Tesla Removed From Widely-Tracked ESG Index

Index provider S&P Dow Jones recently removed Tesla from its S&P 500 ESG Index

Tesla showroom in Indianapolis
Tesla is allowed to sell its vehicles in Indiana, but only after winning a legislative battle.

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Index provider S&P Dow Jones Indices has removed Tesla (TSLA) from its widely-tracked S&P 500 ESG Index, citing issues related to claims of racial discrimination and crashes of Tesla’s autopilot vehicles. The decision prompted a harsh response from Tesla CEO Elon Musk.

According to S&P Dow Jones Indices, Tesla has failed to provide sufficient details relating to the company’s low-carbon strategy and codes of business conduct. Margaret Dorn, head of ESG Indices at S&P Dow Jones, cited this as a contributing factor to the index provider’s recent decision. "You can't just take a company's mission statement at face value, you have to look at their practices across all those key dimensions," stated Dorn. Dorn cited the lack of accurate disclosures and reporting procedures as a significant risk to the company’s ESG-related outreach to investors.

Tesla CEO Elon Musk was quick to voice his dissatisfaction, responding via a tweet shortly after noon Wednesday. Specifically, Musk tweeted that "Exxon is rated top ten best in the world for environment, social & governance (ESG) by S&P 500, while Tesla didn’t make the list! ESG is a scam. It has been weaponized by phony social justice warriors."

The removal of Tesla from the S&P 500 ESG Index was part of a series of changes made to the index’s components and methodology beginning April 22. Twitter (TWTR) was included among the additions to the index during this time, a company that Elon Musk is currently in the process of buying. 

A series of controversies and legal battles involving Tesla may have factored into S&P Dow Jones’ recent decision. Last year, the National Highway Traffic Safety Administration (NHTSA) opened a probe against Tesla following a series of crashes attributed to the company’s autopilot. Tesla was likewise faced with a recent lawsuit compiled by a California state agency, alleging discrimination within the workplace.

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  1. S&P Dow Jones Indices. "The (Re)Balancing Act of the S&P 500 ESG Index"

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