Tesla Is Not Green

Tesla Is Not Green

Share to Linkedin The S&P 500 ESG Index has kicked out Tesla Inc (TSLA), the company that made electric vehicles cool: That's the latest nonsense in the world of environmental, social and governance (ESG) investing, which according to Bloomberg Intelligence projections will govern nearly $38 trillion of assets by the end of 2022. In the real world, a vice to some is frequently a virtue for others. But in a stock market that's heavily segmented, indexed and ultimately ETF'd, ESG ratings can and do have a major influence over prices, particularly in the near term—though the methodology calculating them is arguably opaque as ever. Tesla, for example, is the world's leading manufacturer of EVs, considered essential to decarbonization efforts. Yet investors who buy ETFs based on the premier blue chip "virtue" index will no longer own the stock. Nor will they have shares of NextEra Energy (NEE), the leading US producer of wind and solar energy. Dow Jones' ESG index does include, however, leading oil and gas drilling company Baker Hughes Company (BKR), oil and gas producer EOG Resources (EOG) and leading fossil fuels refiner Valero Energy Corp (VLO). And it also deems Caesars Entertainment Inc (CZR) sufficiently virtuous, though