Adani Ports raises green profile with a B score in management band from CDP

Adani Ports & Special Economic Zone (APSEZ) Ltd has secured B-score in the management band as per the CDP score framework on climate change, helping India’s biggest private port operator raise its green profile by neutralising the impact of thermal coal exposures, translating into more investor interest and lower borrowing costs.

The score is higher than the intermodal transport and logistics sector average of D, Asia regional average of D and global average of C.

Analysts had raised concerns that more climate risk is likely to be priced into Adani Ports’ bonds, particularly as more globally significant financial institutions (GSFI) are specifically excluding thermal coal exposures entirely.

An entity with a clear ‘green’ profile, though, could be given the benefit of doubt, as rating agencies could view their international funding base positively.

This assumes significance as APSEZ is increasingly relying on dollar bond issues for their funding needs.

The score highlights APSEZ’s stewardship in setting competitive benchmarks in fulfilling commitment towards reducing impact on climate change, APSEZ said in a statement.

A carbon disclosure rating is a measure of the environmental sustainability of a company, based on voluntary disclosures by the company itself. The practice is intended to help investors who wish to incorporate environmental, social, and governmental (ESG) factors into their investment decision-making process.

The most widely used carbon disclosure ratings are administered by CDP, a United Kingdom-based non-profit organization formerly known as the Carbon Disclosure Project.

In the ports and logistics sector, 22% companies fall in the disclosure band, 17% in the awareness band, 41 % in the management band and 20% in the leadership band.

APSEZ’s performance was good in the areas of value chain engagement, targets, scope 1 and 2 emissions, risk management processes, opportunity disclosure, governance & energy as compared to the global average.

APSEZ received a B score in CDP – water security, which is the same as the intermodal transport and logistics sector average of B, Asia regional average of B and global average of B.

APSEZ performed well in the areas of water risk assessment, water policies, targets and goals, integrated approaches to environmental challenges, business strategy and business impacts.

“It signifies that APSEZ is equipped to make efforts to mitigate risk, advance environmental accounting in at-risk sites, make risk assessments more robust and comprehensive, implement an environmental policy and integrate environmental issues into business strategy. Management scoring for climate change thus incentivizes this as a management action,” the company said.