Tesla and the S&P 500’s ESG Index : The Reasons Behind The Elimination of Tesla
Tesla Inc.
As part of its annual update, the S&P decided to remove Tesla from the index, while other companies such as Apple, Microsoft, Amazon, and Exxon remained on the list.
The S&P 500 ESG index awards companies one hundred data points based on their environmental impact and the working environment for their stakeholders (customers, employees, investors, and so on).
The organization officially published the reasons behind this decision, including a "lack of low-carbon strategy" and reported racism as well as poor working conditions in their facilities in Fremont, California. The way Tesla handled an investigation by the National Highway Traffic Safety Administration also affected its score.
"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. All these events come in contradiction with the official mission of Tesla, which is committed to accelerating the transition to sustainable energy.
However, the company was accused of neglecting to track its emissions and of breaching the Clean Air Act for years. Tesla even ranked 22nd in last year’s Toxic 100 Air Polluters Index, worse than Exxon Mobil, which was in 26th place.
In Tesla’s first-quarter filing, the company confessed to having to pay a fine in Germany for failing to fulfill "take back" responsibilities for used batteries in the country, and was investigated in California for its waste handling.
Tesla is also blamed for retaliating against its employees, who protested low-level jobs and more physically demanding and dangerous work.
Elon Musk tweeted on Wednesday morning how frustrated he was with the decision of the S&P Global Ratings, saying that they had "lost their integrity."
On that same day, the value of Tesla’s shares declined by more than 6 percent. This year, the corporation's stock has dropped by more than 30 percent in total.
He also shared previously on his 90 million followers account: "I am increasingly convinced that corporate ESG is the Devil Incarnate."
Tesla also argued that other manufacturers could achieve superior ESG ratings even if they just minimally reduced emissions and continued producing internal combustion engine vehicles.
The company's report mentioned: "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."
Source : CNBC
