Tesla Removed From S&P 500 ESG Index, CEO Elon Musk Says "ESG Is A Scam"

The S&P Dow Jones Indices cited issues like racial discrimination claims and crashes linked to its autopilot vehicles have prompted them to remove Tesla from the ESG Index

Elon Musk, CEO, Tesla. Image: Getty

Source : Getty

New Delhi: US electric carmaker Tesla has been shown the exit door by S&P Dow Jones Indices from its widely-followed S&P 500 ESG Index, according to a report by Reuters.

The report mentioned that the S&P Dow Jones Indices cited issues, including racial discrimination claims and crashes linked to its autopilot vehicles, which has prompted the move.

Tesla CEO Elon Musk has criticised the move on Twitter on Wednesday, saying that “ESG is a scam. It has been weaponized by phony social justice warriors.”

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

While furnishing details regarding Tesla's removal from ESG Index, Margaret Dorn, head of ESG indices for North America, said that the other contributing factors to the changes, effective May 2, included Tesla’s lack of published details on its low-carbon strategy or business conduct codes.

She said that even though Tesla is contributing to reducing emissions with its electric cars, its issues and lack of disclosures relative to industry peers should raise concerns for investors looking to judge the company across environmental, social and governance (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," Dorn added.

Representatives from Tesla, however, did not immediately respond to questions from Reuters. According to the report, there is a grwoing controversy about how to judge corporate ESG performance.

Investors concerned about issues such as diversity and climate change have poured money into funds using ESG criteria to pick stocks, prompting questions about how effectively the funds promote change or whether they have become too involved in setting policy.

The majority of S&P Dow Jones Indices is owned by S&P Global Inc.

Tesla's removal was among a group of changes made to the S&P 500 ESG Index dating from April 22. Among the additions to the index at the same time was Twitter Inc, the social media platform that Musk has aquired for $44 billion.

However, Dorn and others did not clarify the reasons behind the addition of Twitter.