Tesla's cars have helped spur an electric vehicle revolution. But that wasn't enough to stop the S&P 500 from removing the company from its ESG list on Tuesday, leading Elon Musk to call the list a "scam" that has been "weaponized by phony social justice warriors."
The S&P made the decision to remove Tesla despite its ranking remaining relatively stable over the past year. But the automaker has slipped when compared to improvements at other companies, Margaret Dorn, the S&P senior director for ESG Indices North America, wrote in a Wednesday blog post. Dorn said that the company attributed Tesla's fall off the list to reports about poor working conditions and racial discrimination in the company's Fremont, California, factory as well as an NHTSA investigation into reports about deaths and accidents tied to the company's self-driving technology.
"Both of these events had a negative impact on the company’s S&P DJI ESG Score at the criteria level, and subsequently its overall score. While Tesla may be playing its part in taking fuel-powered cars off the road, it has fallen behind its peers when examined through a wider ESG lens," Dorn wrote.
Tesla has faced multiple racial discrimination lawsuits over its treatment of workers at its Fremont factory, one of which it lost last year. Protocol found in a 2021 investigation that 120 individuals requested the right to sue the company for discriminatory reasons between 2018 and 2021 in California. Workers in the Fremont factory have described racist graffiti and the use of racial slurs as rampant throughout the factory and have alleged that Tesla does little to address the incidents when they occur.
Tesla's recently constructed Gigafactory in East Austin has also come under criticism. Both community and environmental advocates have raised concerns that the plant could contribute to the area's noise and water pollution problems, as well as add congestion in an area that's predominantly home to communities of color.
Though the company's products are key to decarbonizing transportation, Tesla has also been dinged in a report released earlier this year by corporate watchdog As You Sow for not having a climate plan to disclose, let alone deal with, its own carbon pollution. That report ranked major polluters like Exxon and Chevron higher for their disclosures. Exxon remains a large part of the S&P 500 ESG list, something Musk was quick to point out in his tweet criticizing the rankings.
That complaint is something climate and social justice advocates — and, increasingly, investors — have also said, noting that the criteria used to create ESG ratings rarely reflect companies' actual progress in reducing carbon pollution or improving society. They've said the rankings instead capture how the world's current and future political and economic climate might affect a company's prospects. Elon, it seems, agrees now that he's been bumped from the list.
Climate TRACE's data show emissions at the facility-level.Image: Climate TRACE