How Green Is Tesla, Really?
On May 13, Elon Musk said Tesla would no longer accept bitcoin because of bitcoin’s heavy energy consumption. Yet the company ranks well behind General Motors and Ford in reporting carbon emissions and setting carbon-reduction targets. So how green is Tesla, really?
Those concerned with the fate of the planet have long lauded Tesla for its efforts “To accelerate the world’s transition to sustainable energy.” The company says that “ the faster the world stops relying on fossil fuels and moves towards a zero-emission future, the better. “
While founder and CEO Elon Musk caused alarm among environmentalists in early 2021 by endorsing bitcoin, whose annual carbon emissions are equivalent to that of a small country, he reversed this position with a tweet on May 13. Responding in part to a tweet from the Cambridge Centre for Alternative Finance calling bitcoin’s energy usage “insane,” Musk said that Tesla would no longer transact in bitcoin because of its heavy reliance on fossil fuels and its “great cost to the environment.”
There is no denying that Tesla has disrupted the auto industry by making exclusively electric vehicles-and maybe more importantly, by making them sexy. When the Model 3 was released in 2017, corporate elites and tree-huggers alike put their names on the wait list. Tesla succeeded in electric cars where its American competitors, General Motors and Ford, had failed.
But Tesla’s story about being green is not as black-and-white as it may seem.
A recent study conducted by Arabesque (not publicly available) found that the car company is among the 15% of the world’s largest companies, across 14 indices, that do not disclose their overall greenhouse-gas emissions. General Motors and Ford, meanwhile, are far more transparent-about both the emissions they create in making their vehicles and their targets for reducing those emissions.
One needs to ask: If Tesla is truly committed to a positive environmental future, why doesn’t it disclose its carbon emissions?
Arabesque is an asset-management company that uses ESG (environmental, social and governance) and sustainability criteria in allocating capital. It argues that ESG policies signal the strength of a company’s strategy, corporate purpose, and management qualities.
In terms of carbon emissions, Arabesque expects corporations to report two pieces of data:
- Specific and separate numbers, in tonnes, for Scope 1 (direct) and Scope 2 (indirect, owned) emissions across all its operations
- Clear carbon-reduction targets
The data must also be from a reporting period within the past two years in order to be considered sufficiently timely.
Arabesque believes that disclosing these specific data and targets allows company executives to be held accountable by shareholders and climate activists, as well as raising awareness among company employees and prompting them to actively seek ways to reduce carbon.
When I asked Arabesque researchers which companies stood out among those that did not report their carbon emissions, they replied, “Tesla.”
Surprised? I was too.
Tesla Lags Behind Ford and GM in Disclosure and Targets
Arabesque ranked Tesla well behind Ford and General Motors (GM)-two of Tesla’s fiercest American competitors, which have built their success on carbon-intensive combustion engines.
Tesla shows its carbon emissions in graphs, which means they do not disclose the exact numbers. As well, they do not offer details, such as Scope 1 or Scope 2 emissions, or the percentage of operations that these graphs cover. What’s more, the company’s data are not timely: the figures in its 2019 report are for 2017.
The company also has failed to commit to carbon targets, making its decision to trade cars for the energy-intensive bitcoin an understandable oversight.
GM and Ford, on the other hand, are willing to air their dirty laundry. Not only do both companies disclose their carbon emissions, they have also set ambitious targets to get to net-zero carbon.
General Motors uses science-based targets and plans to be carbon-neutral in products and operations by 2040. It will offer only electric vehicles by 2035. To get there, the company is investing an additional $27 billion in autonomous and electric-vehicle research and development, over and above what it invests in gas and diesel vehicles.
Ford also uses science-based targets and plans to be carbon-neutral by 2050. Further, it offers very specific targets for its Scope 3 emissions (the emissions related to its products, such as their cars). It too also plans to invest heavily in electrification: $22 billion through to 2025.
Staying silent on its carbon emissions helps Tesla dodge public scrutiny of lapses in its ESG.
In 2018, for example, the company was fined $139,500 by the Bay Area Quality Management District because of malfunctioning burners at its Fremont plant that had emitted high levels of nitrogen oxide between 2013 and 2016. As well, t he Environmental Protection Agency is currently investigating Tesla for failing “to provide records demonstrating compliance with certain requirements under the applicable National Emission Standards for Hazardous Air Pollutants under the Clean Air Act of 1963, as amended, relating to Surface Coating of Automobiles and Light-Duty Trucks regulations.”
Carbon Commitments Versus Low-Carbon Business Models
Granted, even though Tesla does not disclose the specifics of its carbon emissions, it has disrupted the auto sector’s reliance on combustion engines. And the company is seeking not to just move a single part of the transportation industry, but the entire transportation and energy ecosystem.
For example, Tesla provides both businesses and homeowners an opportunity to generate solar energy through solar panels and store them in a Powerwall battery. Tesla also claims to be seeking to extend its battery life and ensure they are recycled responsibly. Remarkably, it has also opened up its patents -a bold move in an industry that works hard to protect its intellectual capital in order to capitalize on research-and-development investments.
Despite all these positive-even revolutionary-moves, Tesla’s lack of transparency regarding its carbon emissions and targets should raise questions about its commitment to a sustainable future. As much as we all love a good story of the maverick that disrupts the way we do things, we need to take a long breath before we say that Tesla is deep green. If Tesla is truly committed to low carbon emissions, it should, at the very least, be willing to report them. If it had done so, maybe it wouldn’t have committed to using bitcoin in the first place.
Originally published at https://www.forbes.com.