ESG criteria are increasingly being diluted to ensure the flow of capital rather than forcing companies to change. Photograph: iStock
Tesla also has a lower ESG score than cigarette maker Philip Morris when tobacco causes millions of deaths every year. In the S&P rankings, Telsa scored a dismal 37 out of 100 while Philip Morris scored a socially responsible 84.Jacobs’ man putting the building blocks in place for the economyDefenders of these ESG indices will say that while Tesla scores well on environmental grounds, it falls short in terms of social and governance factors hence the poor overall score.
Part of the problem lies with the amalgamation of disparate concepts in the first place, he says. “We have one concept, environment, which is existential to the world, mixed with a social thing which is a human right.” Part of the problem is the growth in ESG funds and the influence of asset managers who drive billions and billions of euro into stocks and funds with ESG ratings.
Legal & General Investment Management , one of the world’s largest fund managers, treads a fine line between sanctioner and facilitator. It makes no secret of the fact that it continues to hold stakes in companies excluded from its environmentally and socially focused funds but insists it is trying instigate change from the inside by holding company boards to account.