Abrdn: Scots capital firm has huge investment in embattled coal giant

AN Edinburgh investment company which markets itself as sustainable and sponsors major cultural events in Scotland holds £50 million worth of bonds issued by an Indian coal giant.

Abrdn – formerly known as Standard Life Aberdeen – owns 2% of all the bonds issued by Adani Group, an Indian conglomerate which saw its value plummet in recent weeks after short sellers in the US accused it of “brazen stock manipulation and accounting fraud”.

Adani is a major global producer of coal and owns coal-fired power plants across India. Coal is the dirtiest fossil fuel and burning it for energy is the leading cause of the climate crisis.

Abrdn sponsored the At Home programme at the Edinburgh International Festival (EIF) in both 2021 and 2022, which allowed audiences around the world to view performances online for free.

It is also the corporate partner of Scottish Ballet’s Safe to Be Me initiative, which aims to use dance to introduce topics “such as racism, homophobia, bigotry, ableism and transphobia” to young people.

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The website which outlines the partnership between EIF and abrdn notes that “when you invest in good things… good things happen”.

But activists have accused the investment firm of “enabling and profiting from climate destruction” by holding bonds in Adani.

One campaigner argued that sponsoring cultural events allows the “architects of the climate crisis to project an image of themselves as generous, progressive and green, giving them a social legitimacy they do not deserve”.

A spokesperson for EIF said it has an “ethical fundraising policy in place” and its commercial relationship with abrdn came to a “natural conclusion” after the 2022 edition of the festival.

The Ferret has contacted Adani for a response while abrdn declined to comment.

A stock market rout saw Adani lose half of its market value in just 10 days after it was the subject of a scathing report by the US investment research firm, Hindenburg Research, which announced it was “shorting” Adani bonds. .

Short selling is a form of investing where the investor makes a profit if the value of a stock or bond falls, so Hindenburg, as an activist short-seller, stood to benefit from the collapsing value of Adani bonds.

The personal wealth of Gautam Adani – the founder and chairman of the conglomerate who was richer than Bill Gates or Warren Buffett until a few weeks ago – has been slashed since the report was published on January 24.

Alongside the accusations of accounting fraud, the report questioned billions of dollars worth of “suspicious dealings” with Gautam Adani’s brother, Vinod, which involved a “labyrinth of offshore entities” which Hindenburg believes were used for stock manipulation.

The report also raised concerns about the substantial amount of debt taken on by Adani companies and concluded that seven of them were overvalued.

Adani published a 413-page response to the report which threatened legal action and accused Hindenburg of a “calculated attack” on India. Gautam Adani is considered a close ally of the country’s president, Narendra Modi (above), and his conglomerate’s collapse has sent shockwaves through Indian markets.

Despite widely publicised plans to increase spending on green energy, the main source of Adani’s revenues remains coal and this side of the business continues to expand despite the threat of global heating.

Adani has invested over £2.5bn into new coal mines in India, Australia and Indonesia in the last decade. Its annual coal mining output also increased by 58% between 2021 and 2022, and Adani Enterprises recently won bids for two new commercial mines in India.

Adani has faced particular scrutiny from climate activists in Australia over its development of the Carmichael mine in Queensland.

Green campaigners have labelled the project a “carbon bomb” which will add a huge amount of climate pollution to the atmosphere over its 60-year lifespan.

Concerns have been raised that the project will destroy the ancestral lands and deplete the waters of indigenous peoples living close to the mine or the railway line which will transport coal from it.

The project is also expected to increase shipping traffic over a protected area of the Great Barrier Reef. Coal will be transported to a port near to the reef – a world heritage site.

Adani has disputed these claims, arguing it has “engaged every step of the way” with indigenous communities and that the mine will meet “strict environmental requirements”.

But similar accusations have been made in India, where activists, researchers and opposition politicians have raised concerns about the tactics Adani uses to win mining contracts, as well as the way it and Modi’s government acquire land from indigenous groups.

Adani’s activities are increasingly funded by global bond investors who have been told by environmentalists to stop financing the company unless it commits to “unequivocally halt” the expansion of its coal business.

The £50m in bonds held by abrdn make it the 12th biggest bondholder in the Indian conglomerate globally, according to Bloomberg market data seen by The Ferret.

The At Home programme by the EIF included online screenings of the festival’s closing concert by the Royal Scottish National Orchestra, a performance of Handel’s Saul at the Usher Hall, and a music session by the indie rock band, Arab Strap.

Abrdn describes itself as a sustainable investor and argues that environmental, social and governance considerations have been “integral” to its investment strategy for almost 30 years.

The environment and sustainability section of its website acknowledges that the world faces “interlinked environmental crises, from climate breakdown, extreme weather, and species loss to water scarcity and unsustainable food production”.

Abrdn is a member of the Net Zero Asset Managers initiative which aims to support global efforts to reach net zero greenhouse gas emissions by 2050.

Campaigners told The Ferret that abrdn is not living up to these commitments with its continued investment in Adani.

Andrew Taylor from Money Rebellion – an offshoot of Extinction Rebellion which sees the financial system as the root cause of the climate crisis – claimed that those with investments in Adani were “supporting a toxic mix of corruption, human rights abuses, land grabs and climate breakdown”.

“Adani’s expansion plans include developing more new thermal coal mining than any other private company in the world and making Carmichael the biggest coal mine in Australia,” Taylor said.

“Adani’s funders should have divested long ago. The next best time is now.”

Taylor’s view is also held by activist group Culture Unstained, which campaigns to end fossil fuel sponsorship of cultural events. It is currently protesting Adani’s sponsorship of an exhibition at London’s Science Museum on the ‘Energy Revolution’.

A spokesperson welcomed the news that the Edinburgh Festival’s relationship with abrdn had ended because “promoting a company that is enabling and profiting from climate destruction is clearly incompatible” with EIF’s commitments on sustainability.

They said: “Back in 2016, Edinburgh Festival was one of the first cultural organisations to end its sponsorship by BP after 34 years of partnering with the company.

“Sponsoring art, culture and sport allows the architects of the climate crisis to project an image of themselves as generous, progressive and green, giving them a social legitimacy they don’t deserve.”

An EIF spokesperson said: “Abrdn previously supported Edinburgh International Festival Opening Events and our 2021 and 2022 At Home digital programmes, after which the partnership came to its natural conclusion.

“The Edinburgh International Festival has an ethical fundraising policy in place, and we work closely with our partners to ensure our values are understood.”

Adani’s annual sustainability report notes that it is the conglomerate’s “duty to conduct ourselves as a business that enriches people’s lives and creates a sustainable value-chain”. “We are emphasising climate protection, increasing community outreach, and are empowering our people”, it adds.

Adani’s lengthy response to the Hindenburg report argued that it made “misleading claims around offshore entities” without any evidence.

The response said: “The document [Hindenburg’s report] is a malicious combination of selective misinformation and concealed facts relating to baseless and discredited allegations to drive an ulterior motive.

“It is tremendously concerning that the statements of an entity sitting thousands of miles away, with no credibility or ethics has caused serious and unprecedented adverse impact on our investors

“This is not merely an unwarranted attack on any specific company but a calculated attack on India, the independence, integrity and quality of Indian institutions, and the growth story and ambition of India.”

Hindenburg has said it would “welcome” any lawsuit taken against them and added that any such action would be “meritless”.

In July 2020, The Ferret revealed that abrdn – under its previous guise of Standard Life Aberdeen – had provided financial backing to the oil firm, Geopark, which was accused of endangering an indigenous group in the Peruvian Amazon.

The Wampis Nation of Peru’s Loreto region argued that Geopark workers entering its territories could spread Covid-19, which the group feared could be genocidal for indigenous peoples. Geopark dropped its plans to extract oil in the area shortly after our revelations.

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