Tesla was kicked out of the S&P 500′s ESG index , Why?
Why Tesla was kicked out of the S&P 500′s ESG index ???
- In a blog post Wednesday, the S&P explained why it kicked Tesla out of its ESG index earlier this month.
- Tesla was removed from the S&P ESG index list due to concerns about malfunctions and low environmental, social and governance standards, among other problems facing the world's most famous electric car maker.
- It said that Tesla’s “lack of a low-carbon strategy” and “codes of business conduct,” along with racism and poor working conditions reported at Tesla’s factory in Fremont, California, affected the score.
- Tesla CEO Elon Musk has called ESG metrics the “Devil Incarnate.”
The S&P 500 booted electric vehicle maker Tesla from its ESG Index as part
of an annual update to the list. Meanwhile, Apple, Microsoft, Amazon and even
oil and gas multinational Exxon Mobil were still included on the list.
The S&P 500 ESG Index uses environmental, social and governance data to
rank and effectively recommend companies to investors. Its criteria include
hundreds of data points per company that pertain to the way businesses affect
the planet and treat stakeholders beyond shareholders — including customers,
employees, vendors, partners and neighbors.
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| Tesla shares fell after this news |
Changes to the index took effect on May 2, and a spokesperson for the index
explained why they were made in a blog post published Wednesday.
It said that Tesla’s “lack of a low-carbon strategy” and “codes of business
conduct,” along with racism and poor working conditions reported at Tesla’s
factory in Fremont, California, affected the score. Tesla’s handling of an
investigation by the National Highway Transportation Safety Administration
also weighed on its score.
While Tesla’s stated mission is to accelerate the world’s transition to
sustainable energy, in February this year it settled with the Environmental
Protection Agency after years of Clean Air Act violations and neglecting to
track its own emissions. Tesla ranked 22nd on last year’s Toxic 100 Air
Polluters Index, compiled annually by U-Mass Amherst Political Economy
Research Institute — worse than Exxon Mobil, which came in 26th. (The index
uses data from 2019, the most recently available.)
In Tesla’s first-quarter filing the company also disclosed it is being
investigated for its handling of waste in the state of California, and that
it had to pay a fine in Germany for failures to meet “take back” obligations
in the country for spent batteries.
Meanwhile, California’s Department of Fair Employment and Housing sued Tesla
over anti-Black harassment and discrimination in its Fremont car plant. The
agency says it found evidence that Tesla routinely kept Black workers in
low-level roles at the company, gave them more physically demanding and
dangerous assignments and retaliated against them when they complained about
racist slurs.
Last year, the National Labor Relations Board said Tesla had engaged in
unfair labor practices, as well.
“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,” the S&P spokesperson wrote.
Tesla CEO Elon Musk griped about the index on Wednesday morning on Twitter,
where he boasts more than 90 million followers, saying S&P Global
Ratings has “lost their integrity.”
In an earlier tweet on Musk wrote: “I am increasingly convinced that corporate ESG is the Devil Incarnate.”.@SPGlobalRatings has lost their integrity
— Elon Musk (@elonmusk) May 18, 2022
I am increasingly convinced that corporate ESG is the Devil Incarnate
— Elon Musk (@elonmusk) April 3, 2022
In a company impact report that followed, Tesla wrote:
“Current environmental, social and governance (ESG) reporting does not measure the scope of positive impact on the world. Instead, it focuses on measuring the dollar value of risk / return. Individual investors — who entrust their money to ESG funds of large investment institutions — are perhaps unaware that their money can be used to buy shares of companies that make climate change worse, not better.”
In that report, Tesla contended that other automakers could achieve higher ESG ratings even if they barely reduce their greenhouse gas emissions and continue manufacturing internal combustion engine vehicles.
Tesla shares closed down more than 6% Wednesday amid a broad market sell-off. The company’s stock is down more than 30% this year.
