After Tesla Was Removed From The Index, Musk Called ESG “An Outrageous Scam”
Tesla Inc.’s score on environmental, social, and governance standards has remained “pretty steady” over the past year, according to S&P Dow Jones Indices, although it has fallen behind improving worldwide peers.The world’s most well-known electric vehicle manufacturer has dropped out of the S&P 500 ESG Index.
The index provider also cited concerns related to working conditions and the firm’s handling of an investigation into deaths and injuries linked to its driver-assistance systems. A lack of low-carbon strategy and codes of business conduct also counted against Elon Musk’s company, it said.
“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,” Margaret Dorn, senior director and head of ESG indices for S&P Dow Jones in North America, said in a Tuesday blog post.
CEO Tesla writing on Twitter on Wednesday Musk described ESG as a “scam”
In a recent annual report, Tesla called ESG measurements “fundamentally incorrect,” while Musk declared in an April tweet that “corporate ESG is the devil incarnate.”
Dorn wrote that an analysis seeking to identify risks to the company stemming from any controversial incidents identified:
“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.”
Both had a negative impact on Tesla’s score, she said.
The S&P 500 ESG Index is tracked by at least 16 exchange-traded funds, according to the S&P Dow Jones website. Berkshire Hathaway, Johnson & Johnson and Meta Platforms Inc. are among other large companies that also don’t make the list.
Kristin Hull, founder of Nia Impact Capital, a sustainability fund in Oakland, California that has been pressing Tesla to address worker issues, said she was relieved that there was “finally accountability.”
“This move signals to other companies that ESG standards, and improving them, matters,” she said. “And that there will be material, financial implications.”
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