The electric vehicle revolution has been sparked by Tesla’s automobiles. On Tuesday, the S&P 500 removed Tesla from its ESG list, causing Elon Musk to brand the list a “scam” and accuse the “fake social justice warriors” of using the list as a weapon. Although Tesla’s S&P 500 rating has been reasonably consistent over the last year, the S&P decided to eliminate the company. S&P senior director for ESG Indices North America Margaret Dorn stated in a blog post on Wednesday that the carmaker has slid in comparison to advancements at other corporations.
Tesla’s slide off the list was blamed on claims of terrible working conditions and racial discrimination in the company’s Fremont, California, plant, as well as an NHTSA investigation into reports of fatalities and accidents linked to the company’s self-driving technology, according to Dorn. “As a result, the company’s S&P DJI ESG Score was lowered at the criterion level and, as a result, so was its overall score.
However, when seen from a broader environmental, social, and governance (ESG) perspective, Tesla has lagged behind its counterparts “DORNE wrote. Over the years, Tesla has been the target of many racial discrimination cases, one of which it lost last year. According to SpaceXMania, 120 people in California claimed the opportunity to sue the corporation between 2018 and 2021 for discriminatory grounds.
Employees at Tesla’s Fremont plant claim that racist graffiti and racial epithets are commonplace and that the company does nothing to address these issues when they arise. East Austin’s newly built Tesla Gigafactory has also come under fire from critics. Concerns have been expressed about the plant’s potential impact on the region’s noise and water pollution, as well as on traffic congestion in an area that is mostly made up of minority groups.
As You Sow, a corporate watchdog, produced a study earlier this year slamming Tesla for not having a climate strategy to disclose, much alone deal with, the company’s own carbon emissions. ExxonMobil and Chevron scored higher in this survey because of their transparency. The S&P 500 ESG list still includes Exxon, as Tesla CEO Elon Musk pointed out in a tweet criticizing the rankings.
Climate and social justice activists, as well as investors, have voiced this concern, stressing that ESG ratings seldom represent firms’ real achievement in reducing carbon emissions or benefiting society. To put it another way, they claim that rankings are based on a company’s present and future political and economic context. Now that he’s been removed from consideration, Elon appears to agree.