JPMorgan's Bold Move: Adani Group's Stocks Removed from ESG Fund
JPMorgan's Bold Move: Adani Group's Stocks Removed from ESG Fund

JPMorgan’s Bold Move: Adani Group’s Stocks Removed from ESG Fund

JPMorgan Chase & Co.’s asset management unit has sold off its holdings in Adani empire from its ESG portfolios. Bloomberg’s analysis shows that while JPMorgan has exited its Adani stake, other major investment firms like BlackRock Inc. and DWS Group are still holding Adani stakes in ESG funds that track indexes offered by MSCI Inc.

JPMorgan’s Global Emerging Markets Research Enhanced Index Equity ESG UCITS ETF sold more than 70,000 shares in cement manufacturer ACC Ltd., a stake it had held since May 2021.

Meanwhile, JPMorgan’s AC Asia Pacific ex Japan Research Enhanced Index Equity ESG UCITS ETF sold approximately 1,350 shares it had held in the same company since July last year. As a result, JPMorgan now has no further exposure to any part of the Adani conglomerate via ESG funds.

JPMorgan's Bold Move: Adani Group's Stocks Removed from ESG Fund
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BlackRock and JPMorgan declined to comment, while DWS said that it does not use any proprietary ESG assessment for its MSCI-tracking ETFs. MSCI confirmed that it has not adjusted any Adani ESG ratings but will implement the results of its regular review of its ESG and climate indexes at the end of this month.

JPMorgan Chase & Co’s asset management unit has sold its stakes in Adani conglomerate companies from its ESG portfolios. The move was made following the publication of a report by Hindenburg Research on January 24th, which accused Adani of fraud and market manipulation. JPMorgan still holds Adani stocks in non-ESG funds.

MSCI ESG indexes still hold Adani stocks, but asset managers such as BlackRock are reducing their exposure to the conglomerate through other indexes. S&P Global Inc. recently removed Adani Enterprises from its Dow Jones Sustainability Indexes, and Sustainalytics has downgraded the ESG scores of several Adani companies.

Global ESG Fund Investemts

About 500 ESG funds in Europe hold Adani stocks, and most of the holdings are contained in funds registered as Article 8, meaning they’re required to “promote” environmental, social and governance goals under European Union rules.

The Adani Group has rejected the claims made in the report and hired lawyers and communications specialists to improve its image. However, the group’s 10 companies are continuing to lose money, with roughly $150 billion lost in combined market capital since the Hindenburg findings were released, according to Bloomberg data.

MSCI has not changed the ESG ratings of Adani companies since the Hindenburg report, though Adani Enterprises Ltd., Adani Power Ltd., and Adani Ports & Special Economic Zone Ltd. hold MSCI’s lowest ESG rating, CCC.

The use of Adani Green Energy shares to support Adani’s coal unit could further increase ESG concerns and hinder funding access due to Adani Group’s complex debt structure and weak transparency. Regulators need to stay on top of index funds and lack of clarity and regulatory definition to manage systemic risks.