On Friday, MSCI ESG Research stated that it had revised some of its environmental, social, and governance assessments of Adani Group companies following the Indian conglomerate’s involvement in a short-selling scandal over the past few weeks.
After Hindenburg Research published a report on January 24, accusing Adani Group of stock manipulation and improper use of tax havens, and raising concerns over the group’s debt levels, seven Adani Group companies lost over $100 billion in market value combined. As a result, MSCI ESG Research recently changed some of its environmental, social, and governance assessments of Adani Group entities. Despite these allegations, Adani has denied any wrongdoing.
“On March 3, we downgraded our assessment of the Hindenburg-related controversy cases to ‘moderate’ from ‘minor’ following new developments in the relevant cases,” MSCI ESG Research said in a statement to Reuters.
It said the downgrade and resulting score changes did not lead to any changes in overall ESG Ratings of each company.
Entities rated by MSCI ESG Research include Adani Green Energy, Adani Power, Adani Total Gas, Adani Transmission and Adani Enterprises, according to the statement.
This week, MSCI ESG Research flagged all its covered Adani Group entities for the metric of accounting investigations, while some were flagged for the securities valuations metric, it said.
MSCI’s ESG Controversies scoring and flagging system alerts investors to potential reputational risks, according to a factsheet produced by the agency.
“Across various Adani Group entities, MSCI ESG Research has identified issues relating to governance, board independence, related party transactions, and controlling shareholders,” the company said.
Since the short-seller report release, MSCI ESG Research has added “Bribery and Fraud” and “Governance Structures” controversy cases to all Adani Group companies in its coverage, it said.
Adani Group did not immediately respond to a request for comment sent outside of business hours.
Company representatives have met fixed-income investors over the past two weeks in an international roadshow.
Sustainability ratings company Sustainalytics downgraded corporate governance-related scores for some Adani Group companies last month.
MSCI ESG Research said on Friday it was closely monitoring developments in the Adani case, “including any associated potential launch of regulator-driven investigations or any ongoing developments related to governance structures, audit and accounting practices.”
