Elon Musk exploded online in fury after Tesla was removed from a prominent environmental, social and governance (ESG) index.
An S&P Dow Jones Indices executive said the electric carmaker Tesla had been dropped from the widely followed S&P 500 ESG Index because of issues including claims of racial discrimination and crashes linked to its autopilot.
Tesla CEO Elon Musk responded on Twitter with scathing criticism. “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.”
He added: “It has been weaponised by phony social justice warriors.”
Effective May 2, the sustainability index also added Twitter, which Musk has said he would acquire, and oil refiner Phillips 66 while dropping Delta Air Lines and Chevron, according to an announcement.
The back-and-forth over the index changes reflects a wider debate about the metrics used to judge corporate performance on environmental, social and governance (ESG) issues, a growing area of investing.
Expanding into Battery Storage
Tesla has become the most valuable automotive industry company by pioneering EVs and expanding into battery storage for electric grids and solar-power systems.
Factors contributing to its departure from the index included Tesla’s lack of published details related to its low-carbon strategy or business conduct codes, said Margaret Dorn, S&P’s head of ESG indices for North America.
Even though Tesla’s products help cut planet-warming emissions, Dorn said, its other issues and lack of disclosures relative to industry peers should raise concerns for investors looking to judge the company across ESG criteria.
“You can’t just take a company’s mission statement at face value, you have to look at their practices across all those key dimensions,” she said.
Tesla representatives did not immediately respond to questions. The company has previously called ESG methodologies “fundamentally flawed”.
Exxon now accounts for 1.443% of the weight of the ESG index. Apple was the largest at 9.657%.
- Reuters, with additional editing by George Russell