Tesla dumped by S&P ESG index as Musk calls label a ‘scam’

The index provider cited concerns related to working conditions and the firm’s handling of a probe into deaths and injuries linked to its driver-assistance systems.

The world’s most famous electric-vehicle maker has lost its spot on the ESG version of the S&P 500 Index.

S&P Dow Jones Indices says that Tesla Inc.’s score on environmental, social and governance standards has remained “fairly stable” over the past year, but that it has slipped down the ranks against improving global peers.

The index provider also cited concerns related to working conditions and the firm’s handling of an investigation into deaths and injuries linked to its driver-assistance systems. A lack of low-carbon strategy and codes of business conduct also counted against Elon Musk’s company, it said.

“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,” Margaret Dorn, senior director and head of ESG indices for S&P Dow Jones in North America, said in a Tuesday blog post.

Tesla didn’t immediately respond to an emailed request for comment, though writing on Twitter on Wednesday Musk described ESG as a “scam.”

Exxon is rated top ten best in world for environment, social & governance (ESG) by S&P 500, while Tesla didn’t make the list!

ESG is a scam. It has been weaponized by phony social justice warriors.

— Elon Musk (@elonmusk) May 18, 2022

Tesla also recently criticized ESG metrics as “fundamentally flawed” in an annual report, and in an April tweet Musk said “corporate ESG is the devil incarnate.”

Dorn wrote that an analysis seeking to identify risks to the company stemming from any controversial incidents identified “two separate events centered around claims of racial discrimination and poor working conditions at Tesla’s Fremont factory, as well as its handling of the NHTSA investigation after multiple deaths and injuries were linked to its autopilot.”

Both had a negative impact on Tesla’s score, she said.

The S&P 500 ESG Index is tracked by at least 16 exchange-traded funds, according to the S&P Dow Jones website. Berkshire Hathaway, Johnson & Johnson and Meta Platforms Inc. are among other large companies that also don’t make the list.

Kristin Hull, founder of Nia Impact Capital, a sustainability fund in Oakland, California that has been pressing Tesla to address worker issues, said she was relieved that there was “finally accountability.”

“This move signals to other companies that ESG standards, and improving them, matters,” she said. “And that there will be material, financial implications.”

(Updates with Musk tweet, Tesla comments on ESG, fund comment.)

–With assistance from Sean O’Kane, Crayton Harrison and Saijel Kishan.