Musk Mad Tesla Removed from S&P 500 ESG Index

Musk Mad Tesla Removed from S&P 500 ESG Index

access_time2022-05-19 08:55:36


Tesla CEO Elon Musk is unhappy that the EV company was deleted from the S&P 500 ESG Index.

Tesla ( (TSLA ) - Get Tesla Inc Report) CEO Elon Musk is extremely unhappy that the EV company was eliminated from the S&P 500 ESG Index on Wednesday, voicing his concerns on Twitter.

The electric automaker was taken off the ESG index by S&P Dow Jones Indices due to Tesla's ongoing issues of racial discrimination claims from employees and how it has dealt with a National Highway Traffic Safety Administration (NHTSA), a government investigation after several crashes were connected to its autopilot vehicles.

The changes are retroactive: they are effective May 2 and a May 17 S&P Dow Jones Indices blog  post described the rationale. This is the fourth annual rebalance by the index company.

"Tesla was ineligible for index inclusion due to its low S&P DJI ESG Score,3 which fell in the bottom 25% of its global GICS® industry group peers," wrote Margaret Dorn, senior director, head of ESG Indices, North America S&P Dow Jones Indices. 


Other companies, including Berkshire Hathaway ( ( BRK.A ) -  Get Berkshire Hathaway Inc. Class A Report), Johnson & Johnson ( ( JNJ ) -  Get Johnson & Johnson Report) and Meta ( ( FB ) -  Get Meta Platforms Inc. Class A Report) also were eliminated and "have once again met the index methodology’s chopping block," she wrote.

Even though Tesla has a "self-declared mission" to  "accelerate the world’s transition to sustainable energy,” the company was eliminated because its ESG score fell in comparison to other auto companies, Dorn wrote.

Additional analysis also showed that there were "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 vehicles," Dorn wrote. 

These two events resulted in a negative impact on the company’s S&P DJI ESG Score at the criteria level and also its overall score. 

"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," she wrote.

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