Tesla has been removed from the S&P 500 ESG index after CEO Elon Musk trashed the system that is supposed to measure the sustainability of a company or investment.

S&P Global announced this week that it has removed Tesla from its ESG index. ESG stands for ‘Environmental, Social, and Governance.’ This index is used as a standard for investors to rank companies based on those standards. However, it has been criticized for using a flawed assessment system that doesn’t truly take into account the environmental benefits of a company’s business.

Lately, Tesla CEO Elon Musk has been vocal about his disagreement with ESG rankings. He wrote on Twitter recently:

Stop the outrageous false ESG assessments, where Tesla gets a bad grade, but an oil company can get a good grade. Total gaming of the system!

ESG doesn’t really take into account the fact that Tesla’s entire business is about transitioning the world to sustainable energy but rather looks at strategies to decarbonize operations.

Tesla has notoriously scored poorly – though it’s not just about the environmental aspect but the assessments that have also criticized Tesla’s company culture.

This week, S&P Global commented on removing Tesla from its ESG Index:

First and foremost, the GICS industry group in which Tesla is assessed (Automobiles & Components) experienced an overall increase in its average S&P DJI ESG Score. So, while Tesla’s S&P DJI ESG Score has remained fairly stable year-over-year, it was pushed further down the ranks relative to its global industry group peers. A few of the factors contributing to its 2021 S&P DJI ESG Score were a decline in criteria level scores related to Tesla’s (lack of) low carbon strategy and codes of business conduct. In addition, a Media and Stakeholder Analysis, a process that seeks to identify a company’s current and potential future exposure to risks stemming from its involvement in a controversial incident, identified two separate events centered around claims of racial discrimination and poor working conditions at Tesla’s Fremont factory, as well as its handling of the NHTSA investigation after multiple deaths and injuries were linked to its autopilot vehicles. Both of these events had a negative impact on the company’s S&P DJI ESG Score at the criteria level, and subsequently its overall score. While Tesla may be playing its part in taking fuel-powered cars off the road, it has fallen behind its peers when examined through a wider ESG lens.

The group said that Tesla could be added back to the index in another upcoming rebalance.

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