‘ESG is a hoax’, says Musk after Tesla dropped from index

by

S&P Dow Jones excluded Tesla from its S&P 500 ESG Index, citing issues such as racial profiling and collisions linked to the autopilot’s autopilot system. The decision triggered a series of angry tweets from the company’s chief executive, billionaire Elon Musk.

Tesla’s exclusion from the index marks the growing debate over the metrics used to judge compliance with environmental, social and governance issues, grouped together under the acronym ESG.

Other reasons for Tesla’s removal from the index include the automaker’s failure to publish details related to its low-carbon strategy or codes of business conduct, said Margaret Dorn, director of S&P Dow Jones’ ESG indices for North America.

While Tesla appears to contribute to reducing carbon emissions through the thousands of electric cars it produces, the lack of information regarding the company’s industry peers should raise concerns for investors who rate the company on ESG criteria.

“You can’t just take a statement about a company’s mission at face value. You have to look at its practices in all these important dimensions,” she said.

Tesla declined to comment on the matter, but after the announcement, Musk tweeted that “(oil) Exxon is ranked in the world’s top ten in ESG by the S&P 500, while Tesla is not on the list! ESG It’s a hoax. It’s been used as a weapon by fake social justice warriors.”

Asked about Musk’s criticism, a representative of the index provider said that “the list is not a ranking of the best companies in terms of ESG”.

Exxon has a weight of 1.443% in the index while Apple has the largest at 9.657%.

Investors who say they are concerned about issues like diversity and climate change have poured billions into funds that claim to use ESG criteria to choose their assets.

But there is debate about how effective these funds are in promoting change or whether they can meaningfully incentivize companies on issues that should be addressed by government policy.

Tesla’s withdrawal is among a series of changes to the S&P 500 ESG since April 22. Among the additions are Twitter.

You May Also Like

Recommended for you