Tesla was expelled from the S&P 500 ESG (Environmental, Social, and Governance) Index but oil companies were added. CNN reports Tesla was terminated and both Marathon and Exxon Oil were included in the index at the same time. CNBC also reported that these alterations to the index went into effect on May 2.
CNBC referred to a spokesperson that the lack of a low-carbon strategy and codes of business conduct of Tesla were described as reasons. A spokesperson for the S&P said Tesla is supposedly playing its role in removing fuel-powered cars from the road. It has slowed down its royalty during examining through a broader ESG vision.
CEO of Tesla, Elon Musk also challenged the integrity of the S&P Global Ratings. He called the ESG a scam and phony social justice fighters boosted it. However, Reuters also pointed out the matter and the response from Elon Musk. The news outlet interviewed the head of ESG indices for North America of S&P Dow Jones Indices, Margaret Dorn.
Tesla recently released Impact Report
Dorn pointed out the lack of published details from Tesla related to its business conduct codes and low carbon strategy. She said both were factors discovered in concluding the ranking. Dorn said investors can’t only consider a mission statement of a company at face value. They must have to see their past and current practices across these entire major dimensions.
However, Tesla recently released its Impact Report but Dorn was uninformed about it. Dorn said that Tesla CEO was supposedly referring to a list on the company blog. This list featured the S&P 500 ESG Index of the biggest 10 structures after Tesla and others were removed. Meanwhile, the supposed list removed Tesla and added Exxon.
S&P DJI ESG Score of Tesla
It is noteworthy that the GICS industry group has received an overall boost in its average S&P DJI ESG Score. However, the DJI ESG Score of Tesla stayed quite stable year-over-year. It was moved down the ranks connected to its global industry group elite. A couple of elements participating in its 2021 S&P DJI ESG Score were dropped in criteria level scores.
Those scores are about the lack of Tesla over low carbon strategy and codes of business conduct. Moreover, a media and Stakeholder Analysis said the process needs to mention the current and potential future exposure of a company. It includes threats coming from its involvement in a continuous incident.
Poor Working Conditions & Racial Discrimination
The analysis mentioned 2 separate events moving around claims of poor working conditions and racial unfairness at Tesla’s Fremont factory. It mentioned its approach to the NHTSA investigation after multiple deaths and injuries were found involved in its autopilot system. These events reflected a negative effect on Tesla’s S&P DJI ESG Score at the criteria level and its overall score.
Moreover, Greenpeace shared a group of photos in 2013 from decades of Exxon oil explosions and spills. Last year, a plant of Exxon was discovered producing 350 pounds of grainy matter per hour. It is important that the Baton Rouge plant generates 517,000 barrels of oil per day. However, there were other influences discovered affecting the ESG score of Tesla. The ESG score of Exxon was worse than Tesla.