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Sustainability learning exercise

Brain circuits

Tesla: Exclude, engage or just invest?

Published 24 March 2021 in Brain circuits

With a mission “to accelerate the world’s transition to sustainable energy,” Tesla should be a shoe-in for investors with environmental, social and governance (ESG) concerns.  Yet, with controversial corporate practices related to ESG factors, the investment decision for responsible/sustainable investors is not so straightforward.

Despite lofty goals that could revolutionize the automobile industry with an inherently “good” product – making zero-emission electric vehicles mainstream, Tesla investors also have to consider their material ESG issues in their corporate practices and policies.

Put yourself in the shoes of an ESG investor. What are the most important material factors for you? (choose three per criteria)

  • Tesla would expedite the move from a mine-and-burn hydrocarbon economy toward a clean electric economy.
  • Tesla’s mission to accelerate the world’s transition to sustainable energy is aligned with Triodos’s transition themes.
  • Elon Musk is a true visionary and pioneer in the clean energy field.
  • Tesla and Musk, himself, are publicly involved in governance, labor and human rights controversies.
  • Elon Musk’s remuneration package is excessive.
  • Elon Musk social media activity affects firm’s value
  • Tesla’s IPO was on June 29, 2010. Its stock has grown exponentially since the IPO.
  • Contract workers at Tesla sign arbitration agreements that could hide labor relations abuses even sexual harassment.  
  • Since 2014, workers have filed 145 complaints with California’s Department of Fair Employment and Housing, alleging discrimination at Tesla on the basis of race, age, gender, disability, medical leave, pregnancy, sexual orientation and national origin.
  • Tesla is selling carbon credits to other car manufacturing companies that do not comply with CO2 regulatory target yet.
  • Tesla’s 8th of February adoption of cryptocurrency defies corporate finance norms
  • Elon Musk accused of Bitcoin market manipulation in February 2021 by top economist Nouriel Roubini

Final Poll question: Given your findings would you invest in Tesla? 

(a) yes, with no hesitation

(b) yes, but I want to challenge them to do better on ESG issues so I would engage

(c) no way! Tesla is overvalued 

(d) no, Tesla doesn’t align with my values

(e) other…

Feel free to post your answer in the comments section below

Authors

Vanina Farber - IMD Professor

Vanina Farber

elea Professor of Social Innovation, IMD

Vanina is an economist and political scientist specializing on social innovation, entrepreneurship and corporate social responsibility, with also almost twenty years of teaching, researching and consultancy experience, working with academic institutions, multinational corporations and international organizations. She is the holder of the elea Chair for Social Innovation.

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