The index provider cited concerns related to working conditions and Tesla’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 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 indexes for S&P Dow Jones in North America, said in a Tuesday blog post.
For months now, Tesla has been critical of ESG. The company said in its annual report that ESG ratings are “fundamentally flawed,” and in an April tweet, Musk said “corporate ESG is the devil incarnate.”
From a market standpoint, Tesla’s removal from the S&P index probably will be minimal as there was only about $11.7 billion that tracked S&P ESG gauges as recently as the end of 2020. By contrast, trillions of dollars track the main S&P 500 gauge.
Investors are split on S&P’s decision. 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.”
Zach Stein, chief investment officer of Carbon Collective, a climate-change focused online investment adviser based in Berkeley, California, said the opposite. The biggest issue in ESG is climate change, so kicking out the leading maker of electric vehicles makes no sense, especially since companies like Exxon Mobil Corp. remain in the S&P index, he said.
--With assistance from Elaine Chen, Esha Dey and Saijel Kishan.
This article was provided by Bloomberg News.