Following Tesla’s removal from the S&P 500’s Environmental, Social, and Governance index last week, an investor in the automaker still believes the company believes in the ESG’s cause despite CEO Elon Musk calling it a “scam.”
John Streur, President of Calvert Research and Management, said Tesla’s disclosure of workforce diversity data earlier this month was admirable. Streur said the company remains in his ESG indexes despite the S&P 500’s decision to remove Tesla from theirs last week.
“A few of the factors contributing to its 2021 S&P DJI ESG Score were a decline in criteria level scores related to Tesla’s (lack of) low carbon strategy and codes of business conduct,” the S&P said in a blog post. “In addition, a Media and Stakeholder Analysis, a process that seeks to identify a company’s current and potential future exposure to risks stemming from its involvement in a controversial incident, identified two separate events centered around claims of racial discrimination and poor working conditions at Tesla’s Fremont factory, as well as its handling of the NHTSA investigation after multiple deaths and injuries were linked to its autopilot vehicles.”
The firm added that both the racial discrimination claims and handling of Autopilot investigations by the NHTSA contributed to the decision to remove Tesla from the index.
Despite Tesla Chief Executive Elon Musk calling the ESG “an outrageous scam” in a Tweet last week, Streur said he still believes the company believes in ESG.
“I think they’ve fully embraced operational excellence, which is really what ESG is all about,” Streur said in an interview (via Reuters). He added that he is not sure about Musk’s opinions, but he does believe the company believes in ESG.
Tesla director Hiro Mizuno said in a response to a Musk Tweet regarding ESG assessments that:
“To be clear, Tesla is not denouncing ESG investments but urges ESG rating scheme to fairly evaluate a company’s positive impacts as well as negative impacts. The current ratings often overweight reduction of negative impacts while neglecting positive impacts.”
Streur’s company Calvert is a unit of Morgan Stanley and has a “full weight” of Tesla-like companies in its U.S. Large Cap Core Responsible Index Fund. He admits ESG data can be confusing and “a bit of a mess.”