Tesla withdraws from S&P 500 ESG Index, and Elon Musk tweets his anger

May 18 (Reuters) – Electric car maker Tesla Inc. has been fired, an executive at S&P Dow Jones Indes told Reuters on Wednesday. (TSLA.O) From the widely followed S&P 500 ESG index (.SPXESUP)Due to issues including racism and accidents associated with its autopilot vehicles, Tesla CEO Elon Musk responded with harsh tweets saying “ESG is a scam”.

It turns out, from May 2, the stability code will soon be Musk-controlled Twitter Inc. (TWTR.N) And oil refinery Philips66 (PSX.N) When Delta Air Lines and Chevron Corp leave, according to an announcement.

The back and forth of index changes reflect the broader debate about the metrics used to assess corporate performance in environmental, social and governance (ESG) issues, which is a growing area of ​​investment.

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Pioneer Tesla has become a highly valued automotive company by expanding its battery storage for EVs and power grids and solar systems.

Factors contributing to the exit from the index were the lack of published details about Tesla’s low carbon strategy or business behavior codes, said Margaret Dorn, head of S&P Dow Jones Indices for ESG codes for North America.

While Tesla’s products help reduce planetary warming emissions, Dorn said its other issues and lack of industry-related exposure should be of concern to investors seeking to evaluate the company on environmental, social and governance (ESG) criteria.

“You can’t take a company’s work report at face value, you have to look at their practices in those key dimensions,” he said.

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Tesla representatives did not immediately respond to questions. The company previously called ESG methods “fundamentally flawed”.

Musk tweeted, “Exxon rated the top ten best in the world by the S&P 500 in the environment, community and governance (ESG), while Tesla was not on the list! ESG is a scam. It was armed with fake social justice players.”

When asked about the tweet, a representative of the index provider said that Musk may have mentioned the list on a company’s blog. Mail After the removal of Tesla and others, the S&P 500 ESG Index has the largest 10 components by market capitalization. The representative said the list was “not a ranking of the best companies in terms of ESG score”.

Exxon now stands at 1.443% by index weight. Apple Inc is the largest at 9.657%.

Growing concerns

Investors concerned with issues such as diversity and climate change have poured billions of dollars into funds using ESG criteria to select stocks.

S&P Dow Jones codes are wholly owned by S&P Global Inc. (SPGI.N) Musk & others have complained that the company and its competitors combine several issues by combining ESG concerns into a total score.

For example, a fund based on the S&P 500 ESG index, the SPDR S&P 500 ESG ETF, received a low rating of “D” by climate activist research group As You Sow, which, despite its title and sustainability mandate, is 6.5 percent fossil fuel stock. % Of financial assets.

In a blog post reviewing changes since April 22, S&P’s Dorn said, “The index aims to weigh the same amount of industry as the standard S&P 500 index, while improving the overall consistency profile of the index.” In practice that means Facebook parents can leave big companies like meta platforms and have oil companies (FB.O) And Wells Fargo & Co.(WFC.N)

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Dorn said Tesla’s ESG score was slightly lower than “22” last year. At the same time the average score improved among other automakers, pushing Tesla out of the ESG index because of the rule against adding low-quarter performance.

Dorn & others did not immediately elaborate on other details, such as whether Twitter or Philips 66 was added or dropped by other companies.

Among other major ESG rating agencies, MSCI Inc (MSCI.N) The companies’ websites give Tesla a “median risk” rating, while Morningstar Inc.’s Sustainalitics division gives Tesla an “average” ESG rating.

On Wednesday, a U.S. security regulator launched a special crash investigation into the Tesla crash in California this month, which involved more than 30 crashes involving advanced driver assistance systems. [nL2N2XA2CY]

In February, the California State Agency sued Tesla over allegations by black workers that the company tolerated racism in an assembly plant. read more

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Report by Ross Gerber; Editing by Pete Henderson, Aurora Ellis and David Gregorio

Our standards: Thomson Reuters Trust Principles.

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