Environmental technology company, Envirosuite (ASX: EVS) has called for a global ESG standard to allow investors to know what to do after Tesla was axed from a leading ESG index. The environmental technology company believes that Tesla founder and CEO Elon Musk, was correct following his questioning of ESG ratings after his company was not included in the S&P 500 ESG Index. Envirosuite then called for a globally recognized standard to prevent future occurrences.

The news came off the back of a series of events linked to Tesla, which included fatal car crashes linked to Tesla’s autopilot technology, claims of racism at the company’s Fremont factory and a lack of published details on its low carbon strategy or business conduct codes. Although Tesla’s products are environmentally-friendly by helping cut planet-warming emissions, S&P head of ESG indices for North America, Margaret Dorn, justified the axing of Tesla from the Index. Dorn said its other issues, including the lack of disclosures relative to Tesla’s peers, are topics that can raise concerns for investors who want to judge the company using ESG criteria.

Tesla founder and CEO Elon Musk was quick to tweet on his company’s omission from the Index, which has mounted pressure on Tesla’s tech selloff-weary share price. CEO and managing director of Envirosuite, Jason Cooper, said,

“Elon makes a fair point when he questions ESG ratings. Firstly, ESG isn’t clearly defined, and the second thing is that there isn’t a globally recognized standard, so depending on the framework used, the rating could be misleading.” 

He continued by saying, “In Tesla’s case, yes, they are a company focused on accelerating the world’s transition to sustainable energy. However, this doesn’t discount the potentially negative impact they have in other areas.” Cooper said a critical aspect of ESG is actual measurement, and it needs to be seen as more than a trend. “For companies, it is important to know your baseline to make improvements that enable positive outcomes for more than just industry, as prosperity can’t come at the cost of people and planet.”

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