Highlights:
- Tesla loses spot in S&P 500’s ESG Index
- A spoke person said, Tesla ”lacks a low carbon strategy”
- Elon Musk goes to Twitter, calls ESG a ‘’scam’’
On May 18th, 2022, the S&P 500 made the decision to remove Tesla from the S&P 500 ESG Index. This is a result of growing concerns linked to racial discrimination at its Fremont factory and autopilot crashes.
Musk then lashed out in a series a tweets, labeling ESG a ‘’scam.’’
The news broke following a growing push for oversight on Environmental, Social & Governance (ESG) criterion.
Back in March 2022, Elon Musk and Marc Andressen went to Twitter, expressing their displeasures on the hypocrisies within ESG regulatory frameworks. Musk criticized ESG frameworks in Europe, amid the Russia/Ukraine war.
Musk described the regulatory frameworks within ESG investing being ‘’twisted to insanity.’’ This is a result of frameworks being altered at a political whim. European ESG funds that were primarily against defense stock companies, were suddenly allowed to buy them.
This made it extremely difficult for Musk to take ESG investing seriously.
Elon Musk is arguably the most prominent renewable energy entrepreneur of our generation. However, ESG regulatory guidelines continue to work against him and Tesla.
In a series of tweets, Musk said ‘’Exxon ranked top ten best in world for environmental, social & governance (ESG) by S&P 500, while Tesla didn’t make the list.’’
Furthermore, he said ‘’ESG is a scam. It has been weaponized by social justice warriors.’’
Musk’s comments do not come as a surprise for most, due to his extreme criticisms of ESG investing. While he does raise some great concern regarding ESG, it is important to understand that ESG criteria does not only cover the environment.
Tesla ESG Index: Final Takeaway
According to a 2021 ESG global survey, 51% of investment managers outlined ‘’social’’ as the hardest component to integrate into their investment analysis. As the social component of ESG continues to gain dominance, publicly traded companies will have to shift focus to their operations and Equity, Diversity & Inclusion within their ESG and sustainability goals.
With a growing push for sustainability and regulatory oversight on ESG, this may not be the last time we see a company as prominent as Tesla kicked from the S&P ESG Index.
