The S&P 500 ESG Index cut Tesla from its ranks, prompting CEO Elon Musk to heavily criticize environmental, social, and governance (ESG) as an investment strategy.
Reuters reported that claims of racial discrimination and crashes linked to its autopilot vehicles were reasons for the move.
Musk responded with a flurry of tweets, calling ESG a “scam,” and claiming “S&P Global Ratings has lost their integrity.” He also predicted that “Political attacks on me will escalate dramatically in coming months.”
The S&P 500 ESG Index is “a broad-based, market-cap-weighted index that is designed to measure the performance of securities meeting sustainability criteria while maintaining similar overall industry group weights as the S&P 500,” according to the firm.
Reuters noted that the sustainability index added soon-to-be-Musk-controlled Twitter and oil refiner Phillips 66.
“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!” Musk added. “ESG is a scam. It has been weaponized by phony social justice warriors.”
Musk said he would vote Republican for the first time because Democrats “have become the party of division & hate …Now, watch their dirty tricks campaign against me unfold.”
Bloomberg noted that Tesla sank to the lowest level this year on the news, wiping $12.3 billion from Musk’s wealth, while Twitter further extended its slide.
“All told, Musk has lost $49 billion since launching his bid for Twitter last month, partly as the wider market tumbled and as some investors in Tesla grew concerned over how he’d fund his offer for the social-media giant,” Bloomberg said.
Musk is the second billionaire in as many months to criticize ESG. “I think that ESG is a hate factory, it’s a factory for naming enemies,” PayPal Founder Peter Thiel told Bitcoin 2022 conference attendees in Miami, Fla., in April. “What’s the difference between ESG and the CCP [Chinese Communist Party]?”
“Perhaps the real enemy is ESG,” Thiel added.
ESG investing options are increasingly popular and offered in many workplace retirement plans.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
