• Interconnected ESG Risks: ESG principles highlight the interconnected nature of risks and opportunities across a company’s value chain. Elon Musk, a prominent business personality, faces ongoing challenges in various aspects of ESG, including governance.
• Governance Concerns: Musk’s control over multiple companies and his involvement in headlines raise governance-related questions. Recent investigations into Tesla’s Autopilot system and its “Elon Mode,” which allows drivers not to pay attention, have sparked controversy, leading to concerns about hidden features elsewhere.
• ESG Controversies: Tesla faces a string of complaints related to ESG issues, encompassing working conditions, carbon reduction strategies, and other controversies. These challenges led to Tesla’s removal from the S&P 500 ESG Index in 2022, although it was later reinstated in 2023. The scrutiny also extends to Musk’s influence over Starlink satellites and potential military applications.

One thing I love about ESG is the interconnected nature of the acronym, its ability to pull risks and opportunities across a value chain between companies. One thing I love about baseball is that you get three strikes before you are out, and even mighty Casey had his day. I recently contemplated the overlap for Elon Musk.

For the G in ESG, Governance, relationships stretch across companies with common board members and management teams. Business personalities like Musk have far-reaching control across multiple companies, in his case very important ones. 

For Musk there are continuing dramas in the headlines across his portfolio, most recently an investigation into Tesla by the National Highway Traffic Safety Administration.  NHTSA has been investigating Tesla’s Autopilot’s role in several crashes and uncovered a secret “Elon Mode” that doesn’t require the driver to pay attention. Originally discovered by a hacker who calls himself “@greentheonly,” this capability may be behind the aggressive correcting features of Tesla. Drivers have called this “nagging” and are pushing back. But, this begs the question, where else might there be an “Elon Mode” lurking? 

Related Article: How I see it: By Matthew Sekol

There are a string of complaints around ESG issues for the company, including the S and the G. There are complaints of the working conditions at its Fremont factory, and a poor carbon reduction strategy. Is this a company-level “Elon Mode” at work?

Coincidentally, these issues were listed as the reasons S&P Global listed Tesla was removed from the S&P 500 ESG Index in 2022. With all of these controversies, rumors are swirling that X is exploring facilitating payments, training AI models on Tweets, and collecting user biometric and employment information. This comes on the heels of what can only be called an extremely rocky transition to the platform’s current state, including massive social impacts across its employee base and users (full disclosure: I no longer tweet or check the site.) Despite these issues, spoiler alert:Tesla was added back in to the Index with little fanfare in the spring of 2023.

Now serious questions are being asked about Musk’s individual power over Starlink satellites and their military applications, especially around Ukraine. The US Government appears to be so concerned about losing Starlink support that it won’t comment on service loss in Crimea. Is this another “Elon Mode” at work?

ESG strike three? Stay tuned.

This article is contributed by Matthew Sekol. Every week ESG News delivers smart commentary from ESG practitioners and experts to unpack issues of the day. Submit an article for editorial consideration for the ESG Unpacked series here: [email protected]