Investment decisions based on a company’s view of environmental, social and governance (ESG) responsibility have gained momentum as the world on a global scale experiences adverse events as a result of global warming and social injustice.
The World Economic Forum (WEF) meeting that is currently taking place in Davos is making a special effort to focus on the focus that businesses should have on their ESG responsibilities.
“In the summer of 2022, the health of the planet is deteriorating. Companies are expected by investors and the wider community to be part of a multistakeholder, collaborative effort to restore it – and transparently,” said the WEF on its site.
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A slanted narrative
While this is an idea that is welcomed by the majority of participants, some say that the narrative and intentions around ESG promotion are being skewed.
One of them is Larry Fink, CEO of BlackRock Inc – an investment firm – who says that the conversation around ESG is creating a huge polarization. The American writer, Michael Shellenberger, spoke out about the WEF meeting, suggesting that there is another agenda at play.
In Shellenberger’s tweet, Tesla CEO Elon Musk responded that the ‘S’ in ESG is the devil.
In May last year, Musk described ESG as “a scam that has been used by fake social justice warriors”. This was stated in a tweet where he contested that Exxon was rated in the world’s top ten list for environmental, social & governance (ESG) by the S&P 500, while the company Tesla did not make the list.
Musk’s management style
It’s easy to see how Musk expects Tesla to be rated as an ESG-responsible company. After all, Tesla is an electric vehicle manufacturer that will provide the blueprint for the future of environmentally responsible modes of transportation.
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However, it is Musk’s management style that could be the spanner in the works that sees his company soar.
While electric cars seem to reduce environmental problems, in terms of social and governance factors, Musk seems to be lacking. Musk has been criticized in the media for targeting female employees during layoffs.
His management style and lack of transparency as a leader when he took over Twitter was also criticized.
Musk’s reply to Shellenberger’s post could just be a case of sour grapes.
At Tesla Impact Report 2021, the company notes that current ESG evaluation methodologies are fundamentally flawed. To achieve the much-needed change, ESG must evolve to measure real-world Impact.