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Key Takeaways
- Tesla was removed from the S&P 500 ESG Index
- Exxon is a leading company in the index, causing conflicts of interest
- Investors can still invest in clean tech with Q.ai’s Clean Tech Kit
Despite being an electric vehicle manufacturer, Tesla is no longer deemed a socially responsible company. And that’s why it was kicked out of the widely followed S&P 500 ESG Index (.SPXESUP), which focuses on companies that prioritize environmental, social and governance (ESG) issues.
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The news comes after claims of “rampant racism” and fatal car crashes linked to Tesla’s autopilot technology. The Department of Fair Employment and Housing reported finding evidence that the Fremont factory “is a racially segregated workplace where black workers are subjected to racial slurs and discrimination in work assignments, discipline, pay and promotion.”
Meanwhile, January saw the first person charged with a felony for a fatal crash involving an automated driving system. And there have been more reported fatalities involving Teslas since. The most recent crash earlier this month, involving a 2022 model Tesla Model S that claimed three lives, is one of 35 under investigation by the U.S. National Highway Traffic Safety Administration (NHTSA) since 2016.
Margaret Dorn, the executive in charge of ESG ratings for North America, wrote in a blog post: “While Tesla may be playing its part in eliminating fuel-powered cars, it has fallen behind its peers when examined through a broader ESG lens.”
But Tesla CEO Elon Musk is calling the ESG index “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!” he tweeted, adding that the index “has been weaponized by phony social justice warriors.”
While racial discrimination and fatal car crashes are certainly nothing to dismiss, Musk may have a point: ESG investing, at large, does have its fair share of shortcomings.
For example, index makers have built forward-thinking products that are merely marketable to those who want to better align their portfolios with their eco-conscious values. And weak oversight by regulators means that conflicts of interest have cropped up alongside them. To Musk’s point: a giant gas and oil company—raking in billions each quarter producing fossil fuels—is among the top companies.
This all leads to questionable results of rating systems that may have much more than meets the eye. So much happens behind closed doors and we, as a society, have a lot of learning and unlearning to do to get to a place the planet needs us to be. It’s tough to tell how sustainable and eco-friendly companies that claim to be actually are because what’s marketed is marketed for good reason.
While the S&P 500 ESG index sorts itself out—excluding or including clean tech companies for one reason or another—you can still get invested in it with Q.ai’s Clean Tech Kit.
Sure, the Kit can’t promise a positive impact across the board because of the aforementioned uncertainties and inconsistencies. But it will offer you access to diversified and optimized holdings focused on U.S. and international companies in clean tech—trailblazers in renewable energy and power, electric vehicles, waste reduction, and more. It cuts companies with conflicting operations—like wind or solar power producers that also generate substantial coal power.
Better yet: Q.ai’s machine learning models select top-performing companies each week to automatically rebalance your portfolio. So you can focus on improving other aspects of your lifestyle while Q.ai focuses on improving your portfolio.
Learn more about Q.ai’s Clean Tech Kit.
Download Q.ai for iOS today for more great Q.ai content and access to over a dozen AI-powered investment strategies. Start with just $100. No fees or commissions.
