The fallout for Tesla being kicked out of the S&P500 ESG index

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The fallout for Tesla being kicked out of the S&P500 ESG index

Photo: AP

The company’s shares suffered a sharp drop after being banished from the ESG index of the selective Standard and Poors stock market index (S&P 500) that groups the 500 most listed companies of corporations that meet environmental, social and governance criteria.

Company CEO Elon Musk responded on Twitter saying the S&P 500’s ESG is “a scam,” adding further pessimism to investors in the electric car company as they fell 6.8% amid a broad sell-off. of technological actions.

At the close of trading, Tesla shares slipped to $709.8, their lowest value since August 2021.

The expulsion of Tesla has generated a strong debate in the market since the carbon footprint of this company valued at $735,000 million is a small fraction compared to its peers; however, the rest of the components of the ESG index (social and government risk), make investors and analysts doubt.

elon musk | Photo: AP

From a market standpoint, Tesla’s removal from the S&P index will likely be minimal, as there was only about $11.7 billion tracked by S&P ESG indicators as recently as late 2020. By contrast, trillions of dollars they track the leading indicator of the S&P 500.

It should be remembered that after a long wait, Tesla entered the S&P500 index in December 2020, one of the most important in the United States.

The configuration of the list of the 500 companies that make it up changes every quarter, and those responsible for its preparation, S&P Global, have decided that Tesla is the best option. It will thus replace Apartment Investment and Management, a real estate investment fund.

Thus, it joined the select group of companies such as Apple Microsoft, Amazon, Alphabet and Facebook, Berkshire Hathaway, Visa, JPMorgan Chase, Johnson & Johnson or Walmart.

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