Thirty-seven non-profit organisations led by the Australian environmental campaign group Market Forces have written to S&P Global urging them to review the decision to include Adani Ports and Special Economic Zone (APSEZ) in Dow Jones Sustainability Index. The letter highlights the controversies surrounding Adani Group’s “activities expanding the unsustainable thermal coal sector, its destruction of the environment and the livelihoods that depend on it and its work with partners which have committed human rights abuses.”
The letter makes specical mention of three controversial issues affecting APSEZ’s sustainability claims, namely the company’s involvement with the Myanmar military which is accused of war crimes and genocide, its involvement in the development and operation of coal haulage infrastructure for the Adani Carmichael coal mining project, and “the devastating impact it has caused at several of its sites including the ports of Mundra, Hazira, Kattupalli, Vizhinjam and Mormugao. . .” The latter, the letter states, affects the ecology and livelihood of nearby fishers.
The Dow Jones Sustainability Index was “launched in 1999 as the first global sustainability benchmark and tracks the stock performance of the world’s leading companies in terms of economic, environmental and social criteria.” As more and more investors are forced to incorporate human rights and environmental considerations in configuring their portfolios, indices such as DJSI are positioned to “provide an effective engagement platform for investors who wish to encourage companies to improve their corporate sustainability practices.”
The methodology for calculating such indices includes a Corporate Sustainability Assessment process where media and stakeholder commentaries and other publicly available information are monitored to “identify companies’ involvement and response to environmental, economic and social crisis situations that may have a damaging effect on their reputation and core business.”
A press release by Market Forces announcing the despatch of the letter explains that companies may be delisted from the index between annual reviews if the Index Committee establishes that the company is “no longer behaving in a manner that is consistent with the Corporate Governance Compliance.” Volkswagen, for instance, was delisted from the Index in 2015, after it was found to have cheated in the North American emissions test.
The letter states that APSEZ’s actions are having a “material reputational impact” on the company as evidenced by numerous negative media articles and the boycott by 90 major companies of the Adani Carmichael coal project and, in some cases, the Adani Group in general. In a letter addressed to the Government of India, Adani Group admits as much. Highlighting the vociferous campaigns, including the ongoing farmers’ protests in India and the campaign by Australian aboriginal communities against the Carmichael coal mine, targeting Adani, the Group had in December 2020 complained to the Government of India that “Social media reach is being used to create immense damage to our image.”
Since Adani’s writing of the letter, though, public outrage against the company has only increased. In January 2021, Deutsche Bank was prevented by its internal sustainability committee from participating in Adani Ports bond issue.
An environmental public hearing announced for the company’s controversial Kattupalli megaport near the Pulicat Wildlife Sanctuary in Tamil Nadu triggered vigorous protests in the election-bound state. Fearing the loss of livelihood and a worsening of Chennai’s flood vulnerability by the port’s proposed encroachment of the Ennore Pulicat wetlands, local fisherfolk and citizen activists from Chennai protested against the project prompting all major political parties barring the ruling ADMK and the BJP from condemning Adani’s plans for the region.
Pablo Brait of Market Forces, one of the signatories to the letter, said “the evidence we have presented is damning. The S&P-owned Dow Jones Sustainability Index must uphold the credibility of its index by reviewing Adani Ports’ inclusion.”
Update: S&P responded to the letter on March 18 with a single line email to market forces— “We have escalated this to the relevant Media and Stakeholder Analysis Analyst.” This process is expected to take up to two weeks. In case the index committee in the media and stakeholder analysis finds that the company is no longer behaving consistently with corporate governance standards, it may lead to deletion of the company from the DJI.