Spacex Got the Worst Possible Environmental Grade Right Before Its IPO, Putting It in the Same Tier MSCI Gave Putin's Russia After It Invaded Ukraine

Elon Musk's response to SpaceX getting the lowest possible ESG rating: "Unfortunately, electric rockets are impossible."

The grade came down one day before SpaceX's IPO, courtesy of MSCI, the global index provider whose Environmental, Social, and Governance scores big investors use to size up risk. SpaceX bottomed out the environmental category, according to the Financial Times, landing on the same tier as the Kremlin in the wake of Russia's invasion of Ukraine.

It hasn't gone well for the stock either. After a brief pop following the IPO earlier this month, shares have slid back to around $167 as of Monday morning, erasing every gain from last week.

The environmental score isn't hard to explain. SpaceX rockets burn enormous amounts of fuel and dump plumes of pollutants straight into the stratosphere. The company has also been cited for dumping toxic wastewater and damaging ecosystems and wildlife around its launch sites.

The other two ESG categories weren't much better. SpaceX scored a 1 out of 10 on controversies, which tracks with a CEO who's been tied to corruption allegations, made openly racist remarks as recently as last week, and had an extensive relationship with Jeffrey Epstein. Governance came in at 3.2 out of 10, with analysts flagging that Musk has handed himself roughly 80% of the voting power.

"A poor controversies assessment, a very poor governance assessment and a low overall ESG rating should not surprise anyone," Edhec business school program director Frédéric Ducoulombier told the FT. "This is very close to a governance horror story for public-market investors."

Musk has been here before. In 2022, Tesla got booted from the S&P 500 ESG Index over racial discrimination concerns, poor working conditions, and a "lack of a low-carbon strategy." He erupted then too, calling corporate ESG "the Devil Incarnate" and accusing S&P of having "lost their integrity."

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