Tesla’s Removal From S&P Index Sparks Debate About ESG Ratings

A benchmark ESG stock index has removed Tesla Inc., sparking a debate about which companies do — and don’t — pass muster with socially aware investors.

Tesla has grown into a $735 billion company on the back of its breakthrough electric-vehicle engineering. Its own carbon footprint is a small fraction of its peers, and its success in the market has pushed the industry overall away from gas-powered vehicles.

But the other components of ESG — the social and governance risks — give investors pause. Chief Executive Officer Elon Musk is an unconventional manager, prone to impulsive tweeting, and the company discloses very little information ...