Here’s Why Was Tesla Removed from the S&P 500 ESG Index

The Index, which gauges the performance of securities meeting sustainability standards, has seen its annual rebalancing this month.

Even though S&P 500 follows only major companies, some companies are ahead of their competitors and the rebalancing resulted in the removal of some components, while new companies were added to the index.

Among the companies removed as a part of the rebalancing was also the world’s largest electric vehicle (EV) maker, Tesla (NASDAQ:).

Elon Musk’s carmaking giant was removed from the index because it was “pushed further down the ranks relative to its global industry group peers,” said Maggie Dorn, Senior Director and Head of ESG Indices, North America at S&P Dow Jones Indices.

Even though Tesla’s S&P DJI ESG Score was stable on an annual basis, several factors that changed its score in the index included “a decline in criteria level scores related to Tesla’s (lack of) low carbon strategy and codes of business conduct,” added Dorn.

Furthermore, other factors such as reports of racial discrimination and inadequate working conditions at Tesla’s plant in Fremont, as well as the way the carmaker dealt with the NHTSA investigation after numerous deaths and injuries were linked to its autopilot cars, also contributed to the decline in Tesla’s S&P DJI ESG Score.

By Senad Karaahmetovic