With the obvious being its electric vehicle businesses and solar and smart grid operations,
Tesla Inc (NASDAQ:TSLA) appears to be the epitome of an environmentally friendly company, one that checks all sorts of sustainable investing boxes.
What Happened: That and the much-ballyhooed stock just entered the S&P 500 on Monday in the biggest inclusion into the benchmark domestic equity gauge on record. That means Tesla is now a top 10 holding – number seven to be precise – in popular exchange-traded funds such as the
SPDR S&P 500 ETF (NYSE:SPY) and the
Vanguard S&P 500 ETF (NYSE:VOO).
Already a prominent part of a slew of ETFs, Tesla s S&P 500 entry means the stock also entered offshoot indexes, such as the S&P 500 Growth Index and the S&P 500 Consumer Discretionary Index, putting it into ETFs that track those benchmarks.
The index is a broad-based, market capitalization weighted index that provides exposure to companies with high environmental, social, and governance (“ESG”) performance relative to their sector peers while maintaining similar overall industry group weights as the S&P 500 Index.
“The main driver of whether a company is selected to join the S&P 500 ESG Index is its S&P DJI ESG Score,” according to S&P Dow Jones Indices. “This score is derived from the annual Corporate Sustainability Assessment (CSA), which is administered by SAM, a part of S&P Global. The CSA is a highly granular, industry-specific questionnaire based on financial material ESG metrics. Insights gathered from the CSA form the backbone of the ESG score that is used to select companies added to the S&P 500 ESG Index.”