An S&P Dow Jones Index executive told Reuters on Wednesday that it has removed electric car maker Tesla Inc from the widely-followed S&P 500 ESG index because of issues including racial discrimination and claims of accidents involving its Autopilot vehicles. Because of that, and Tesla CEO Elon Musk responded with a stern tweet. Including “ESG is a scam”.
That changes, as from May 2, the sustainability index also added soon-to-be Musk-controlled Twitter Inc. and oil refiner Philips 66, while leaving Delta Air Lines and Chevron Corp., according to an announcement.
The back-and-forth changes in the index reflect widespread debate about environmental, social and governance (ESG) issues, a metric used to judge corporate performance on a growing sector of investment.
Tesla has become the most valuable auto industry company by pioneering EVs and expanding into battery storage for the electric grid and solar power systems.
Factors contributing to its departure from the index include a lack of published details related to Tesla’s low-carbon strategy or code of business conduct, said Margaret Dorn, head of the S&P Dow Jones Index for North America, ESG Index, in an interview. .
Even if Tesla’s products help cut planet-warming emissions, Dorn said, its other issues and a lack of disclosure relative to industry peers may judge the company in environmental, social and governance (ESG) norms for investors. To worry should increase.
“You can’t just take a company’s mission statement at face value, you have to look at their practices in all those key dimensions,” she said.
Tesla representatives did not immediately respond to questions. The company has previously called the ESG methodology “fundamentally flawed”.
Musk tweeted https://twitter.com/elonmusk/status/1526958110023245829 that “Exxon is rated the top ten best in the world for Environmental, Social and Governance (ESG) by the S&P 500, while Tesla ranked Not made! ESG is one. Scam. It has been weaponized by fake social justice warriors.”
When asked about the tweet, a representative for the index provider said that Musk was using a listing on the company’s blog post https://www.indexologyblog.com/2022/05/17/the-rebalancing-act-of-the Would be mentioning. -SP-500-SG-index of the 10 largest components by market cap of the S&P 500 ESG Index after excluding Tesla and others. The list “is not a ranking of the best companies by ESG score,” the representative said.
Exxon now accounts for 1.443% of the weight of the index. Apple Inc. was the largest with 9.657%.
Growing Concern
Investors concerned about issues such as diversity and climate change have poured in billions of dollars using the ESG criteria to choose stocks, prompting debate about how effectively funds promote change or Do they push companies too hard on issues to be decided by government policy.
S&P Dow Jones Indices of S&P Global Inc. majority of. Musk and others have complained that the firm and its rivals have faced too many issues by tying ESG concerns into one aggregate score.
For example, a fund based on the S&P 500 ESG index, the SPDR S&P 500 ESG ETF, received a low rating “D” by climate activist research group As You Soo, which, despite its title and sustainability mandate, gives fossil fuel stocks 6.5. make. % of the fund’s assets.
In a company blog post reviewing the changes from April 22, S&P’s Dorn said the purpose of the index is to keep industries weighted the same way they are in the regular S&P 500 index “while raising the index’s overall stability profile.” In practice that means it could keep oil companies out of the way, leaving out big players like Facebook parent meta platforms and Wells Fargo & Co.
Dorn said Tesla’s ESG score dropped slightly from the “22” it achieved last year. At the same time the average score among other automakers improved, ousting Tesla from the ESG index as a rule that included the lowest-quartile performers.
Dorn and others did not immediately describe other details such as reasons for adding Twitter or Philips 66 or leaving other companies.
Among the other large ESG rating agencies, MSCI Inc. gives Tesla an “average” ESG rating, while Morningstar Inc.’s Sustainlytics unit gives Tesla a “moderate risk” rating, according to the firms’ websites.
On Wednesday, a US safety regulator opened a special accident investigation into this month’s Tesla crash in California, investigating more than 30 accidents involving advanced driver assistance systems. [nL2N2XA2CY]
In February, a California state agency sued Tesla over allegations of black workers tolerated racial discrimination at an assembly plant, adding to claims the company made in several other lawsuits.
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