Faltering Tesla Faces a Familiar Question: Is It an ESG Stock?

The debate about whether Tesla Inc. belongs in ESG-focused investment funds is resurfacing again. And it’s emerging during a week when the company posted its first year-over-year sales drop since the early days of the Covid pandemic. Its stock plummeted Tuesday on the news.

Two years ago, Tesla was removed from a market benchmark—the S&P 500 ESG Index—mainly because of concerns about workplace-related issues. Tesla was put back into the index last year after it provided additional disclosures about its hiring practices, climate risks and supply-chain strategy.