S&P Dow Jones Indices’ decision this week to boot Tesla from the S&P 500 ESG Index has cast a harsh light on the role that environmental, social, and governance, or ESG ratings play in scoring companies as positive for the planet.
Investment firms use ESG ratings from companies such as MSCI (MSCI), the largest ESG rating company, and Sustainalytics, owned by Morningstar (MORN), as a guide in screening stocks for inclusion in ESG and sustainable investment portfolios and funds.
ESG…