May 2, 2022. The S&P 500 ousts Tesla, Inc. from the S&P 500 ESG Index. Tesla is widely recognized as the firm that ushered electric vehicle making into the mainstream. So the index’s move seems unreasonable or possibly made in error to many, raising some interesting questions:

• How does an environmentally-friendly corporation like Tesla get dropped from an ESG index?
• Why does a potentially non-environment-friendly company like Exxon make the ESG index and remain on it?
• What do these moves mean about the integrity and validity of ESG scores and ratings?

Before we go on, let’s bring some context.

Why did the S&P 500 ESG Index drop Tesla?

May 18, 2022. In an S&P blog post, "The (Re)Balancing Act of the S&P 500 ESG Index," a spokesperson announces and explains their decision. Here are the bullet points:

• Global industry group peers pushed Tesla’s S&P DJI ESG Score further down the ranks in the GICS industry group: Automobiles & Components.
• A decline in criteria level scores related to Tesla’s low carbon strategy and codes of business conduct contributed to its 2021 S&P DJI ESG Score.
• A media and stakeholder analysis identified "two separate events centered around claims of racial discrimination and poor working conditions at Tesla’s Fremont factory."
• The analysis also highlights "the handling of the NHTSA investigation after multiple deaths and injuries were linked to its autopilot vehicles, affecting the company’s S&P DJI ESG Score at the criteria level, and its overall score."

Companies, including Tesla, left out of the S&P 500 ESG Index post-rebalance. Image courtesy of Indexology Blog.

The S&P blog post summarizes their case about dropping Tesla, "While Tesla may be playing its part in taking fuel-powered cars off the road, it has fallen behind its peers when examined through a wider ESG lens." And in this statement lies the crux of why the index dropped Tesla and why others are still on.

Analyzing Tesla’s web data

SESAMm’s TextReveal® insights suggest that the S&P 500’s decision to remove Tesla could be justified based on increasing controversy levels concerning discrimination, ethical standards, and work health and safety. By analyzing text related to ESG topics across the web, we picked up trends for the following subtopics:

• climate_change_atmospheric_pollution
• ethical_standards
• discrimination_racism_sexism
• labor_standards
• health_and_safety_at_work
• general_environmental_impact

Tesla’s ESG scores (six subtopics)

Regarding the volume features (Figure 1), we observed a significant increase in the scores related to ethical standards, discrimination, and atmospheric pollution for Tesla before the controversy. The conclusions are mostly the same for ESG sentiment (negative) scores. An interesting note is that the negative score of health and safety at work slightly increased in the months before the removal of Tesla from the index.

Comparing Tesla’s sentiment with other S&P 500 ESG Index companies

To see how Tesla’s ESG sentiment scores compared with other companies, we must rescale them with respect to a large universe of companies. This process means that for a given company, we use percentiles of the distribution of each subtopic’s ESG score to do a rescaling to the S&P 500 ESG constituents list after the 2022 rebalancing. Rescaling allows us to compare the companies with each other because the rescaled score indicates how bad the company is compared to the others, according to a specific ESG subtopic.

The following graphs show different sets of subtopics, plotting the mean of the respective rescaled scores if several topics are considered. Here are the companies considered.

Companies removed from the index:

• Tesla
• Delta Air Lines
• Chevron Corporation

Companies that joined the index after the 2022 rebalancing:

• American International Group
• Expedia Group

Companies still part of the index:

• Exxon Mobil
• Apple
• Amazon

Tesla, Delta, Chevron, AIG, and Expedia compared

Apple, Amazon, and Exxon compared

The S&P 500’s choice is reasonable

Our analysis shows that the S&P 500’s decision to oust Tesla from the ESG index is reasonable. We found significant subtopic volumes and negative sentiment that support the S&P 500’s claims of racial discrimination, poor working conditions, and other controversies.

Thanks for reading this quick analysis. For a more detailed report, including Chevron’s and Delta’s ESG scores, reach out to a representative today.

SESAMm’s ready-to-use alternative data

Leverage our alternative data streams to incorporate systematic insights into your alpha signals or risk monitoring your entire portfolio. From tracking global sentiment to analyzing retail communities like WallStreetBets and integrating ESG alternative data into your systems, our solutions will make generating value from web insights easy.

Following the success of SESAMm’s AI-Powered Deal Screening Reports, we’re expanding our due diligence suite with a new addition: the AI-Powered Legal Risk Report. Built for private equity, M&A, and legal teams, it delivers a rapid, data-driven view of a company’s litigation, regulatory, reputational exposure and all public compliance documentation and disclosures, helping professionals identify red flags early and make faster, more informed decisions.

Accelerating Legal Due Diligence

In private equity transactions, time is limited but the stakes are high. Traditional legal research can take weeks of reviewing court filings, disclosures, and media coverage. SESAMm’s Legal Risk Report automates this process, scanning millions of documents to surface potential risks in less than an hour.

Each report is generated automatically in less than 15 minutes and backed by verifiable sources, giving legal and compliance teams the transparency they need to validate findings and support defensible due diligence.

The Legal Risk Report helps professionals accelerate and strengthen their assessments at every stage of a transaction:

• Reduce blind spots: Uncover litigation, compliance, or reputational issues that manual research might miss.
• Strengthen documentation: Support client memos and audit findings with verifiable, AI-extracted evidence.
• Reduce costs and time: Cut research hours while maintaining defensible, high-quality standards.

SESAMm’s technology is trusted by leading financial institutions to enhance their understanding of ESG, reputational, and regulatory risks. The new Legal Risk Report builds on this foundation, extending SESAMm’s AI capabilities to help law firms, compliance officers, and corporate legal teams uncover litigation and reputational exposures with speed and transparency.

A Growing Suite of AI Reports

These new Legal Risk reports are the latest addition to SESAMm’s expanding portfolio of AI-generated reports. Other reports include ESG assessments, supply chain screening, secondaries screening, and deal screening.

By combining AI-powered text analysis with structured risk categorization, SESAMm enables professionals to go from question to insight  - and from risk to response - faster than ever.

Below is an approximation of this video’s audio content. Watch the video for a better view of graphs, charts, graphics, images, and quotes the presenter might be referring to in context.

Intro to SESAMm

Thank you very much, Greg. Thank you, everyone, for listening to this presentation. I’m Sylvain. I’m CEO and co-founder of SESAMm. SESAMm is an AI company. We extract billions of articles and messages from the web in order to identify critical insights related to financial institutions and corporates. We’re a team of close to a hundred people. And what we aim to show you today is our new product that helps financial institutions and corporates identify ESG controversies in the form of alerts on all of their investments, on all of their clients, and all of their suppliers.

So there are more than 23 million companies in the world right now. These companies are your investments, your suppliers, your clients, and no one is actually tracking them. Most of these companies are never tracked day to day. SESAMm’s solution aims at automatically identifying controversies on these companies and finding the critical information that you’re missing.

See a dashboard example

So let’s take a quick example first. Here we have dashboards where we analyze a company called Wirecard. Wirecard is a fintech company—German—that went bankrupt a few years ago due to a two billion fraud scandal. That company was heavily embedded into the financial sector, working with a lot of banks, a lot of corporates worldwide.

On our dashboards, we can immediately identify all of the key controversies and all of the key risks on the companies. And we have a score called a virality score that helps assess the severity of each ESG event so as to understand whether that company should be excluded from your list of suppliers, for example, or even discussed as a client.

SESAMm solution benefits

There are key benefits to providing this information and to the way that this product is brought to the market. First, SESAMm covers more companies than anyone else. We cover close to five million firms, whereas most ESG providers have coverage limited to 50,000 firms in total. In addition to that, we’re able to detect controversies in real time and generate daily alerts where normally a bank, for example, would have to go through that process manually and update it just a few times a year instead of receiving that live information.

In addition to that, as you can see on the demo here, we have information for more than 14 years of data. So anytime you onboard a new supplier, anytime you check for information—ESG information, on a new client, or on an investment—you’ll automatically be able to go back in history and understand whether that company was exposed to issues in the past.

Trusted by major financial institutions

SESAMm solutions are already adopted by major banks such as Raiffeisen or Nomura, for example, in this industry, major private equity firms such as Carlyle. And what’s interesting in this solution is that we’re seeing specific interests from commercial banks that are missing the solution in order to track ESG risk on their suppliers and their clients. And it makes sense. Most of these suppliers and clients are small firms, local firms that no one else is going to track. And AI is enabling us to automate the process of monitoring these firms and making sense of that data in real time.

SESAMm's solution in action

So now, let’s go to the second part of the demo. We want to take an actual life example. So let’s take a company like Twilio, for example. So you may know Twilio communications, API, messaging services, phone services, and the like. This company is a typical provider of banks or of financial institutions or any other corporates in the world.

So you see on the left, we immediately identify all of the information related to Twilio. And we can rank this based on negative sentiment so as to understand what are the key critical topics that I should care about and that I should evaluate before actually working with Twilio or in the context of already working with Twilio. We go through that process by handling more than 20 billion articles and messages from more than four million sources worldwide. So that’s an insanely large amount of information.

And on Twilio—say Twilio is one of your suppliers or one of your clients—we immediately identify a large controversy related to a data breach and cybersecurity issue, and we identified both in news but also in some of the specialized cybersecurity websites. In addition to that, we can go in even more granularity and look transparently at the content themselves, read the contents from the platform, and not just rely on a numeric rate saying that “Hey! This company is problematic.” We can actually read the underlying content and understand how the controversy emerged.

SESAMm solution benefits

So the key benefits and the real advantages of that solution is getting information immediately. You don’t have to wait for a due diligence for someone to check for someone to send a questionnaire to the company. You just type in the name, get the information in a few seconds wherever the company is, and however local that company is. It could be the most obscure company. And as you can see our system also covers many different languages, including Asian languages that are monitored automatically.

The second part is that we have access to millions of sources, including very industry-specific sources. I was mentioning cyberthreats. We also have access to NGO websites that identify these types of ESG issues in real time.

So this is really the information that is aimed at helping you monitor controversies and ESG events in just one place on any number of companies, public and private, whether they are your suppliers, your clients, or your investments. You can make sense of that data in real time using AI.

Presentation summary

I’ll finish this presentation a bit early, and we’ll actually bring the point to three calls to action. The first one is, first, please come to our booth. We’re actually on the left of the exhibit hall right when you come in. The second one is, please visit our website. It’s spelled SESAMm, sesamm.com, and you can get a free trial from the website. And finally, come talk to our amazing team with Dave and the rest of our team at our booth. And please ask us for a free POC—whether you’re a bank, an asset manager, or a fintech company—and help us help you track all of the ESG controversies on millions of companies.

Thank you very much.

Reach out to SESAMm

TextReveal’s web data analysis of over five million public and private companies is essential for keeping tabs on ESG investment risks. For example, ESG Alerts provides a better way to research and monitor your investment portfolio. To learn more about how you can analyze web data or to request a demo, reach out to one of our representatives.