(Reuters) – A head of the S&P Dow Jones Indices told Reuters on Wednesday that it had removed the electric car maker Tesla Inc. from the widely followed S&P 500 ESG index due to, among other things, allegations of racial discrimination and crashes linked to its autopilot vehicles, and Tesla CEO Elon Musk responded with harsh tweets including that “ESG is a scam.”
In its amendments, as of May 2, the sustainability index also added the soon-to-be-Mr. Musk-controlled Twitter Inc. and the Phillips 66 oil refinery while releasing Delta Air Lines and Chevron Corp., according to an announcement.
Back and forth over the index changes reflects a broader debate on the measures used to assess companies̵7; performance in environmental, social and governance issues, a growing area of investment.
Tesla has become the most valuable automotive company by pioneering electric cars and expanding to battery storage for power grids and solar energy systems.
Factors that contributed to its deviation from the index were Tesla’s lack of published details related to its low-carbon strategy or business conduct codes, said Margaret Dorn, S&P Dow Jones Index’s head of the ESG Index for North America, in an interview.
Although Tesla’s products help reduce global warming, Dorn said its other problems and lack of disclosures in relation to industry colleagues should be of concern to investors who want to judge the company based on environmental, social and governance criteria.
“You can not just take a company’s mission statement at face value, you have to look at their practice across all of these key dimensions,” she said.
Tesla’s representatives did not immediately answer questions. The company has previously called ESG methodology “fundamentally wrong”.
Mr. Musk twittrade that “Exxon is ranked in the top ten best in the world for the environment, social and governance of the S&P 500, while Tesla did not make the list! ESG is a scam. It has been armed by fake fighters for social justice.”
Asked about the tweet, a representative of the index provider said that Musk may have referred to a list on a company’s blog post of the 10 largest components by market capitalization of the S&P 500 ESG Index after the removal of Tesla and others. The list is “not a ranking of the best companies by ESG score”, said the representative.
Exxon now accounts for 1.443% of the index’s weight. Apple Inc. was the largest with 9.657%.