May 18 (Reuters) – S&P Dow Jones Industrial Average Inc. has removed electric car maker Tesla (TSLA.O) From the widely watched S&P 500 ESG Index (.SPXESUP)citing issues including racial discrimination lawsuits and accidents related to autopilot vehicles, a move that prompted harsh tweets from Tesla CEO Elon Musk on Wednesday.
The undoing underscores the growing debate about the metrics used to judge companies’ performance on environmental, social and governance (ESG) issues, and is a growing area of investment.
Other contributing factors to the changes, as of May 2, include Tesla’s lack of published details regarding its low-carbon strategy or business code of conduct, Margaret Dorn, head of ESG indexes at S&P Dow Jones Indices for North America, said in an interview.
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Dorn said that while Tesla contributes to reducing emissions with its electric vehicles, its other issues and lack of disclosures regarding its industry peers should raise concerns for investors looking to judge the company via ESG standards.
“You can’t just take a company’s mission statement at face value, you have to look at its practices across all of those key dimensions,” she said.
Tesla representatives did not immediately respond to questions. But after the index changes, Tesla CEO Elon Musk tweeted on Wednesday that “Exxon has been ranked the world’s top ten Environmental, Social and Governance (ESG) company by the S&P 500, while Tesla didn’t make the list! ESG is a scam.” It has been weaponized by pseudo-social justice warriors.”
When asked about the tweet, a representative for the index provider said that Musk might have been referring to a listing on the company’s blog mail One of the top ten components by market capitalization of the S&P 500 ESG Index after the removal of Tesla and others. The representative said the list “is not a ranking of the top companies by ESG score”.
Exxon now accounts for 1.443% of the index’s weight. Apple Inc was the largest, with 9.657%.
growing fears
Investors interested in issues such as diversity and climate change have poured billions of dollars into funds using ESG’s criteria for stock selection, fueling debate about how effective the funds are in promoting change or whether they are pushing companies too much on issues that must be resolved through government policy.
S&P Dow Jones Indices is majority owned by S&P Global Inc. (SPGI.N)
Tesla’s removal was among a raft of changes made to the S&P 500 ESG index dated April 22, according to an announcement. Among the additions to the index at the same time Twitter Inc (TWTR.N)social media platform Musk has entered into a purchase agreement.
Dorn and others did not immediately mention the reasons for adding Twitter.
Last year, the National Highway Traffic Safety Administration (NHTSA) opened a formal safety investigation into Tesla Inc’s driver assistance system after a series of accidents involving Tesla models and emergency vehicles. [nL4N2R92KC]
In February, a California agency sued Tesla over allegations by black workers that the company tolerated racial discrimination at an assembly plant, fueling claims in several other lawsuits. Read more
A shareholder proposal that called on Tesla to release detailed data on its diversity and inclusion efforts last year was supported by a majority. Read more
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(Reporting by Ross Kerber) Editing by Pete Henderson and Aurora Ellis
Our criteria: Thomson Reuters Trust Principles.
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