Tesla, the world’s leading maker of electric vehicles, has been cut from S&P’s ESG Index created for environmentally conscious investors owing to flaws in its business conduct and, ironically, aspects of the company’s low-carbon strategy. The move inflamed Tesla CEO Elon Musk, who caviled, “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 didn’t detail the changes until 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 ranked among the index’s top ten while Tesla scored in the bottom 25%, making it ineligible for inclusion.
Tesla “was pushed further down the ranks relative to its global industry group peers” that made improvements in their operations and due to “Tesla’s (lack of) low carbon strategy and codes of business conduct,” Dorn said. The company was also faulted for “two separate events centered around claims of racial discrimination and poor working conditions at Tesla’s Fremont factory, as well as its handling of the NHTSA investigation after multiple deaths and injuries were linked to its autopilot vehicles. While Tesla may be playing its part in taking fuel-powered cars off the road, it has fallen behind its peers when examined through a wider ESG lens.
“While Tesla may be playing its part in taking fuel-powered cars off the road, it has fallen behind its peers when examined through a wider ESG lens.”
From Tesla’s earliest days Musk committed the company to lead a revolution in clean transportation and power, and no manufacturer has done more to push the auto industry to shift to electric vehicles from carbon-fueled cars and trucks. Yet Tesla is also contending with lawsuits alleging discrimination against Black employees in California, it recently settled a clean air violations case with the U.S. EPA and is awaiting the outcome of a federal investigation of its partially automated Autopilot feature that’s been linked to numerous accidents. On Wednesday, after the S&P blog, the Transportation Department said it opened yet another review of a fatal Tesla crash involving Autopiloto.
“Exxon is rated top ten best in world for environment, social & governance (ESG) by S&P 500, while Tesla didn’t make the list! ESG is a scam,” Musk tweeted on Wednesday. “It has been weaponized by phony social justice warriors.”
The billionaire, who has grown increasingly strident in his political comments, has had increasingly tense relations with government agencies in the U.S., including the Securities and Exchange Commission, National Highway Traffic Safety Administration, Occupational Health and Safety Administration and National Labor Relations Board (owing to his interference with unionization efforts at Tesla’s Fremont, California, plant).
S&P’s move also appeared to amplify Musk’s growing animus toward Democratic politicians and policies, a sentiment he previously shared this week at the All In Summit in Miami.
“In the past I voted Democrat, because they were (mostly) the kindness party. But they have become the party of division & hate, 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 6.8% to $709.81 in Nasdaq trading on Wednesday, amid a broad market selloff. They’re down 41% this year.
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