For now, the 10 companies that make up the Adani conglomerate are continuing to bleed money, having lost roughly $150 billion in combined market capital since the Hindenburg findings were released, according to data compiled by Bloomberg.
Tim Buckley, director at Australian think tank Climate Energy Finance, described the investor losses as an "absolute failure" on the part of regulators and index providers.
Regulators need to stay on top of "the biggest systemic risks, and to me, one of the big systemic risks is the index funds and the lack of clarity and regulatory definition."
About 500 ESG funds in Europe hold Adani stocks, according to the latest available data compiled by Bloomberg. 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. A handful of so-called Article 9 funds, which are required to target 100% sustainable investments, also hold Adani stocks.
Funds with at least $10 billion in assets under management tracking MSCI ESG indexes held shares in Adani Enterprises alone when the Hindenburg report was published, according to an analysis by the Anthropocene Fixed Income Institute, which has been studying the Adani Group since mid-2020.
Though MSCI still holds Adani stocks in its ESG indexes, asset managers such as BlackRock are reducing their exposure to the conglomerate through other indexes. S&P Global said this month it was removing Adani Enterprises from its Dow Jones Sustainability Indexes. Sustainalytics has downgraded the ESG scores of several Adani companies.
MSCI has made no changes to the ESG ratings of Adani companies since the Hindenburg report. Adani Total Gas and Adani Green Energy both hold an A rating. Three entities — Adani Enterprises, Adani Power and Adani Ports & Special Economic Zone — hold MSCI's lowest ESG rating, CCC.
"Many of the Adani companies already performed poorly on corporate governance," a spokesperson for MSCI said. MSCI has previously assessed a range of ESG controversies tied to Adani, including "community opposition to specific projects and questionable business ties," the person said.