Cathie Wood has a simple answer to Tesla’s exclusion from an S&P 500 ESG index: ‘Ridiculous’


Cathie Wood isn’t thrilled that one of her most popular investments, Tesla Inc., is being left out of a leading index that tracks environmentally and socially responsible companies.

“Ridiculous,” was essentially Wood’s terse response to the news that the S&P 500 ESG Index dropped Elon Musk’s electric vehicle maker Tesla TSLA.
-6.80%
of its range, as part of its annual rebalancing.

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“While Tesla may be playing its part in taking gas-powered cars off the road, it has lagged behind its peers when examined through a broader ESG lens,” wrote Margaret Dorn, senior director and head of ESG indices, North America, at S&P. Dow Jones Indices, in a blog post dated Tuesday.

The S&P Dow Jones index announcement may come as a shock to some, given that the automaker is seen as a pioneer in producing electric vehicles for the masses, perhaps laying the groundwork for major manufacturers such as Ford Motor F,
-5.54%
and General Motors Co. GM,
-5.96%,
who are racing to compete with Tesla in larger-scale electric vehicles after falling behind Musk & Co. in the low-carbon category.

Dorn argues that some of the factors that contributed to Tesla’s exclusion were “declining criteria scores” related to its low-carbon strategy and “codes of business conduct.”

Tesla has been one of the biggest and most successful investments for Wood, the CEO of ARK Investment Management, whose optimism about disruptive companies like Tesla has helped her gain exposure on Wall Street.

However, Wood’s flagship fund has been thrown off balance by the downturn, which has capsized much of the investment market in growth, technology and tech-related investments.

Wood’s flagship product, ARK Innovation ETF ARKK,
-4.43%
has fallen about 74% from its peak in mid-February 2021 and is down more than 56% so far in 2022.

Tesla stock has fallen more than 42% since its recent peak in early November. Shares of the electric vehicle maker are down 33% so far in 2022.

Meanwhile, Ford and GM shares are both down about 38% year-to-date, with the S&P 500 SPX,
-4.04%
down nearly 18% so far this year, the Dow Jones Industrial Average DJIA,
-3.57%
by more than 13% and the technology-laden Nasdaq Composite COMP,
-4.73%
down 27%.

Musk also reflected on Tesla’s exclusion from the ESG index:

To read: A “summer of pain”? The Nasdaq Composite could plunge 75% from the top, the S&P 500 slip 45% from its top, warns Scott Minerd of the Guggenheim.