Tesla's Low ESG Score and What It Means

Tesla's ESG score is a concern for many investors, with a recent report giving the company a score of 34 out of 100.

This score is based on Tesla's performance in environmental, social, and governance areas, which is lower than many of its peers in the automotive industry.

The company's environmental impact is a major contributor to its low ESG score, with a report highlighting its high carbon footprint and reliance on fossil fuels.

Tesla's social responsibility score is also a concern, with issues around worker safety and labor practices being raised in recent years.

The company's governance practices are not without controversy either, with some critics accusing Tesla of lacking transparency and accountability in its decision-making processes.

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Tesla's ESG score is 28.5 with a "medium risk" according to Sustainalytics. This score is based on two main factors: Exposure and Management.

Tesla's Exposure score is Medium, which means the company is moderately exposed to material ESG issues. Its business model is considered when determining this score.

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The company's Management of ESG Material Risk is Average, which suggests that Tesla's ESG programs, practices, and policies are not particularly robust.

Here's a comparison of Tesla's ESG score with those of four oil companies that Investopedia considers environmentally friendly:

As you can see, two oil companies, OMV AG and Repsol, have a better ESG score than Tesla. Among automakers, Mercedes-Benz and BYD also have better scores than Tesla.

Tesla's ESG issues are not limited to its environmental impact. The company has a poor record on labor issues and human capital, including a lawsuit filed by the California Department of Fair Employment and Housing.

Our ESG Risk Ratings consider a company's exposure to industry-specific material ESG risks and how well it manages those risks.

Tesla's ESG Risk Rating is calculated based on its exposure to different material ESG issues. This includes subindustry and company-specific factors such as its business model.

The exposure score is a key component of Tesla's ESG Risk Rating, and it indicates the extent to which the company is exposed to various ESG issues.

Tesla's low ESG score has sparked curiosity, and one possible reason is the company's CEO, Elon Musk. According to an article, Musk's behavior, such as sending random tweets, negatively impacts Tesla's score for transparency and labor relations.

The author of the article likens ESG scoring to figure skating, where judges evaluate artistry, presentation, and execution. In this context, Tesla's statement in its 2019 impact assessment might have raised eyebrows.

Tesla's statement said that making a significant impact on environmental sustainability is difficult without securing financial sustainability. This statement might have been perceived as dismissive or uncooperative, affecting their ESG score.

Tesla's ESG score is not the worst, however, as it's better than many oil companies and its fellow automakers, such as VW and Toyota. Their score has actually improved compared to last year's.

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Calculating ESG risk is a complex task, but it's essential to understand the core approach. Our ESG Risk Ratings measure a company's exposure to industry-specific material ESG risks.

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To assess this exposure, we consider various factors, including a company's management of those risks. The ESG Risk Ratings measure how well a company is managing those risks.

Industry-specific material ESG risks can vary significantly, so it's crucial to tailor our approach to each sector. By doing so, we can provide more accurate and relevant ESG Risk Ratings.

Our ESG Risk Ratings are designed to help investors, lenders, and other stakeholders make informed decisions about the companies they're interested in.

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Understanding Exposure is key to calculating risk. Exposure refers to the extent to which a company is exposed to different material ESG issues.

Our exposure score takes into consideration subindustry and company-specific factors such as its business model. This means that companies with unique business models may be more exposed to certain risks than others.

For example, Tesla, Inc.'s Exposure is Medium, indicating that it is moderately exposed to material ESG issues.

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Tesla's management of ESG material risk is considered average.

The company's management score assesses the robustness of its ESG programs, practices, and policies. This score is a crucial factor in determining Tesla's overall ESG rating.

One reason behind Tesla's low ESG score is its poor performance in areas such as transparency, labor relations, and adherence to governance. Specifically, the company's CEO, Elon Musk, has been criticized for sending out random tweets, which has negatively impacted Tesla's score.

Tesla's statement from its 2019 impact assessment, which emphasized the difficulty of achieving environmental sustainability without securing financial sustainability, was also seen as a negative factor.

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Tesla's management of ESG issues is considered average. This assessment is based on the robustness of the company's ESG programs, practices, and policies.

The company's management score evaluates the effectiveness of its ESG programs. However, the specifics of these programs are not detailed in the assessment.

A company's management of ESG material risk is a crucial aspect of its overall sustainability. It's essential to address these issues to maintain a positive reputation and comply with regulations.

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Tesla's management of ESG material risk is rated as average. This indicates that the company may not be doing enough to address its ESG issues.

A company's ability to manage ESG issues can have a significant impact on its stock price. This is because investors are increasingly considering ESG factors when making investment decisions.

Tesla's management score is just one aspect of the company's overall ESG performance. Other factors, such as its material ESG issues, also play a crucial role.

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Tesla's ESG score is 28.5, which is considered "medium risk." This score is based on two factors: Exposure and Management.

Tesla's Exposure is rated as Medium, meaning the company is somewhat exposed to material ESG issues. The Exposure score takes into account the company's business model and subindustry-specific factors.

The Management of ESG Material Risk is rated as Average for Tesla. This suggests that while the company has some ESG programs and policies in place, there is room for improvement.

Investors are taking notice of Tesla's ESG performance, and it's worth comparing it to other companies in the industry. Here's a brief comparison of Tesla's ESG score with some oil companies:

It's interesting to note that two oil companies, OMV AG and Repsol, have a better ESG score than Tesla.

Tesla's ESG score is influenced by its controversy level, which has impacted its rating over the last three years.

The highest controversy level that has affected Tesla's ESG Risk Rating in the last three years is not specified in the provided article sections.

However, it's worth noting that controversy can arise from various factors, including labor practices and environmental concerns.

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The Controversy Rating is a crucial aspect of a company's ESG Risk Rating. It measures the highest level of controversy that has impacted a company's rating in the last three years.

Tesla, Inc. has a significant controversy level that has impacted its ESG Risk Rating. According to the data, Tesla's highest controversy level in the last three years was related to its ESG Risk Rating.

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ESG ratings are constructed in a way that reflects a company's financial influence rather than its impact on the environment. Tesla argued in its 2021 Impact Report that existing ESG evaluation methods are flawed.

The problem is that these ratings primarily measure the influence that climate change has on a company's finances, rather than the company's influence on the planet. This makes them less useful for evaluating the sustainability of an investment.

Rating agencies have different criteria for rating different companies at different times. These ratings can vary significantly, and their methodology is a key factor in how they weigh different factors.

Ty Francis pointed out that a small business like a bakery might not have to worry about complex risks like cybersecurity or the Foreign Corrupt Practices Act, which can skew the ratings. This highlights the challenges of comparing companies on a like-to-like basis.

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Tesla's ESG score is 28.5, which is considered a medium risk. This score is based on two factors: Exposure and Management.

Tesla's Exposure score is Medium, meaning the company is moderately exposed to material ESG issues. Its business model is also taken into consideration when determining this score.

Tesla's Management of ESG Material Risk is Average, indicating that while the company has some good practices in place, there is room for improvement.

Here's a comparison of Tesla's ESG score with some oil companies that are known to be environmentally friendly:

Note that two oil companies, OMV AG and Repsol, have a better ESG score than Tesla's, and among automakers, Mercedes-Benz and BYD have better scores as well.

Tesla's ESG score is 28.5, ranking it 41 out of 82 automobiles and 8,192 out of 14,666 in the Global Universe.

This score is based on two factors: Exposure and Management. Exposure refers to the extent to which a company is exposed to different material ESG issues, with Tesla's exposure score being Medium. Management refers to how well a company is managing its relevant ESG issues, with Tesla's management score being Average.

In comparison, some oil companies have better ESG scores than Tesla. For example, OMV AG has a score under 28.5, and Repsol has a score of 26.7 with a medium risk and strong management.

Here are the ESG scores of some oil companies mentioned in the article:

Among automakers, Mercedes-Benz and BYD had better scores than Tesla's.

Tesla's ranking is a mixed bag. The company's ESG score is 28.5, which is considered medium risk. This puts Tesla 41st out of 82 automobiles and 8,192nd out of 14,666 in the Global Universe.

Tesla's ESG score is based on two main factors: Exposure and Management. Exposure refers to the extent to which the company is exposed to different material ESG issues. Tesla's Exposure is Medium.

Management refers to how well a company is managing its relevant ESG issues. Tesla's Management of ESG Material Risk is Average. This means that while Tesla has made efforts to manage its ESG issues, there is still room for improvement.

Here's a comparison of Tesla's ESG score with that of some oil companies:

As you can see, some oil companies have better ESG scores than Tesla. In fact, OMV AG and Repsol SA both have scores under 28.5, which is better than Tesla's score.

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