Adani Ports raises green profile with B score in management band of CDP framework

P Manoj Mumbai | Updated on December 22, 2020

The score could help the firm lower its borrowing costs

Adani Ports & Special Economic Zone Ltd (APSEZ) has secured a 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 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 fulfiling commitment towards reducing impact on climate change, APSEZ said in a statement.

Also read: Long road to lower emissions

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 organisation formerly known as the Carbon Disclosure Project.

In the ports and logistics sector, 22 per cent companies fall in the disclosure band, 17 per cent in the awareness band, 41 per cent in the management band and 20 per cent 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 and energy as compared to the global average.

Also read: Declare ‘climate emergency’: UN chief Antonio Guterres tells world leaders

APSEZ received B score in CDP - water security, similar to 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 incentivises this as a management action,” the company said.

Published on December 22, 2020

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