Kicked out of the index + attacked by a sex scandal, Musk initiates a war with ESG!

Within a day, posting dozens of tweets about one thing, even for Musk who advocates for the "Twitter governance", is considered intensive.

What really angered Musk was Tesla being removed from the s&p 500 esg index. ESG is an investment concept and corporate evaluation standard that focuses on corporate environmental, social, and governance performance rather than financial performance.

Overnight, Tesla's stock price fell by nearly 7%, foreign media analysts stated that this was related to the impact of Tesla being removed from the s&p 500 esg index.

"ESG is a scam" is one of Musk's "acceptance speeches" on Twitter regarding this matter. Starting around noon on local time on Wednesday, Musk posted dozens of tweets (including related retweets) within 24 hours, almost tweeting every hour, from day to night, from night to day.

Initially, Musk's anger was directed straight at ESG, and he appeared indignant for Tesla: "Tesla is obviously the company that contributes the most to the environment!"

But shortly after, Musk's anger extended to the political field, quoting a satirical image that ESG caters to left-wing elements, and saying that he used to vote for the Democratic Party because they were the "kind-hearted party", but now he has changed his mind: "They have become the party of division and hatred, I can no longer support them, I will vote for the Republican Party."

Perhaps as a sign of sincerity, Musk pinned this tweet for several hours.

Musk's political stance shift had been foreshadowed. In December last year, Musk chose to relocate Tesla's headquarters from Democratic stronghold California to Republican stronghold Texas.

Musk is well aware of the weight of his recent statements, and he predicted on Twitter: "Over the next few months, political attacks against me will escalate sharply."

After a day of Musk typing away on the keyboard, media outlet Insider published a report claiming Musk had sexually harassed a flight attendant in 2016, exposing his genitalia and demanding "more services".

Musk responded to this, calling the report "politically motivated", without providing further details on why.

Today, Musk carries many buffs: not only is he the richest person in the Shanghai New World, but also holds over 90 million followers on Twitter. Most remarkably, it appears he is highly likely to directly acquire this crucial social media platform, making his political stance enough to draw attention from the USA political circles.

The ESG evaluation system, the 'culprit' of all this, has become a focus of global attention and controversy along with Musk's Twitter offensive.

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Officials explained that Tesla's removal from the s&p 500 ESG index. Margaret Dorn, Senior Director for North America at S&P Dow Jones Indices and head of the ESG Index, stated on May 17 in an official post on the website that Tesla's Fremont, California plant's poor working environment and racial discrimination, handling of autonomous driving-related casualties investigations, and lack of low-carbon strategies and business conduct guidelines all worked against it.

Although Tesla has played a role in phasing out fuel vehicles, Dorn believes that from a broader ESG perspective, it has fallen behind its peers.

This is obviously not acceptable to Musk.

This is not Musk's first attack on ESG. Prior to this, Musk had publicly criticized ESG ratings as 'false' and 'meaningless' multiple times, even calling them 'the incarnation of the devil.'

The ESG concept originated from socially responsible investing and was officially proposed by the United Nations Environment Programme in 2004. It adds another measure to evaluate a company's 'performance': to be considered 'excellent,' a company must not only make money but also have a positive impact on the planet and society.

ESG has now become an important management and investment concept, the mainstream system of non-financial disclosures for international companies. Currently, the number of global ESG rating agencies has exceeded 600, and many countries' stock exchanges and regulatory authorities have successively formulated relevant policies, requiring listed companies to voluntarily or mandatorily disclose ESG-related information.

In the eyes of more and more investors, ESG is an important reference for the long-term performance of a company. It is not difficult to understand why Tesla's stock price fell on Wednesday and was attributed to its removal from the s&p 500 ESG index.

But Musk has some reservations about ESG, not that he disagrees with linking improving the world to evaluating companies - after all, this is one of his major strengths, but he looks down on the existing ESG evaluation system.

In Tesla's "2021 Impact Report" released in early May, the opening mentions the 'old friend' ESG: 'The current ESG rating methods have fundamental flaws.'

Tesla further elaborates on this in the report: 'Some may think that the higher the percentage of electric vehicles sold by an auto manufacturer, the better its ESG score. However, that is not the case. As long as a company slightly reduces greenhouse gas emissions while producing a large number of high fuel-consuming vehicles, its ESG rating may rise.'

The report points out that the emissions during the use of most vehicles account for 80% - 90% of the total emissions from cars, but the evaluation mainly focuses on the production process.

Just like Musk's dissatisfaction expressed in his tweets, being removed from the s&p 500 ESG index for Tesla, a world-renowned electric vehicle brand, without even a ranking, while Exxon (Exxon Mobil, a global oil and gas giant) ranks among the top ten globally, goes against common sense.

The current ESG reports focus on measuring the dollar value of risk/return rather than measuring the range of positive impact it has on the world.

Based on Musk's and Tesla's past statements in reports, he does not completely deny ESG, but he believes that the current ESG index system has not been properly managed and is 'broken.' As the report states, Musk advocates that the ESG index should reflect a fundamental question: Is the development of this company positively impacting the world?

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This attitude actually reflects Musk's previous Democratic stance, not only criticizing the esg system at this time, but also escalating to changing political positions and instead supporting the Republican party, which is not just an impulsive decision made under the heat of the moment.

The world must remember how Trump quickly withdrew from the Paris Agreement at the slightest disagreement. Social responsibility, climate issues, environmental protection, and other matters have always been major concerns for the Democratic Party, while the Republican Party has different priorities.

According to a Pew Research Center survey last year, only about 10% of right-wing individuals consider climate change a top priority, while this proportion is about 49% among left-wing individuals.

Biden had already announced the slogan of achieving net zero emissions by 2025 during his campaign, pledging to require companies to provide more details on environmental risks and greenhouse gas emissions.

Upon taking office, Biden immediately brought the United States back into the Paris Agreement and passed a $1.2 trillion infrastructure bill (including infrastructure that can effectively combat the impacts of climate change).

The broader attention to esg issues after the COVID-19 pandemic, coupled with the supportive policies of the Biden administration on esg issues, has fueled strong momentum in esg investments. According to data from the Lipper fund of Refinitiv, as of the end of November last year, global esg fund inflows reached a record $649 billion, higher than in 2020 and 2019, accounting for 10% of global fund assets.

The increasing prominence of esg under the Democratic Party's rule has prompted the U.S. Securities and Exchange Commission (SEC) to even consider regulating the disclosure of climate-related information by companies.

As the midterm elections in the USA approach, the ESG issue is in the midst of debate: Should ESG-related information be mandatory for companies to disclose? Can ESG indicators be given the same importance in regulations as financial indicators?

On May 10th, former US Vice President Mike Pence bluntly expressed his desire to control ESG at a conference. The State Treasurer of Utah also mentioned that ESG indices overly adhere to 'left-wing' beliefs, blurring the line between subjective judgment and objective financial judgment.

If the Republican Party gains control of the House of Representatives in the midterm elections, they may take action to curb ESG-related regulations.

In the midst of such controversies, Musk made a high-profile announcement of changing his political stance, showing his influential power.

Following Musk's strong criticism of ESG and declaring his intention to switch allegiance to the Republican Party, Insider published an article stating that SpaceX had paid a flight attendant 0.25 million US dollars to settle her 2018 sexual harassment claims against Musk.

According to Insider, the flight attendant worked as a cabin crew member at SpaceX. Her allegations against Musk included exposing his private parts, touching her legs without consent, and offering a horse in exchange for a 'massage.'

Musk responded promptly, initially stating to the media that the article was driven by 'political intentions,' but did not provide further explanation.

As of the time of publication, Musk tweeted at one a.m. local time, claiming, 'Attacks against me should be viewed politically; this is their standard (vile) playbook. However, nothing will stop me from fighting for a better future and your right to free speech.'

This coincides with the warning Musk issued the day after announcing his political stance change: 'The political attacks on me will sharply increase in the coming months.'

Later, Musk also tried to humorously defuse this scandal by suggesting that the term 'Elongate' should be used to refer to scandals about himself. His fans also playfully interacted: Elongate, the way to Mars.

Whether he really switched sides is no longer important, and who he votes for is even less of a focus. Behind the dozens of tweets like a 'model worker' is Musk's determination to curb further advancement of his position and influence under the current unfavorable ESG system.

It is difficult to say whether Musk truly foresaw the political attacks against himself, or if he cleverly placed the scandal into the basket of ESG and extreme left-wing issues. But Musk undoubtedly once again captured the high ground of public opinion.