Investors Criticise Tesla for not Reporting ESG Impacts

Published on: 30 June 2022
by KnowESG

Tesla Inc. has been criticised by investors with over $31 trillion in assets for failing to disclose their environmental impacts using global reporting standards.

Amundi SA, Aviva Plc, and Nuveen are among the institutional investors urging Tesla, Saudi Aramco, Exxon Mobil Corp., Glencore Plc, and Volvo Group to report climate, water, and forest impacts through CDP, the non-profit organisation whose disclosure system is utilised by over 13 000 firms.

Asset managers pursuing environmental, social, and governance (ESG) objectives have increased pressure on the companies in their portfolios to utilise standard reporting measures to obtain transparency and avoid any greenwashing.

It is despite increasing regulatory scrutiny of the business and increasingly stringent regulations intended to reduce greenhouse gas emissions before it is too late.

Laurent Babikian, joint global director of capital markets at CDP, said in a statement:

"Climate change, deforestation and water security present material risks to investments. Companies that are failing to disclose their impact risk trailing behind their competitors in their access to capital.”

This year's campaign is the sixth organised by CDP, and the number of participating financial institutions has increased by a record 57 per cent.

Tesla, whose supremacy in the electric vehicle market is a staple of climate funding, did not respond to emails for comment. Elon Musk, the CEO of Tesla, has previously lambasted the ESG business, even referring to it as a "scam."

After Tesla was banned from an S&P Global index that analyses firms' environmental, social, and governance requirements, he also criticised ESG investing philosophy. According to statistics provided by Bloomberg, nearly 900 so-called light and dark green funds hold Tesla stock.

This year, investors participating in the campaign to convert businesses to the CDP reporting system are targeting 1,473 businesses in total. Babikian stated that enterprises adhering to CDP guidelines will be better equipped to deal with more stringent ESG rules whenever they become a reality.

The US Securities and Exchange Commission is to propose stringent climate disclosure requirements that, in some instances, will require companies to report indirect, or so-called Scope 3 emissions.

Investors supporting the CDP campaign requested that the majority of the targeted corporations disclose their influence on climate change. Additionally, they sought more information regarding water and forest concerns.

Babikian stated that about 2,400 European corporations use the CDP framework for environmental reporting, placing them in the lead. It is anticipated that the number of nations having science-based emission reduction targets would increase.

Source: Bloomberg

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