Elon Musk says 'ESG is the devil' with tobacco firms trouncing Tesla in social-responsibility ratings
News from Web 15-Jun-2023
- Elon Musk called the framework that evaluates companies' social and sustainability standards "the devil" on Wednesday.
- The billionaire tech boss highlighted a report showing tobacco stocks scoring more highly than Tesla in ESG ratings.
- ESG metrics score publicly-listed companies based on environmental, social, and governance.
Elon Musk slammed the framework that evaluates companies' environmental, social and governance standards, flagging that tobacco firms tend to receive higher ESG ratings than electric-vehicle maker Tesla.
"Why ESG is the devil," the Tesla and SpaceX chief said on Twitter, in response to an article by Washington Free Beacon reporter Aaron Sibarium.
ESG is a set of standards meant to assess business practices in relation to sustainability and ethical concerns. An increasing number of financial-market participants use ESG-based ratings as a guidance for socially responsible investing – rather than simply buying assets they think will deliver the best returns.
They often use a 1-to-100 ratings scale, determined by research firms like S&P Global and Morningstar.
But critics of the framework say it encourages so-called "greenwashing", and fails to properly rate companies based on their social contributions.
"From S&P Global to the London Stock Exchange, tobacco companies are crushing Tesla in the ESG ratings," Sibarium had tweeted Tuesday.
"How could cigarettes, which kill over 8 million a year, be deemed a more ethical investment than electric cars?" he added.
Sibarium's article pointed out that S&P Global's latest ESG rankings gave EV maker Tesla a score of 37 – and tobacco giant Philip Morris an 84.
The London Stock Exchange gave British American Tobacco an ESG rating of 94, and Tesla a more middling 65.
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