Norway’s Sovereign Wealth Fund To Exclude Adani Ports Over Ethical Concerns

Adani Ports and Special Economic Zone (APSEZ) has been reportedly excluded from the Norwegian central bank; and Norges Bank’s $1.3 trillion Government Pension Fund Global (GPFG)  based on the Council of Ethics’ recommendation. This council highlighted an “unacceptable risk” of APSEZ’s involvement in serious human rights violations, particularly in war or conflict zones. The excluded entities include India’s Adani Ports and Special Economic Zone (APSEZ), U.S.-based L3 Harris Technologies, and China’s Weichai Power.

Controversy Over Myanmar Port Business

APSEZ has been under scrutiny since March 2022 due to its port operations in Myanmar, a region sensitive to conflict. The Council on Ethics decided to exclude APSEZ after the company failed to provide sufficient information about the buyer of its Myanmar port business, sold in May 2023. The council could not verify if APSEZ still had ties to the buyer, raising concerns about transparency and the potential for human rights violations.

Impact of Exclusion

The exclusion from Norway’s GPFG, the world’s largest sovereign wealth fund, is a major setback for  APSEZ. The fund’s assets and global influence mean its investment decisions can significantly affect a company’s financial health and reputation globally. For APSEZ, this could hinder its possibility of attracting capital from other foreign institutional investors. Following the announcement, shares of Adani Ports fell by over 1.8% to Rs 1,320.55 today, which had previously closed at Rs 1,344.75, making the company’s total market value now around Rs 2.88 lakh crore. 

APSEZ under Scrutiny

APSEZ is facing additional scrutiny over its business practices and environmental impact, complicating its further expansion plans and reputation in the market. The exclusion by Norway’s GPFG brings out the need for APSEZ to show transparency and adopt better practices.

Check: Adani Group Stocks

Conclusion: While the exclusion poses a challenge, it also offers APSEZ an opportunity to reform its ESG practices. The company’s response to this ethical setback will be crucial in determining its future relationship with global investors, strengthening its commitment to transparency will be key to reducing further investor concerns.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.