ESG proposals make waves at Tesla

The company might be an ESG darling, if it weren't for the S and the G

Several ESG-themed shareholder proposals at Tesla received significant support from outside investors – but not enough to pass at the August 4 annual meeting.

A water-risk proposal filed by As You Sow, for example, had nearly 64% support from independent shareholders, according to that group. But that resolution, as with others from the likes of Green Century, Nia Impact Capital, the Shareholder Association for Research & Education and others, likely had much more support from company outsiders than from those within. The water-risk proposal received just over 35% support from all voting shares.

“Tesla’s leadership has been cavalier at times when responding to localized water concerns,” As You Sow president Danielle Fugere, said in an announcement. “Every company, especially those that assert themselves as environmentally forward-thinking, should hold themselves to the highest standards of transparency and accountability regarding their resource use.”

As You Sow cited measures from other automakers, including Ford, GM, Hyundai and Toyota, to share water risk information with shareholders.

Other resolutions at Tesla, which sought to address workplace discrimination and harassment, climate lobbying disclosures, employee arbitration requirements and collective bargaining rights, saw similar levels of support as the water-risk proposal. Proposals around board diversity and reporting on child labor in the supply chain received much less support.

Like at big tech companies, shareholder resolutions at Tesla are notoriously difficult to pass, even as proxy votes have been seeing more success than ever.

Nonetheless, most Tesla shareholder proposals at last week’s annual meeting received considerable support – and that alone can be interpreted as victories for the groups that filed them.

Whether that message resonates with Tesla’s board and management is another matter. Leadership is considered loyal to CEO Elon Musk, who has flouted regulators and criticized ESG. Despite Tesla’s promising role in expanding the electric vehicle market, the company has been scrutinized for social and governance issues, which has led to unfavorable ESG ratings overall.

In May, S&P Dow Jones removed Tesla from its S&P ESG 500 Index, citing the lack of a carbon strategy at the car marker and lower marks for codes of business conduct. Specifically, the indexer pointed to racial discrimination claims, allegations around working conditions at its factory in Fremont, California and the company’s handling of an investigation by the National Highway Traffic Safety Administration over fatalities and injuries tied to cars that used autopilot features.

Following that removal, Musk called ESG a “scam” on Twitter, highlighting the inclusion of ExxonMobil in the ESG index.

That sentiment was apparent at the annual meeting in Austin, Texas. Attendees appeared to boo some of the proxy proposal speakers, and they applauded when the company cut off the presenters when their three minutes were up. In his remarks, Musk said he credited small retail investors with understanding the company better than analysts.