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An aerial view of the Tesla Fremont Factory on May 13, 2020 in Fremont, California. Justin Sullivan | Getty Images
The S&P 500 booted electric vehicle maker Tesla from its ESG Index as part of an annual update to the list. Meanwhile, Apple, Microsoft, Amazon and even oil and gas multinational Exxon Mobil were still included on the list. The S&P 500 ESG Index uses environmental, social and governance data to rank and effectively recommend companies to investors. Its criteria include hundreds of data points per company that pertain to the way businesses affect the planet and treat stakeholders beyond shareholders — including customers, employees, vendors, partners and neighbors. Changes to the index took effect on May 2, and a spokesperson for the index explained why they were made in a blog post published Wednesday. It said that Tesla’s “lack of a low-carbon strategy” and “codes of business conduct,” along with racism and poor working conditions reported at Tesla’s factory in Fremont, California, affected the score. Tesla’s handling of an investigation by the National Highway Transportation Safety Administration also weighed on its score.
While Tesla’s stated mission is to accelerate the world’s transition to sustainable energy, in February this year it settled with the Environmental Protection Agency after years of Clean Air Act violations and neglecting to track its own emissions. Tesla ranked 22nd on last year’s Toxic 100 Air Polluters Index, compiled annually by U-Mass Amherst Political Economy Research Institute — worse than Exxon Mobil, which came in 26th. (The index uses data from 2019, the most recently available.) In Tesla’s first-quarter filing the company also disclosed it is being investigated for its handling of waste in the state of California, and that it had to pay a fine in Germany for failures to meet “take back” obligations in the country for spent batteries.
Meanwhile, California’s Department of Fair Employment and Housing sued Tesla over anti-Black harassment and discrimination in its Fremont car plant. The agency says it found evidence that Tesla routinely kept Black workers in low-level roles at the company, gave them more physically demanding and dangerous assignments and retaliated against them when they complained about racist slurs. Last year, the National Labor Relations Board said Tesla had engaged in unfair labor practices, as well. “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,” the S&P spokesperson wrote.