On May 2nd, the S&P 500 removed Tesla (TSLA) from its ESG Index, which is short for environmental, social, and governance. In recent years ESG investing has grown in popularity as more and more investors push for companies to treat the environment and their stakeholders to a higher standard. But, Tesla, a company that many people would point to as the poster child of an environmentally-friendly company, is no longer on the S&P 500's list of companies that are considered environmentally friendly.
If you are confused, you are not alone. Let's take a deeper look at this change and how it could affect your investments.
The idea behind ESG investing is that only companies promoting environmental sustainability, low carbon emissions, green energy initiatives, and good waste management would meet the environmental sustainability aspect of ESG investing. However, the S&P 500 said that Tesla's "lack of low-carbon strategy" and "codes of business conduct" heavily factored into the decision. The S&P said that Tesla's factories produced very high levels of pollutants. Tesla ranked 22nd on last year's Toxic 100 Air Polluters Index, a list compiled by U-Mass Amherst Political Economy Research Institute. For context, ExxonMobil ranked 26th on that same list last year. Continue reading "Tesla (TSLA) Gets Booted from the ESG Index"