Tesla (NASDAQ: TSLA) joined the S&P 500 in December 2020, which gave a huge boost to the value of its stock. Now the benchmark's sustainable version--the S&P 500 ESG Index--has included the manufacturer in the index.
Even though Tesla, as an electric vehicle manufacturer, was a pioneer in clean energy, this still did not automatically make it a sustainable company. Like any new member of the S&P 500, Tesla had to pass another test during the annual rebalancing of the S&P 500 ESG index, which was held in late April. To qualify, a company must obtain a sufficiently high sustainability rating, which includes a review of its environmental, social, and governance (ESG) indices and their comparison with peers in the automotive industry.
In early May, Tesla joined the S&P 500 ESG Index at its annual rebalance, replacing one of the retired companies--Facebook (FB), Wells Fargo (WFC), and Costco (COST). As of May 25, Tesla is the seventh-largest component in the State Street ETF at a weight of 1.73%, according to issuer data.
“Tesla's S&P DJI ESG Score was 22 out of 100 (up 8 points from last year's score), driven by its ESG Dimension Scores, including an Environmental score of 28 (up 1 point), a Social score of 6 (up 2 points), and a Governance score of 49 (up 21 points),” said S&P Dow Jones Indices.
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