SpaceX Receives Worst Sustainability Rating from MSCI, Compared to Russian State

Investment giant MSCI has assigned SpaceX its lowest possible sustainability rating, a move that places the company on par with the Russian state in terms of environmental, social, and governance (ESG) criteria. This harsh assessment comes just before SpaceX's record-breaking stock listing and highlights significant concerns about the company's governance practices.

The primary issue cited by MSCI is SpaceX's poor governance structure. Elon Musk, despite owning just over 40% of the company, wields over 80% of the voting power through a special class of shares. This concentration of control means that while other investors hold shares that receive dividends, their voting influence is negligible. This structure raises alarms for investors focused on corporate accountability and fair representation.

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The same person as CEO and chairman of the board is a really challenging element from a good governance perspective.

Despite the low rating, MSCI is still including SpaceX in its indices, albeit with accelerated processing. This inclusion means that index funds, which many Finnish banks and investment firms use, will likely incorporate SpaceX shares. However, financial institutions are taking note of the sustainability concerns. Nordea, for instance, has stated that only its funds not prioritizing sustainability will invest in SpaceX, such as low-activity index funds and Enhanced funds.

Seligson & Co, a pioneer in Finnish index funds, follows indices provided by Morningstar. Their sustainability analytics firm, Sustainalytics, is expected to give SpaceX a rating near the lowest category. If this rating is confirmed, Seligson would exclude SpaceX from its funds. The firm's criteria for inclusion in funds like the Seligson & Co North America Index Fund also involve liquidity and sustainability assessments, which could prevent SpaceX's inclusion.

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Practically nothing in the company progresses unless Elon Musk is behind it.