Tesla, the world’s largest electric vehicle manufacturer, has been dropped from S&P’s ESG index prepared for environmentally conscious investors due to flaws in its business conduct and, ironically, aspects of the company’s low-carbon strategy. The move sparked Tesla CEO Elon Musk, who shouted “ESG is a scam†
S&P removed Tesla from the index early this month as part of a regular rebalancing of companies that prioritize sustainability, but described the changes in detail only today, with a blog post from Margaret Dorn, head of S&P’s North American ESG indices. Apple, Microsoft, Amazon and Alphabet were the highest ranked companies on the list, which assesses companies’ overall environmental impact, sustainability efforts and corporate culture. Curiously, oil giant Exxon Mobil was in the top 10 of the index, while Tesla was in the bottom 25%, making it ineligible for inclusion.
Tesla “was pushed further down against its peers in the global industry group” who made improvements in their operations and because of “Tesla’s (lack of) low-carbon strategy and business codes of conduct,” Dorn said. The company was also charged with “two separate events surrounding claims of racial discrimination and poor working conditions at Tesla’s Fremont plant, as well as handling the NHTSA investigation after multiple deaths and injuries were linked to its autopilot vehicles. … While Tesla may have a role in taking fuel-powered cars off the road, it has fallen behind its competitors when examined through a broader ESG lens.
“While Tesla may have a role in taking fuel-powered cars off the road, it has fallen behind its competitors when examined through a broader ESG lens.”
From Tesla’s earliest days, Musk has committed the company to leading a revolution in clean transportation and energy, and no manufacturer has done more to push the auto industry to switch to electric vehicles from cars and trucks to carbon. Yet Tesla is also facing lawsuits alleging that discrimination against black workers in California, it recently settled a clean air violation case with the US EPA and is awaiting the outcome of a federal investigation of the partially automated Autopilot feature associated with numerous accidents.
“Exxon has been rated in the top ten of the world’s best in environmental, social and governance (ESG) by the S&P 500, while Tesla failed to make the list! ESG is a scam,” Musk tweeted Wednesday. “It’s armed by fake social justice fighters.”
The billionaire, who has become increasingly strident in his political remarks, has had increasingly tense relations with government agencies in the US, including the Securities and Exchange Commission, National Highway Traffic Safety Administration, Occupational Health and Safety Administration and National Labor Relations Board (due to his involvement in the union activities at the Tesla factory in Fremont, California).
The S&P move also appeared to amplify Musk’s growing hostility to Democratic politicians and policy, a sentiment he shared at the All In Summit in Miami earlier this week.
“In the past I voted for Democrat because they were (mostly) the kindness party. But they have become the party of division and hatred, so I can no longer support them and will vote Republican,” he tweeted on Wednesday. “Now watch their dirty tricks campaign against me unfold.”
Tesla shares fell about 7% to $709.32 in afternoon trading on Nasdaq amid a broad sell-off in the market. They are down nearly 41% this year.