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Daily ESG Briefing: Tesla makes S&P ESG index despite 6/100 social score

The latest developments in sustainable finance

Tesla has made it into the S&P 500 ESG Index, despite scoring just six out of 100 on its S&P ESG social score, and coming last out of the five automobile companies in the broader S&P 500 index. In a blog, Daniel Perrone, S&P Dow Jones Indices’ Head of Operations for ESG Indices, said that the electric car giant’s inclusion was based more on it representing 75% of float market cap within the automobile manufacturing group than its ESG score. The S&P 500 ESG Index targets 75% of the float market cap for each industry group, and so Tesla’s exclusion would leave automobile manufacturing underexposed. Perrone cited the inclusion of companies such as Apple and Edison International, which score 25 and 20 out of 100 respectively.

More than 60% of companies surveyed said they consider the EU Emissions Trading System a decisive factor in making investment decisions – up from 27% in 2020 – according to Refinitiv’s Carbon Market Survey. The survey found a majority of respondents believed carbon prices under the UK’s new emissions trading system would align with those in the EU, and half thought linking between the two systems would be in place by 2025.

A group of investors including Amundi, Robeco, Impax and Brunel have written to the EU urging it to strengthen rules on tax transparency for multinational companies. The group, coordinated by the PRI, welcomed an EU initiative to mandate country-by-country reporting for multinationals, and said that the EU should reduce possible exemptions and expand disaggregated reporting requirements to all countries of operation.

The International Association of Insurance Supervisors and the Sustainable Insurance Forum have published a paper on the supervision of climate risks in the insurance sector, recommending the integration of climate-related risk into corporate governance frameworks, and the disclosure of material risks – potentially using the TCFD framework. The recommendations came as NGO ShareAction  published a report concluding that insurers lag behind other financial sectors in managing systemic risks such as climate change. While coal policies are having a real impact (with BMD Group reportedly unable to obtain insurance for its work on the Adani coal mine because of climate-based exclusions), just 16% of the 70 insurers assessed had policies to restrict underwriting for tar sands, shale oil or Arctic exploration. Just 17 had a board member with sustainability-related expertise, and 19% had any board-level sustainability KPIs. 

BlackRock, State Street and T. Rowe Price are among asset managers accused of siding with management more often at companies they provide services to, according to a report by As You Sow. The report, which analysed asset manager votes across a period of six years, found that BlackRock was more than three times more likely to vote against management when it had no business ties to a company. State Street allegedly voted with shareholders only 23% of the time at companies it had ties to, versus 37% of the time when it had no ties.