Does Tesla qualify as an impact stock?
As an impact investing ETF issuer and specialist, clients often ask: “Is Tesla in your green energy ETF?”
After all, Tesla’s positive impact is pretty straightforward. Tesla helps drive the climate transition through cutting-edge technologies.
Last year, it sold 1.3 million electric vehicles and estimates that each EV sold avoids 55 tonnes of CO2 over its life.
Then there’s the Tesla Powerwall and Megapack, which are at the forefront of energy storage at both residential and commercial levels.
For some investors (including us), the positive narrative of accelerating the advance of sustainable technology is not enough.
Behind the scenes, there is a murkier side to Tesla, and its rapid growth has come at a cost. For all their environmental good, many controversies have prevented Tesla from meeting our definition of an impact stock.
In fact, there are 14 controversies associated with Tesla that impak Analytics have identified since 2018.
Many of these controversies are allegations and open cases, for example, the 2021 allegation against Tesla for having a mining company accused of having poor working conditions for workers in Congo.
Then there is the 2022 fine, which forced Tesla to pay USD 2.2 million to South Korea’s antitrust regulator for neglecting to inform customers that the driving range of Tesla’s electric vehicles could halve in cold weather. Though many of Tesla’s controversies remain ‘allegations’, the number identified is impossible to ignore.
Whilst we don’t like the idea of netting positive and negative impacts to determine an impact outcome for a company, we do think acknowledging both is essential to the concept of impact investing. Making a positive impact is not just about the environmental impact of your products and services.
Until there is evidence that Tesla takes full responsibility for its social and environmental footprint, in our mind, it won’t qualify as an impact stock.
Commentary written by Charlie Macpherson - Managing Director of ETFs at CIRCA5000