SpaceX, Elon Musk’s aerospace company, received the lowest ESG rating ever from the financial services company MSCI.
SPACEX LIKE THE RUSSIAN GOVERNMENT, ACCORDING TO MSCI
The acronym ESG refers to the environmental, social, and governance factors (environmental, social and governance, precisely) of a company, an entity, or more generally an asset. SpaceX received a “CCC” rating from MSCI, the same rating given to the Russian government following the invasion of Ukraine in 2022.
According to MSCI, Musk’s company – which recently went public, reaching a market capitalization of over 2.4 trillion dollars – “lags behind its sector due to its high exposure and inability to manage significant ESG risks.”
GOVERNANCE ISSUES
SpaceX is reportedly problematic particularly in terms of governance, that is, corporate management and internal controls over rules: MSCI states it found “critical issues” in this regard, assigning the company a score of 3.2 out of 10.
Other analysts – and investors – had also raised doubts about SpaceX’s governance standards. Since the company filed documentation for its stock market listing, which took place on June 12, concerns have emerged regarding its shareholding structure and the limitation of shareholder rights, as well as the concentration of control in the hands of insiders, conflicts of interest, lack of board independence, and oversight of compensation.
As the Financial Times writes, all these issues have sparked a debate among European asset managers about SpaceX’s compliance with European sustainability transparency regulations: the risk for SpaceX, in short, is that European funds may not invest in it.
– Also read: The great investor exodus from European ESG funds
IS SPACEX CONTROVERSIAL?
MSCI also gave SpaceX a score of 1 out of 10 and an orange flag (“orange flag”) in the “Controversies” category of the New York-based index provider. The orange flag is assigned to companies considered indirectly involved in one or more serious ongoing controversies.
A score of 0 out of 10, combined with a red flag (“red flag”), is reserved for companies believed to be directly involved in serious ongoing controversies: for example, in 2022 the car manufacturer Volkswagen received the red flag after accusations of forced labor in the Chinese Xinjiang region, where the Uyghur population is subjected by the Beijing government to mass surveillance, detention, and exploitation practices.
WHAT MUSK THINKS ABOUT ESG
Elon Musk, however, has a very negative view of ESG, which he previously called “a scam turned into a weapon by fake social justice warriors.”
In 2022 Tesla, the electric vehicle and energy systems company of which he is CEO, was excluded from the S&P 500 ESG index amid accusations of racial discrimination and lack of details on its decarbonization strategy.
