Elon Musk Tweet Storm Blames Big Oil for Negative Tesla Reports

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The concept of ESG (environs, social, governance) – first coined in 2005 – dates back to the late 80s in the form of SRI, or socially responsible investing. Iii decades later, what makes of ESG, and to an extent, ESG ratings? Well, in 2022, information technology has sparked debate and confusion amid investors, regulators and the fiscal globe as a whole; peculiarly when 1 of the world’s richest men, Tesla CEO Elon Musk, chosen it a ‘scam’.

Screenshot from Twitter/Elon Musk

The example of TESLA

Leading the market, Tesla can perhaps be considered synonymous with electric vehicles. In 2021 alone, the company released almost a one thousand thousand fuel-free cars onto the road every bit it sold about 934 million units of electric vehicles – a new record for the company.

Autonomously from accelerating the earth’south push back against the use of fossil fuels through ‘green cars’, Tesla highlights the importance of impact transparency. Yearly, it releases sustainability reports to talk about its carbon footprint, sustainability efforts and – the bigger picture: ESG operation.

It’s a given fact: TESLA has fabricated huge steps in helping the world transition to sustainable energy. So, it’southward also a given that TESLA will receive impressive ESG ratings, correct? Not actually.

This year, the South&P 500 Dow Jones Indices (S&P DJI) struck out TESLA from its sustainability criterion, as function of its fourth annual rebalance.

308 companies were selected every bit role of the S&P ESG Index. ‘[O]ne familiar name may stick out as being absent from that listing: Tesla’, wrote Due south&P DJI in a weblog. What happened? S&P explained.

The automobiles and components industry, overall, has been faring improve, in terms of ESG; Tesla, according to S&P, remained stable on a twelvemonth-over-year basis. Just it wasn’t able to keep up with its global peers, the regulator noted. What S&P saw from TESLA’s ESG performance was, i: the company had a lack of low carbon strategy and codes of concern behave. Two: at that place were also reported incidents of ‘rampant racism’ in Tesla’s Fremont constitute. California sued the visitor over this. Tesla pushed back, calling the lawsuit ‘unfair’, co-ordinate to an NPR written report. 3: S&P too mentioned Tesla’s poor handling of the investigation of the National Highway Traffic Safety Administration (NHTSA) of a May 2022 Tesla crash that left three dead and three others injured. These incidents dragged down the overall ESG score of the company.

‘While Tesla may be playing its role in taking fuel-powered cars off the route, information technology has fallen behind its peers when examined through a wider ESG lens’, said S&P.

Musk reacted with the ‘ESG is a scam’ tweet. Just it wasn’t the starting time time he took a swipe at the concept. In a previous tweet, he said ESG ratings don’t make sense.

ESG ratings make no sense / Elon Musk tweets
Screenshot from Twitter/Elon Musk

In its 2021 Affect Written report, TESLA’due south foreword read:

Current ESG evaluation methodologies are fundamentally flawed. To achieve acutely-needed change, ESG needs to evolve to measure out real-world impact.

The automobile giant believes ESG ratings don’t measure the positive impact of companies on the world; but rather, the value of risk/return.

Are ESG ratings confusing and conflicting?

Private investors – who entrust their money to ESG funds of large investment institutions – are perhaps unaware that their money can exist used to buy shares of companies that make climatic change worse, not better.

That is according to the Musk-led company in the same 2021 study mentioned above.

Reports of racial discrimination within a visitor, should, of course, not exist dismissed, especially from an ESG perspective. But there is a point to Musk’s claims. While ESG ratings are not totally a scam, there are corners that become somewhat confusing and, at times, conflicting.

A concrete instance is the latest ESG index of Due south&P; ESG sceptics may ask: how can the list keep oil behemothic ExxonMobil, but not EV maker TESLA? This decision has pushed ESG ratings into the limelight. That leaves room for many questions. But the short answer is that companies are ESG-rated against their peers in the same industry; and so, Exxon, TESLA, and, say, Apple will non be inside the same subclass. Come to think of it, Exxon’s environmental ratings on the ESG scorecard will be unsatisfactory if compared with TESLA. But it’south not simply the E factor that is taken into account; the Social and Governance factors are just as important – in which TESLA didn’t perform impressively, as explained by S&P.

Information technology is probably crucial, likewise, to expect at the entirety of the end-to-finish supply chain of the company. This makes sure the companies are rated not just on their operations but as well on their third-party transactions. It seems the ideal affair to do – rating a company’s ESG efforts from the offset through the concluding stride. But due to lack of data, Telescopic 3 emissions (often Scope 1 and 2 of the partner or supplier) aren’t reported completely.

For example, Amazon, a mainstay on the S&P DJI ESG list, does not provide a consummate report on its oceanic shipment. A study showed only 15 per cent of Amazon’southward total sea shipments can be tracked. The company ranked eighth amongst the world’due south meridian 15 polluters, based on Ocean Import carbon emissions (2019 information). And then, considering these findings, it makes footling sense for Amazon to score remarkably high on the ESG canvas.

Rating ESG ratings

The thought of responsible investing has been existing for decades; simply in recent years, mainly due to rapid and massive climate change felt from continent to continent, sustainable and socially responsible investments are magnified now more than than ever. Environmental activists, in particular, call for corporations, regulators and governments to double time. Still, ESG factors in the financial returns of responsible investing – and quantifying these efforts may be more complicated equally they tend to look, especially as it involves the books and the dollars.

Perhaps this ‘confusion’ calls for a much more unified arroyo in giving ESG ratings and full disclosure of companies’ ESG efforts. This way, ESG ratings may go more than just figures or lists that show corporate leaders who take initiatives to make a positive impact – environmentally or socially. A standardised rating system and indices, as well as transparency on the office of corporations, may very well be a huge stride towards a truly sustainable future, even with minimal money motivation – and not a scam, as some are inclined to believe.

Bolder is looking into it

ESG has evolved far beyond existence a business accessory or add together-on. Gradually, it has morphed into a mandatory practice for investors all over the world. This is, in part, due to the Covid-19 pandemic, social unrest and call for social equity as well as media coverage of climate injustice and environmental problems. Professional asset managers are well-enlightened of the increasing demand for ESG compliance, which comes with a cost, financial- and timewise.

As a global financial services provider, Bolder guides and assists its clients in their international business and investment activities, so they tin finer break the barriers in this present complex global market.

Let’due south discuss ESG investing. Reach out to the nearest Bolder office.


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More than and more businesses are investing sustainably; corporations integrate are integrating ESG (Environmental, Social and Governance) factors in their investment decisions. Itself an evolution from SRI (socially responsible investing), ESG keeps on expanding, and information technology seems there’s no stopping information technology, as the governments, the public and other regulatory bodies call for sustainable investment practices. Experts bet: ESG is here for the long run, and it’s just going to keep growing. What are the ESG niches that took the fiscal manufacture by storm?

The biggest ESG niches and so far

Climatic change


Giant companies in the steel and oil industries accept been at the receiving end of the arraign for all-encompassing environmental damage due to their operations. Studies on climate change, ecology issues and their negative impacts on the planet and quality of life accept continued to ability the global appetite for sustainable investments.

There’due south an undeniable clamour from environmental activists and the general public akin for corporations—big and pocket-sized—to engineer innovations that would integrate social and ecology impacts into their fiscal decisions and objectives. What’s more than, a chunk of the public has adjusted its consumption habits based on environmental and ethical concerns. And corporations have taken note of these factors.

The Paris Understanding is too a major driving factor for investors to open their wallets to environment-friendly corporation practices. Many companies have aligned their goals with the Agreement’s objective of limiting global warming to two°C.

DIVERSITY AND INCLUSION

Diversity is a big ESG niche for the investment industry.

It’s not just most biodiversity anymore. Because there is a deeper agreement of office variety and inclusion, companies have started emphasising their advocacies on diversifying their culture and not just their portfolios.

In Canada, for case, the Canada Business Corporations Act required corporations to comply with diversity disclosure ‘beyond gender’ for federally incorporated public companies. This policy came into force in January 2020, the commencement such regulation in the globe. Moreover, in a 2020 survey, 73 per cent of Canadian visitor respondents said they want a function of their portfolio to invest in organisations that provide opportunities for various and women groups. In the U.k., the 30% Gild Investor Group has been pushing for more various board members and senior managers.

‘Embedding diversity in the everyday culture and strategy of the system, with the board and senior management setting the tone. This is required to engage employees, create understanding about where the barriers are and to build alternatives that back up inclusion. Diverse recruitment and promotion, information monitoring and transparent reporting are also key’, said Patrick Odier, senior managing partner at the Geneva-based Swiss bank Lombard Odier Grouping.

HUMAN RIGHTS


In 2021, BSR published: ‘In the business context, [human rights] is manifested in a responsibility to adopt a human rights policy, embed respect for human rights throughout the business, and undertake man rights due diligence—in other words, a key methodology and mindset, not merely an consequence to address’.

In that location are risks to businesses that do non give regard to man rights. Showtime of these are lawsuits; fines, break, divestment and reputational damage, according to the Found of Homo Rights and Businesses. In a report, the found also mentioned how embedding respect for homo rights in the managerial process prevents human being rights abuses within their ranks and the company.

In 2018, eight of the world’s biggest multinational brands released a pooled statement announcing their full support for human rights defenders and borough liberty. These brands said they were working on ‘finding constructive ways’ to aid human rights defenders ‘under threat’.

ESG niches making green trillions, trillion greens

Global ESG investments are projected to be worth up to $53 trillion past 2025 — that’due south three years from now — based on a 2021 Bloomberg Intelligence analysis. What would this hateful for the financial market?

According to an OECD written report: ‘To meet growing demand for this class of sustainable finance, ESG rating providers and investment funds are working to integrate metrics aligned with environmental resilience, climate risk mitigation, and strategies toward renewable free energy among others’. The report furthered that investors are committing to applying financial strategies to minimise their operations’ negative environmental affect and assist facilitate potent climate-resistant economies.

The European Union is fast-tracking a common language and region-wide compages for ESG investments. For example, in March 2021, the Eu Commission has enacted the Sustainable Finance Disclosure Regulation, which seeks transparency in the style European companies integrate ESG into their businesses.

‘The European union taxonomy provides uniform reporting requirements and criteria on the basis of which an economic activity is considered sustainable. The SFDR raises the bar for funds challenge to be green’, according to a Bolder Group insight. Read more than of her give-and-take here.

A 2015 meta-analysis by the Global Inquiry Plant examined studies that looked into the results of ESG factor integration in businesses. Over 62 per cent of these studies showed a positive correlation between ESG investing and favourable fiscal flows.

Bolder is looking into it …

ESG has evolved far beyond being a business accompaniment or addition. Gradually, it has morphed into a mandatory practice for investors all over the world. This is, in office, due to the Covid-19 pandemic, social unrest and call for social equity too as media coverage of climate injustice and ecology bug. Professional asset managers are well-aware of the increasing demand for ESG compliance, which, of course, comes with a price, financial- and time-wise.

Equally a global fiscal services provider, Bolder guides and assists its clients in their international business concern and investment activities, and then they tin effectively break the barriers in this present complex global marketplace.

Let’s discuss ESG investing. Accomplish out to the nearest Bolder office.

Bolder | At the base of business


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Investors are looking into social global investing, its how-tos, every bit well as its benefits, we’re here to dig deep into what it can bring forward. Learn what social global investing (ESG) is, how it is measured, how information technology affects the stock market, and how you lot make your investments ESG compliant.

What is social global investing?

Social global investing or ESG, is short for
Environmental, Social, and Corporate Governance. ESG aims to ensure that a corporate governance will consider the environment and social impacts of their investments. These include employee welfare, social equality; every bit well as the finance attribute of the business – where stocks, shares, bonds, and assets are directed to; as well as the governance planning – how the business organization aligns their values to help others and retrieve equally a whole, rather than an individual entity.


Introduced by an article written past James S. Coleman in 1988 – ESG is the idea of investing as collective growth rather than for self-interest. During the past decades many more discussions about the topic arose. From racial inequality to climate change, many more companies are looking into the effects of their investments. Since and then, social consciousness in investing has been talked about, discussed, and applied.

That said, ESG is non a type of investment nor a type of a return. ESG is a measurement to ensure that environmental and social impacts are considered and embedded into investments made either by corporate entities or individual investors. At the same time, it’due south good to know that there is no specific scoring organisation to measure ESG.

How ESG is tallied in

Dissimilar companies have their ain methodologies and tools to tally and assemble data for their ESG ratings. There are also several firms, locally and internationally, that exercise ESG evaluations while ensuring that your investments and bookkeeping adhere to laws within your jurisdiction – this forth with ESG compliance and resiliency. Yet, in general, many companies use the standard reports made by the following independent companies:

  • Global Reporting Initiative (GRI)
  • Sustainability Accounting Standards Lath (SASB)
  • Global Initiative for Sustainability Rankings (GISR)
  • Task Force on Climate-related Financial Disclosures (TCFD)
Bolder ESG investing

Why look into ESG factors?

With the recent increase in ESG consciousness amid stakeholders, a meliorate understanding of its effects will help us navigate around, and capitalize with ESG in heed. Below are our acme 3 visions why ESG volition assistance a company more than.

1) Perceived to have ameliorate asset liquidationA recent increment in stock and funds were institute in the United states, as shown in the research by MoningStar. “The number of sustainable open-end and exchange-traded funds bachelor to U.S. investors increased to 392 in 2020, up thirty% from 2019”, MorningStar reported in their Sustainable Funds Mural Report 2020. With the increment for sustainable funds in the marketplace, there are more assets to share and liquidate effectually the puddle.


two)  Provides more than jobs

ESG also proved to be a better job provider than other investment types. Research made by the World Resources Institute found that –
“Solar PV creates 1.5 times every bit many jobs as fossil fuels and wind creates 1.2 times equally many jobs as fossil fuels per $i million on average.”


Equally commercialism is a shared web amidst investors, employees, stakeholders, and consumers, providing more jobs will pull the other aspects of information technology creating a bigger web with more than opportunities for everyone.


3) Estimated to produce positive long term financial gains

Based on enquiry by MorningStar, ESG investments proved to exist better than their conventional counterparts. This aligns with the numbers provided by US SIF 2020. According to the study, ESG investments in the United States grew from $12.01T in 2018 to $17.10T in 2020 – the most rapid growth since 2015.

With the increase in numbers from the past half a decade, and the big fishes playing the field more and more, encouraging more than investors to look into ESG investing, i can expect that numbers are to go up and up in the adjacent coming years.

With the benefits mentioned above, corporate entities take ESG and its compliance reporting with a more comprehensive approach and ensure that it is embedded in company values and goals. Blackness Rock’s CEO, Larry Fink, addressed co-CEOs in his 2022 annual letter –

“We are asking companies to gear up short-, medium-, and long-term targets for greenhouse gas reductions. These targets, and the quality of plans to meet them, are disquisitional to the long-term economical interests of your shareholders.”

Larry Fink, CEO, Black Rock

Applying ESG decisions for investments

When it comes to deciding which environmental and social factors to consider adding onto your investment; Nasdaq Contributor, Betsy Askins, suggests to
“identify three to five measurable ESG criteria that are material to your businesses and your constituencies, and are aligned with your corporate strategies”. “For example, an oil and gas visitor that is fracking should measure h2o and waste management and impacts on scarce natural resource. If your business organisation is centered around service personnel as Starbucks is, social preparation on anti-harassment and racial sensitivity will brand consumers feel welcome and strengthen the corporate brand”,
she adds.

“Identify three to five measurable ESG criteria that are fabric to your businesses and your constituencies, and are aligned with your corporate strategies.”


Betsy Atkins, Nasdaq Contributor

On the other mitt, in that location are many more criteria you tin look into – these include climatic change impacts, natural resource scarcity, supply chain management, labor practices, political contributions, board composition and workplace diverseness and inclusion.

In the end, working with an annotator who can identify benchmarks that will exist beneficial for you or the company volition aid not only in improving your ESG score, but too with adjustment your ESG goals with your personal goals or company’s mission and vision.

Every bit Larry Fink, CEO of BlackRock, shares in his Annual CEO Bulletin 2022
“Every company and every industry will exist transformed by the transition to a cyberspace zero world. The question is, will yous pb, or volition y’all be led?”.


Our team at Bolder Grouping has the right experience and knowledge in structuring and administrating funds, investment companies and SPV vehicles on behalf of asset managers and family offices  that want to be ESG compliant.


To learn more than most what we practice at Bolder, click this link.






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