Why Tesla was excluded from the S&P 500 ESG Index

An aerial view of the Tesla Fremont Factory on May 13, 2020 in Fremont, California.

Justin Sullivan | beautiful pictures

The S&P 500 Index removed electric vehicle maker Tesla from the ESG Index in an annual rebalancing. While Apple, Microsoft, Amazon and even multinational oil and gas Exxon Mobil was included in the list.

The S&P 500 ESG Index uses environmental, social and governance data to effectively rank and recommend companies to investors. Its criteria include hundreds of data points for each company related to how the business affects the planet and treats stakeholders beyond shareholders – including customers, employees, suppliers, partners and neighbors.

The changes to the index took effect on May 2, and a spokesperson for the index explained why they were implemented in a short period of time. blog post published Wednesday.

It said Tesla’s “lack of a low-carbon strategy” and “codes of business conduct”, along with reported racism and poor working conditions at Tesla’s factory in Fremont, California , has affected the score. Tesla’s handling of the National Highway Traffic Safety Administration’s investigation also affected Tesla’s 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 violating the Clean Air Act and neglecting to track its own emissions. Tesla ranked 22nd last year Index of 100 people causing harmful air pollutioncompiled annually by the U-Mass Amherst Institute for Political Economy – trails Exxon Mobil, which ranks 26th. (The index uses data from 2019, the most recent available.)

In Tesla’s first quarter filing The company also revealed that it is being investigated for waste behavior in the state of California, and that it has had to pay a fine in Germany for failing to meet its “collection” obligations in the country for its used batteries. use.

Meanwhile, California’s Department of Fair Employment and Housing sued Tesla for anti-black harassment and discrimination in the Fremont car factory. dangerous missions and retaliate against them when they complain about racist slurs.

Last year, National Labor Relations Board said Tesla has also engaged in unfair labor practices.

An S&P spokesperson wrote: “While Tesla may be engaged in getting fuel-powered cars off the road, it has lagged behind its peers when viewed in the public eye. larger ESG glass”.

Tesla CEO Elon Musk made clear the metric Wednesday morning on Twitter, where he boasts more than 90 million followers, saying that S&P Global Ratings has “lost their integrity. “

In an earlier tweet, Musk wrote: “I increasingly believe that the company’s ESG is the Incarnation of the Devil.”

In the company’s impact statement that followed, Tesla wrote:

“The current Environmental, Social and Governance (ESG) Report does not measure the extent of positive impacts around the world. Instead, it focuses on measuring risk/reward value. in dollars. institutions – perhaps unaware that their money could be used to buy shares in companies that make climate change worse, not better.”

In that report, Tesla suggested that other automakers could achieve higher ESG ratings even if they made virtually no reductions in greenhouse gas emissions and continued to produce internal combustion engine vehicles.

Tesla shares were trading down more than 5% midday Wednesday amid a widespread market sell-off. The company’s shares have fallen more than 30% this year.

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