S&P Dow Jones removing Adani Ports & SEZ from their Sustainability Indices due to the company’s commercial relationship with the Myanmar military makes it clear that sustainability is no more a choice.
The Index, a division of US-based S&P Global, said that the decision was taken as Myanmar’s military has been accused of having committed serious human rights abuses under international laws, following a coup on February 1.
Adani Ports is building a $290 million port in Yangon on land leased from the military-backed Myanmar Economic Corporation (MEC). However, the company has in its defense said stated, “The lump sum, one-time payments made in exchange for the port project were completed as of December 2019”. But, the catch is that the commercial interest and association continues as part of an annual fee for lease of the property. Adani said, “In light of the current situation, all transactions with and payments to MEC and its subsidiaries have been terminated.”
The action by S&P Global could be an outcome of US-imposed sanctions against entities including MEC, which is part of the infamous SDN list — Specially Designated Nationals and Blocked Persons.
This points to the fact that experts do not only assess a company’s sustainability standards based on their operations, but also their partner of choice. This could be a wake-up call for Indian companies with global dreams to conduct thorough due diligence on the business partners as well or be held responsible for their actions.
The answer is not that simple, India and the world is trying to internalise the right template for assessment of the sustainability criteria. An expert points out that Myanmar is strategically important in the region for India to counter China’s dominance and many business groups were rolled out a red carpet to explore business opportunities. It could be debated that there was little understanding that a business association can be perceived as an alleged support in the future actions of the transacting partner.
Lessons to learn from the incident could be that sustainability is assessed in every aspect, even external partners of choice and more importantly, the world is geared up to create an ecosystem of awareness and acceptance by putting pressure from all corners, which may cause collateral damage to those caught in the middle.