Ark Invest founder and noted Tesla bull Cathie Wood has joined company boss Elon Musk in slamming the S&P 500’s decision to remove the electric car maker from its stock index tracking the most sustainable and socially conscious companies.
Tesla was removed from the S&P 500 ESG index – shorthand for “environmental, social and governance” – despite a business model centered on the development of eco-friendly technologies such as electric vehicles.
“Ridiculous. Not worthy of any other response,” Wood tweeted Wednesday in response to an article detailing the change.
Tesla is a key holding for Ark, which surged in prominence during a run-up in high-growth tech stocks in recent years. However, the ARK Innovation ETF has struggled as tech stocks come under pressure during a market downturn – plunging more than 50% in 2022 so far this year.
Tesla was the largest company to be excluded from the S&P 500 ESG index based on its weight of its shares relative to the index’s overall value. Tesla comprises about 2% of the broad-based index.
In a blog post, an S&P 500 executive noted that Tesla fell off the list due to issues with elements of its business, including lack of a low-carbon strategy and concerns about its internal practices.
Margaret Dorn, the senior director and head of ESG indices, North America, at S&P Dow Jones Indices, pointed to ongoing allegations of racial discrimination at Tesla’s California factory and a federal investigation into crashes linked to the company’s Autopilot technology.
“Both of these events had a negative impact on the company’s S&P DJI ESG Score at the criteria level, and subsequently its overall score,” Dorn said. “While Tesla may be playing its part in taking fuel-powered cars off the road, it has fallen behind its peers when examined through a wider ESG lens.”
The decision drew a scathing response from Musk, who blamed Tesla’s exclusion on what he described as “phony social justice warriors” and said the S&P had “lost its integrity.”
“Exxon is rated top ten best in world for environment, social & governance (ESG) by S&P 500, while Tesla didn’t make the list! ESG is a scam,” Musk said.
Later, Musk lashed out at the Democrat Party, revealing he had switched his allegiance to the GOP. He also warned that he expects a “dirty tricks campaign” from left-leaning figures in the days ahead.
Tesla’s removal from the index was the latest blow for the firm. Shares are down nearly 40% so far this year during the broader downturn in the tech sector.
Wood frequently comments on major storylines in which Musk is involved. Last month, the prominent tech investor revealed that Ark has been steadily trimming its stake in Twitter while noting the company was in for “a lot of management distraction” related to Musk’s takeover bid.
Musk’s Twitter buyout deal is currently on hold while he seeks clarity on the number of bots within the social media site’s overall user base.