Elon Musk hates the Environmental, Social and Governance discussion. He says “ESG is a scam. It’s been weaponized by phony social justice warriors.” Despite the fact that I think Musk is the Einstein of our times… he is wrong about ESG. He is too focused on the extreme factions of ESG. He is correct that ESG extremists are a problem… but extremists are not typically picked to run ESG programs.

I think my guy Elon is also a bit upset politically. Whenever you wrap politics into a discussion that doesn’t need to have politics injected into it… you turn that subject into a circus. Personally… I would do everything I could, as an ESG Officer, to keep politics out of my ESG program. Activists will tell you to include politics in your ESG program but I would not listen to them. Your CEO doesn’t need to come out every month with a statement in support of whatever activists are currently upset about. I pick my ESG metrics, I set up my ESG management software (preferably from Osprey) and I go about improving my ESG metrics without talking about President Trump or President Biden. My goal as an ESG manager is to make the world a better place by helping my company improve their Environmental, Social and Governance decision making. If I do a good job of that I should get a good ESG rating from the rating agencies.

Tesla was expelled from the ESG version of the S&P 500 index. Some say it’s insane that the electric car company was expelled because electric cars are good for the environment. But Tesla was not expelled because they do or do not produce “ESG friendly” products or services. They were expelled because, in the opinion of S&P, Tesla’s ESG program was not effective enough. And in the case of Tesla, S&P thought Tesla was not doing enough on social and governance issues.

This all brings us to Exxon, who is still on the S&P ESG list and people have gone mad. “How could you expel the electric car company and keep the fossil fuel company?” But ESG ratings agencies don’t look at what you are producing, they are looking at your ESG program. No matter what you produce… they want to know if you are improving all three elements of your ESG program. Apparently, S&P thinks Exxon is making a significant effort to improve their Environmental, Social and Governance decision making and Tesla is not trying hard enough.

If you take anything away from this post, take away the fact that any company, regardless of what they make, can improve their environmental, social and governance decision making and they should be recognized for their efforts.

-Roy Snell

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