While Elon Musk, the world’s richest man, was preparing to acquire social media Twitter, he still tweeted on April 3: “I am more and more convinced that corporate ESG is simply the incarnation of the devil. !”
Musk, who is a top student in carbon reduction, why does he say that? And Tesla is still a pioneer in leading the global auto industry to zero carbon emissions with electric vehicles? As of fiscal 2021, Tesla’s carbon rights revenue accounted for 3% of total revenue, or $1.46 billion. Obviously enough to be listed as a representative of ESG good people and good things, Musk even added more criticism: “(ESG) Unless it is corrected, it should be deleted!”
In fact, Musk has a long history of rejecting ESG (meaning environmental, social, and corporate governance). He is not against corporate sustainability, but hates the three letters of ESG-especially Tesla’s failure to score on ESG, which makes Musk proud.
Another thing that makes Musk even more furious is that ESG investors “do not know the same thing”, even the famous Microsoft founder Bill Gates (Bill Gates), even short the ESG top student Tesla stock!
First of all, Tesla’s ESG score is not very good, such as the Sustainalytics rating, Tesla’s ESG score is 28.5, ranking only 39th among 79 car companies, not even in the top ten. Although MSCI’s ESG rating for Tesla is not bad, it gets a high A in the middle, which is the same level as Toyota, but it has better AA and even AAA. No wonder it makes Musk angry!
Although one of the main reasons for Tesla’s low score may be insufficient disclosure of information and no timetable for carbon neutrality and other goals. However, different rating agencies lack a unified standard for corporate ESG; and the companies that were scored did not even know what the test questions were, and naturally complained a lot.
For example, the MIT Sloan School of Management released a report in April citing the lack of standardization of ESG scores as an urgent problem that needs to be addressed. Different standards cause great differences in ESG scoring results of different institutions. Even as Musk criticized, ESG rating standards are like black-box operations, which can be increased or decreased at will.
The report pointed out that, in an ideal situation, some rating agencies have analyst teams that collect relevant hard data and then give companies ESG scores; but there are also agencies that use AI to understand the meaning of corporate CSR reports for analysis; Rating agencies analyze annual financial reports.
Just in March, Marc Andreessen, founder of Silicon Valley venture capital firm Andreessen Horowitz, broke the news on Twitter that Citi planned to invest its ESG fund in defense companies that manufacture weapons to fight Russia. Musk really echoed the following: “ESG rules have been twisted to the point of insanity.”
Second, although Gates has long been recognized as an expert on climate change, the climate fund he founded, Breakthrough Energy, invests in new innovations such as nuclear fusion and biofuels, and is committed to achieving the world’s goal of net-zero carbon emissions by 2050.
He also praised, “What Musk has done at Tesla is the greatest contribution to climate change in the world.” In February 2021, Gates mentioned in an interview with New York Times columnist Kara Swisher, In terms of improving climate change, the electricity and cars involved in Musk are relatively “simple things”, accounting for only one-third of the problem of climate change. But he again praised in an interview with CNBC that the world needs more entrepreneurs like Musk to tackle the climate challenge together.
Even so, Gates did not let go of the opportunity to make money and joined other investors in shorting the volatile Tesla stock.
A message leaked on Twitter brought Gates to a global public trial. Jean Musk later confirmed on April 22 that Gates had texted him to invite him to a climate change charity event. Musk responded immediately: “Do you still have a $500 million Tesla short position?”
And Gates answered honestly: “Sorry, I haven’t closed my position yet. But I want to discuss charitable opportunities.”
Musk then flatly refused: “When you have a lot of Tesla short positions, I really can’t take your climate change philanthropy seriously, because Tesla is the company that does the most and wants to solve climate change the most.”
Musk, who has done a lot and said a lot, will even take Twitter into his own or even privatize it, and in the future, he will be able to speak freely on the social platform he runs. However, Musk’s criticism also reminds ESG rating agencies that only transparent standards that can be followed can promote companies to improve ESG performance, encourage more investors to invest in companies, and truly contribute to improving ESG.
(Translator: Zhang Fangyu;Business weekly“Reprinted with permission; source of the first picture:Flickr/Steve Jurvetson CC BY 2.0）