Tesla founder Elon Musk made his stance on environmental, social and governance (ESG) ratings unmistakably clear in June 2023 when he posted “ESG is the devil” on his social media platform, X. Musk, a well-known critic of ESG, made the comment in response to a report that cited poor ESG scores for his electric vehicle company, Tesla — ironic, considering the environmental benefits of Tesla’s products.
However, research has shown that strong ESG performance reduces companies’ cost of capital, often resulting in cheaper credit and better stock performance. Investors are becoming more environmentally and socially aware of the impact of their investment decisions and are subsequently gravitating to companies that reflect those values.
