'Why ESG Is the Devil': Here's What Prompted Musk's Latest Criticism of Social Responsibility Ratings

Leah Barkoukis | June 15, 2023 7:30 AM

Elon Musk blasted environmental, social, and governance standards on Wednesday after highlighting how tobacco firms rank higher than Tesla.

Earlier this month, S&P Global gave the electric vehicle manufacturer a score of just 37 points on the 100-point ESG scale compared with Philip Morris International, maker of Marlboro cigarettes, which received 84 points. This, despite tobacco reportedly being responsible for about 8 million deaths per year.

How could this be? According to Washington Free Beacon reporter Aaron Sibarium, it’s because tobacco companies have “gone woke."

Companies like Altria have gone out of their way to emphasize the diversity of their corporate boards and the breadth of their social justice initiatives, from funding minority businesses to promoting transgender women in sports. But Tesla, whose executives are overwhelmingly white men, has resisted that bandwagon, going so far as to fire its top LGBT diversity officer last year.
The "S" in ESG typically includes diversity programs. Philip Morris International, which in 2021 advertised a partnership with "African data scientists," got a social score of 84 from S&P Global. Tesla got a measly 20.
The contrast highlights the hazards of a movement that lumps pressing health and environmental issues in with ideological fads. Early ESG efforts were laser-focused on "sin stocks"—companies whose core business was deemed immoral—including tobacco. But as ESG investing has ballooned, so has the number of variables used in ESG ratings, which now encompass everything from labor practices and carbon pledges to diversity trainings and human rights. That has created countless opportunities to game the system, experts say, and lets even the most sordid companies score points—and investors—by toeing the progressive line. (Washington Free Beacon)