But it turns out that the green credentials go only so far. Just 86 of about 1200 do-gooder investment funds tracked by Bloomberg own Tesla shares. And of those, only seven count Musk’s company as a top-10 holding.
That’s much less of a warm reception than these investors have given even to Facebook, which, despite a data-privacy scandal and the founder’s super-voting power, is held by 126 of those funds.
Tesla represents a quandary for the responsible investing set, who look for companies that they deem supportive of environmental, social and governance issues, or ESG. Musk’s vision for Tesla, laid out a decade ago, was impeccable on at least one score: “To help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy.”
But ESG investors now worry the company’s performance on social and governance issues doesn’t justify its lofty valuation.
Investors say the board is missing expertise on manufacturing - evident in recent production delays - and has too many Musk cronies on the board. The company doesn’t publish a sustainability report, which investors say makes it hard to keep tabs on workforce issues such as safety. And they are concerned that Tesla can’t manage infrastructure changes involving electric vehicles and autonomous-driving cars.
The issues will move to the fore at Tesla’s annual meeting today. State pension funds with strong socially responsible mandates, including those in Oregon and New York City, will be pushing for an overhaul, including opposing the reappointments of three directors.
The vote will be largely symbolic. Musk owns more than 20percent of the shares. That means just a handful of investors, including T Rowe Price, Fidelity and technology investor Baillie Gifford, control about 50percent of the stock.
Tesla “is appealing to many investors because of its role in the transition toward a low-carbon economy”, said Dieter Waizenegger, executive director at CtW Investment Group, an activist group that has led a campaign against the directors. “You also need to have really good governance to fulfil your promise in the long term, and this company has massive problems living up to its promises.”
Tesla declined to comment.
Sustainalytics, which ranks companies on ESG issues, says Tesla is considered just an “average performer” on social and governance metrics. Many of the biggest responsible-investment mutual fund companies hold no Tesla shares.
Oregon’s state pension fund has concerns about workplace safety, manufacturing infrastructure and executive pay, State Treasurer Tobias Read said in an email. It is backing a proposal seeking to strip Musk of his chairman title.
“Tesla is a company of the future and we want to ensure it has a future,” he said.