When Tesla Gets the “You’re Out!” Send‑off from the ESG Hall of Fame
What went down
Short and sweet: S&P Dow Jones pulled Tesla off its S&P 500 ESG Index on May 2. The reason? A cocktail of red‑flag issues: lawsuits over racial discrimination, a string of autopilot crashes, and a repeated complaint that Tesla’s carbon strategy is more “vague” than a weather report.
Why the fuss matters
ESG (Environmental, Social, Governance) is the new buzzword for “good business.” Companies that score high are supposed to be the safe bets for investors who care about the planet and people. When Tesla, a brand that’s all about electric cars and solar panels, shows up in the middle of a scandal, it raises a giant question mark for folks who want a complete picture.
Musk’s reaction
Elon Musk didn’t hold back. Following the news, he tweeted a line that went viral among both his fans and detractors: “ESG is a scam. It’s weaponised by phony social justice warriors.” He added an equally bitter jab about Exxon being top‑ten in ESG while Tesla was left out.
Inside the decision
Ask a senior from S&P’s ESG team, Margaret Dorn, and she’ll tell you the version that’s more likely to be truthful. “You can’t just take a company’s mission statement at face value,” she says. “You’ve gotta check how they tick all the boxes.”
What the index says now
- Exxon ties the knot with the state of “ESG excellence” – it now accounts for 1.443 % of the index’s weight.
- Apple takes the crown, snagging a hefty 9.657 % “vote.”
- All the other companies? They’re scrambling to fill the gap left by Tesla.
Bottom line? Tesla’s removal doesn’t smack down the brand’s reputation as an EV pioneer, but it does remind investors that nothing overpowers transparency and consistency when it comes to ESG performance.
Growing concerns
ESG Funds: A Double-Edged Sword for Investors and Companies
Everywhere you look, investors are putting their hard‑earned cash into ESG‑powered funds—those nifty picks that promise socially responsible returns. But is it really spurring real change, or are we just shouting about climate and diversity while leaving the heavy hitters on their own? The debate’s heating up.
Why ESG Matters (and Why It’s a Mess)
- Money’s Flowing In: Billions are flooding into ESG funds.
- Big Names in the Lineup: S&P Dow Jones Indices, led by S&P Global, is a prime mover.
- Criticism from the Titans: Elon Musk and others slam ESG scores for packing everything into one messy number.
Case Study: The S&P 500 ESG Index
Take the SPDR S&P 500 ESG ETF – the green‑labeled Octane Bank of Wall Street. According to climate activist group As You Sow, the fund earned a flagrant “D” rating because 6.5% of its holdings are fossil‑fuel powerhouses. Even though the title screams sustainability, there’s still a hint of oil. The irony isn’t lost on the keen observers.
Official Response from S&P
Ms. Dorn from S&P emphasized that the ESG index still mirrors the usual sector weights but sprinkles a sustainability upgrade. In practice, that means oil is still in the mix while big tech like Meta and major banks like Wells Fargo can be pushed out.
Tesla’s Spotlights and Shadows
Even a carmaker known for anti‑truck collusion is getting grilled. Tesla’s ESG score dipped from a “22” last year; the company slipped out of the index because other automakers improved, and there’s a rule that bans the lowest quartile from inclusion.
- MSCI: Tesla gets an “Average” rating.
- Sustainalytics: Tesla is tagged a “Medium Risk.”
Recent “Accidents” and Concerns
Just when you thought Tesla’s fuel‑efficiency saga was done, a California crash investigation throws fresh doubts. The state’s safety regulator is now looking into a crash this month, part of a swath of 30+ incidents surrounding advanced driver‑assistance systems.
But the drama doesn’t stop with road safety. In February, a California state agency sued Tesla over claims that Black workers faced racial discrimination at a factory— a complaint echoing other lawsuits listed in a legal litany. The company’s workplace practices are now under scrutiny as well.
Is ESG the Real Game Changer?
Overall, ESG funds are a bold attempt to align capital with conscience. Yet the pressing question remains: do they actually shift corporate behavior or are we merely loading the tape while governments should handle the heavy lifting? Time will tell— but for now, the ESG ball keeps rolling, and everyone’s watching the next sprint with bated breath.
