Adani Green’s 87.3 ESG Score Tops India List, But Rating Disclosure Patterns Raise Questions

Adani Green Energy has achieved the highest ESG score of 87.3 among Indian companies rated by CareEdge-ESG, according to a company announcement. Yet the same corporate group has faced sustained international scrutiny over governance practices and short-seller allegations in recent years.

The rating places Adani Green ahead of other Indian corporates in CareEdge-ESG’s assessment framework. CareEdge-ESG bases its evaluation on environmental, social, and governance risks and opportunities, benchmarking companies across multiple indicators and industry peers.

ESG rating agencies operate with different methodologies and weightings. What CareEdge-ESG prioritizes in its scoring may differ significantly from that of international rating agencies, which have taken a more cautious stance on certain Adani group entities. The divergence in ESG assessments across rating agencies has become a recurring theme in Indian corporate disclosures.

The timing of this disclosure also warrants attention. ESG scores are increasingly used by institutional investors for allocation decisions and by companies for stakeholder communication. A high-profile ESG rating can help rebuild investor confidence and support financing activities, particularly in the renewable energy sector where ESG credentials directly impact capital access.

Rating shopping remains a legitimate but underexplored dynamic in ESG assessments. Companies typically engage multiple rating agencies and may choose to highlight the most favourable scores in their public communications. The regulatory framework around ESG rating disclosure in India does not mandate comprehensive reporting of all ratings received.

Board oversight of ESG reporting presents specific challenges. Directors must evaluate not just the scores themselves, but also the methodologies behind them and the completeness of the disclosures to stakeholders. The reputational and financial implications of ESG ratings make this a material governance consideration.

My Boardroom Takeaway: Independent directors reviewing ESG rating disclosures should ask management for a comprehensive view of all ESG assessments received, not just the highest scores. Audit committees may wish to scrutinise whether ESG rating selection and disclosure practices align with the company’s broader transparency commitments and stakeholder communication strategy.