S&P Drops Tesla From S&P 500 ESG Index

Elon Musk says it’s a political punishment.

S&P Dow Jones Indices LLC quietly dropped Tesla Inc. from its index of large cap ESG companies earlier this month, stripping the company from two ETFs and drawing fire from Tesla CEO Elon Musk. 

The annual rebalance of the S&P 500 ESG Index took place on March 2, removing Tesla alongside names like Home Depot Inc., Chevron Corp., Accenture PLC and Activision Blizzard Inc. The index added Twitter Inc., which Musk has agreed to purchase for $44 billion in a go-private deal.

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The $741.8 million Xtrackers S&P 500 ESG ETF (SNPE) and the $456.6 million SPDR S&P 500 ESG ETF (EFIV) are the only U.S.-listed ETFs tracking the index. 

S&P Dow Jones defended its move in a post Wednesday, saying its internal scoring system dinged Tesla for failures to publicly state a corporate low-carbon transition strategy or a code of business conduct, and marked it down for claims of racial discrimination in a factory and a federal safety investigation over its autopilot-powered cars. 

“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,” wrote Margaret Dorn, S&P’s head of ESG indexes. 

Musk responded on Twitter several hours after the blog post went up, saying ESG was created by “phony social justice warriors” and later posting a meme suggesting ESG scores measure alignment with “the leftist agenda.” 
 

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