Earlier in May, Elon Musk tweeted to show his discontent when his company, Tesla Inc., didn’t make the S&P 500 list for best in the world for environment, social & governance (ESG). He called it a “scam”:
“Exxon is rated top ten best in 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.” – Source: Twitter
The inflated tweet came soon after he had agreed to buy Twitter for $44 billion dollars and announced on the platform that he had switched from Democrat to Republican.
This led to a significant decline in Tesla’s market value, with Musk estimated to have lost $12 billion in a single day as a result of this series of events. Investors became hesitant as to how he would back the $44 billion offer to buy Twitter – and Musk’s willingness to tweet controversial opinions didn’t do him any favors.
As for the reasons Tesla didn’t make the S&P list, they cited a number of issues such as racial discrimination, lack of disclosures on the company’s low carbon strategy, and crashes linked to their autopilot system.
According to Margaret Dorn, head of ESG indices in North America, “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.”
On the other side of the spectrum, there has been controversy in the past over how the ESG rating is calculated. Company leaders and investors have shown contempt for the system, claiming that some companies are rated with different measures than others, leading to “unfair” results.
Jon Streur, president of Calvert Research and Management and Tesla investor, says that although he can’t speak for Musk, Tesla clearly still believes in ESG. "I think they've fully embraced operational excellence, which is really what ESG is all about," he recently said when asked about the events.
He also went on to say that ESG data “can be a bit of a mess,” which mirrors Musk’s disdain for the rating his company was given.
Despite all of this, Elon Musk is still the richest man in the world, with a fortune of over $200 billion dollars. At the time of writing, his deal to buy Twitter hasn’t moved forward after he announced he was waiting on data to confirm if the number of spam/fake accounts was accurate.
Many have been wondering if Musk got “cold feet” after Tesla lost so much stock value in such a short period of time, but deals this monumental take a long time to reach their conclusion. A number of regulatory approvals and shareholders vote’s are still underway, as the deal is expected to conclude later this year.
Musk can still back out, but seeing as he’s not shy about voicing his opinions on the very platform he’s determined to buy, it seems like he’s sticking with the purchase for now.
Curiously, Twitter was one of the latest additions to the S&P 500 list in which Tesla didn’t make the cut.