Industry Updates

Climate campaigners urge major index providers to drop Adani bonds

MSCI, SPDJI, Bloomberg and Morningstar Indexes were sent a letter from Toxic Bonds

Theo Andrew


An activist group focusing on the impact of the bond market on climate change has written to four of the largest index providers urging them to remove Adani bonds from their mainstream indices.

A letter by the Toxic Bond initiative called on MSCI, S&P Dow Jones Indices (SPDJI), Bloomberg Index Services (BIS) and Morningstar Indexes – all of which are part of the Net Zero Service Providers Alliance (NZSPA) – to remove the company’s bonds from their indices.

The group demanded a complete removal until the company “unequivocally halts coal expansion” and adopts a 1.5°C transition plan.

Tracked by several ETFs, Toxic Bonds said the index providers have facilitated investments that destroy the climate including via its coal-fired power and mining expansion plans in India and Australia.

“ETFs not only hold fossil fuel assets but directly finance fossil fuel companies by buying large quantities of corporate bonds as they are issued on the primary market, therefore directly contributing to capital flows that destroy the climate,” Alice Delemare Tangpuori, coordinator of Toxic Bonds, said in the letter.

“Our research shows that [large index providers] have helped facilitate such investments in the Adani Group through the inclusion of its corporate bonds in several indices tracked by ETFs.”

Toxic Bonds said it was seeking a response to the letter by 2 March.

SPDJI said it monitors market developments and events on an ongoing basis and added it will not comment on changes before they have been publicly announced.  

Rob Edwards, director of product management at Morningstar Indexes, said: "Our job as an index provider is to follow our stated methodology, which in this case is to remove companies that are deemed to have a certain level of ESG controversy as measured by Morningstar Sustainalytics. 

"Once this kind of problem is detected, our response will follow our stated rules and reflect the specifics of the case."

MSCI and BlS did not respond to a request for comment.

It added Adani’s fossil fuel growth has been increasingly funded by the global bond market, with the firm’s companies now the largest Indian issuer of foreign-denominated bonds, raising more than $9bn from foreign investors in the last five years.

“Phasing out coal is the first logical step to comply with your commitments as a member of the NZFSPA,” Tangpouri added.

“In line with these commitments, we ask you to change index rules to exclude all companies involved in coal expansion from your mainstream indices and engage in dialogue with asset owners and asset managers on using these indices for benchmarking and investment solutions.”

The group also called for the removal of all companies involved in coal expansion from the indices.

Adani Enterprises’ share price has fallen 65% following allegations of fraud and stock price manipulation by short seller Hindenburg Research on 25 January. The group’s owner Gautam Adani has described the claims as baseless.

It comes as MSCI previously said it would cut the weightings of four Adani sub-companies, although it has delayed two of these cuts, while SPDJI has removed Adani Enterprises from its sustainability indices. FTSE Russell said it was also reviewing index changes for Adani Group stocks.

MSCI currently allocates to the four Adani Group companies in its all-country world (ACWI), emerging markets, Asia and India indices, with the latter weighting more than 3% to the company.

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