6 Steps Elon Musk Can Take to Improve Tesla’s ESG Profile
“$TSLA does quite well on beneficial products–but it doesn’t do so well on worker treatment, discrimination,” says @JUSTCapital CEO @MWhittaker_ #ESG. “They do really well on customer treatment but there’s other areas where they can improve.” pic.twitter.com/G9UYNy84yy
— Squawk Box (@SquawkCNBC) May 20, 2022
Martin was interviewed on CNBC about Tesla’s performance this morning, video included above. The rest of the newsletter is unchanged.
S&P revealed this week it dropped Tesla from its flagship ESG index, bringing the ire of Elon Musk down on the entire ESG space. As an organization that’s been tracking Tesla’s stakeholder performance over the last five years, its data paint an interesting picture.
Close followers of JUST will know that Tesla has historically scored quite poorly (bottom 10%) in our annual Rankings primarily due to how it pays and treats its workers. This year, however, it rose to #608 out of 954 companies. Broadly speaking, it performs well on environmental issues, customer treatment and creating U.S jobs, but not so well on certain “S” and “G” criteria, including “paying a fair and living wage” (#585), “protecting worker health and safety” (#941), and DEI-related discrimination controversies (#936).
Part of its problem is a lack of disclosure. For someone who is committed to freedom of speech, Musk could do a better job of transparency at Tesla. For example, it was near the bottom of our rankings for transparent customer communications and for accountability to stakeholders. As our ESG Governance Report shows this week, companies have been gradually adding ESG governance disclosures over the last few years (including, for example, linking ESG risks and performance to executive compensation). The fossil fuel companies Musk calls out have been notable improvers in this area.
Elon, if this finds its way to you, here are six simple actions you can consider taking to improve Tesla’s score in the JUST Rankings and better align with what Americans want from companies today:
- Perform a living wage assessment across the entire Tesla workforce.
- Perform a worker pay gap analysis by race/ethnicity and gender.
- Release detailed workforce diversity data by race and gender (e.g. EEO-1 Report).
- Commit to and report on a verified 1.5 degree Science Based Target on climate.
- Connect executive compensation to achieving specific stakeholder goals.
- Release board diversity by race and gender.
They will make Tesla an even better company, and the American people will thank you.
Be well,
Martin
This Week in Stakeholder Capitalism
Intel and JPMorganChase CEO pay plans are rejected by shareholders amid growing concerns by Americans over CEO pay in comparison to workers.
McDonald’s plans to sell its Russian businesses and franchises. More in the Forum.
Netflix updates its corporate culture guidelines including a new section under “artistic expression” stating if staff finds it hard to “support our content breadth, Netflix may not be the best place for you.” The company is also letting go of 150 employees amid slowing growth.
Starbucks will reimburse expenses to employees who have to travel for an abortion.
Wells Fargo’s commitment to increase diverse hires led to “fake interviews” according to current and former employees interviewed by The New York Times.
What’s Happening at JUST
Proxy season continues for corporate America as companies face a record number of ESG-related shareholder resolutions. With investors and other stakeholders looking for greater accountability on ESG efforts, our research team took a look at the state of board oversight of ESG among the Russell 1000. Our analysis found a steady increase in disclosure with almost a fifth of Russell 1000 companies reporting all three ESG governance data points we measure in 2022 – up from around a tenth in 2020. Explore the full findings here.
Leslie Picker appeared on CNBC’s The News With Shepard Smith to discuss our latest CEO-to-Median Worker pay research, including new polling showcasing Americans’ growing concern over CEO Pay, rising income inequality, and solutions to close the gap.
On Wednesday, May 18th, JUST’s director of corporate equity Ashley Marchand Orme joined Politico’s Sustainability Summit to discuss “Targeting the S Factor.” Watch the video of the session here.
Last year we celebrated Deepak Chopra as Chairman Emeritus of JUST Capital and created the Deepak Chopra Scholars Fund in his honor. This fund engages the next generation of business leaders in creating a more just, equitable, and sustainable economy through a robust internship at JUST Capital. Over 10 weeks, these scholars help build the backbone of JUST Capital’s research by collecting and analyzing data on how the largest, publicly traded U.S. companies are measuring up to the public’s priorities. Please consider giving to the Deepak Chopra Scholars Fund to support this program!
JUST Events
Moving the Needle: Tracking Corporate Progress on Racial Equity
Over the last two years, corporate leaders made public commitments to combat systemic racism in their workplaces, communities, and society-at-large. This virtual convening will uncover how our nation’s largest corporations are measuring up. Leading investors, asset managers, and corporate leaders will share their latest playbooks, benchmarks, and priorities for moving the needle on equity and opportunity while creating value for all stakeholders. JUST Capital will highlight trends and takeaways from our updated 2022 Corporate Racial Equity Tracker and unveil a new ranking that will shine a light on Workforce Equity and Opportunity. Sign up to join this virtual event here.
The Forum
(McDonald’s)
“Some might argue that providing access to food and continuing to employ tens of thousands of ordinary citizens is surely the right thing to do. But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine. And it is impossible to imagine the Golden Arches representing the same hope and promise that led us to enter the Russian market 32 years ago.”
- Chris Kempczinski, CEO of McDonald’s, on why the company is deciding they must close their Russian business.
“There isn’t really a divide between internal and external communications. It is often better to take the inside-outside approach. Pull the curtain back and publish the internal note for external people to see on social media. Ultimately, that helps with transparency and shows we’re not hiding anything.”
- International Energy Company executive quoted in Brunswick’s Connected Leadership report, showing rising expectations for CEOs to lead through transparent communications on social media.
“When you get in the seat, you need to make sure you return the favor. At some point we all need people in our career to help give us a push. That doesn’t necessarily have to come from people that look like you or have a common background with you, but it doesn’t hurt.”
- Jason Bond, Managing director in Bank of America’s global banking and markets group, on the need for increased diversity in banking and “giving back” when you get ahead.
Must-Reads of the Week
The Conference Board’s latest survey shows declining CEO confidence in the general health of the economy overall, and more than two-thirds say they are increasing wages across the board in response to labor market conditions.
Quartz reports that a coalition of economists are pushing to measure inflation by income level, as opposed to the consumer price index, to get a more granular picture of how rising prices are affecting different income classes.
The Wall Street Journal reports that a judge has struck down California’s law requiring that companies headquartered in the state include 2-3 women on their board.
The Wall Street Journal takes a look at Atlanta’s housing market to shine a light on a national issue – the rise of big banks and remote brokers buying up single family homes, eliminating inventory and driving up the price of purchasing and renting.
The New York Times looks at the workers who managed to trade up for better paying jobs during the pandemic.
Chart of the Week
This chart comes from our latest report analyzing how boards are holding Russell 1000 companies accountable to their ESG targets. Looking at three data points, we found a steady increase in companies disclosing board oversight of their ESG efforts – with a more significant jump, about 10 percentage points, between 2021 and 2022. Boards are also currently more likely to discuss and review progress on ESG topics than to tie ESG metrics to compensation, possibly signaling that many companies are in the early stages of their ESG journeys and the ways in which they’re prioritizing action.
Get to Know JUST
Laurel Britton
JUST Capital Board Member
Laurel Britton founded and oversees a philanthropic fund that supports initiatives and organizations focused on economic inclusivity and community development, as well as arts and culture.
Laurel is also a supporter of the Deepak Chopra Scholars Fund and in regards to the fund, shares, “I’m honored to have been able to support this terrific internship program. I can’t imagine a better way to advance the great work that we’re doing at JUST Capital and I am proud to do what I can to help ensure that the mission of our organization, inspired by Deepak’s vision, is advanced by this inspiring new generation of contributors.”
