low carbon transition plans.
It is worth mentioning that none of the companies are involved in fossil fuel-related activities, such as oil, natural gas, coal, extraction, mining, or production.
The Adani Group's recent exclusion from the Science Based Targets initiative (SBTi) is a significant blow, particularly since sustainability-minded investors often seek out the SBTi's endorsement. Stocks affiliated with Adani were found in over 500 ESG (environmental, social, and governance) funds at the start of February, underscoring the company's broad appeal to ESG investors. However, in the same month, it was revealed that Adani was using shares from its green firms to finance the controversial Carmichael coal mine. As a result, watchdog groups have raised concerns that ESG investors may have unwittingly invested in fossil fuels through their Adani Green holdings, and the loss of SBTi's validation represents another setback for the group.
Earlier this year, the Adani Group lost billions of dollars in market value following a short-seller's accusations of corporate fraud, which was built on a constellation of shell companies and related-party transactions. Despite its recent exclusion from the SBTi's list, the Adani Group is striving to secure approximately $800 million in funding for new green energy
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This effort is part of Gautam Adani's vision to make his conglomerate the top global producer of renewable energy and a frontrunner in eco-friendly data storage. Adani Green Energy reported surging fourth-quarter profits last week, indicating that the group is recovering from the damage done by the short-seller's attack.
The SBTi has removed 16 companies, including three from the Adani Group, from its list following a policy update that excludes firms directly involved in fossil fuel-related activities. However, two other Adani Group companies, Ambuja Cements Ltd. and ACC Ltd., have retained their SBTi validation and place on the list. In March of this year, Market Forces and Ekō, two non-profit organizations, submitted an official appeal to the SBTi, asking the organization to scrutinize the five Adani Group companies on its list. The request highlighted the group's "flagrant disregard" for corporate governance, fossil fuel expansion plans, and interconnected financial nature. Market Forces' Acting Executive Director, Will van de Pol, praised SBTi's move and emphasized the importance of preventing such initiatives from being used for greenwashing. Market Forces' Acting Executive Director, Will van de Pol, has stated that the Adani Group cannot claim to be
in line with the Paris Agreement's goals if it persists in expanding its fossil fuel-related activities.
In conclusion, the Adani Group's loss of endorsement from the Science Based Targets initiative is a significant blow to its efforts to establish itself as a leader in India's energy transition. The removal of these three companies from the list of "companies taking action" by the UN-backed climate group raises questions about the conglomerate's commitment to reducing emissions and transitioning to a low-carbon economy.
Sustainability-minded investors often look for SBTi's validation, and the exclusion of Adani Green, Transmission, and Ports from the list may have consequences for the group's stock performance and funding opportunities. While the Adani Group has expressed optimism that SBTi will review and reverse its decision, losing the organization's endorsement is another setback for the conglomerate, which has already faced accusations of corporate fraud and controversy over its fossil fuel expansion plans.
Despite these challenges, the Adani Group continues to pursue green energy projects and aims to become the world's largest producer of renewable energy. It remains to be seen how the group will navigate the changing landscape of climate action and sustainability in the coming years.