Tesla and Greenwashing 

By Maria LeLourec

Tesla’s Eco-Friendly Claims: Fact or Fiction? 

Led by its CEO, Elon Musk, Tesla Inc. has garnered widespread acclaim for its role in revolutionizing the electric vehicle (EV) industry and promoting renewable energy, the reduction of carbon emissions, and a more sustainable future.^[1] The company’s eco-friendly image, however, is belied by accusations of greenwashing, with critics arguing that Tesla has exaggerated its environmental achievements to enhance its public image.^[2]

In 2022, Tesla published its 2021 Impact Report, in which it disclosed its greenhouse gas emissions from its operations and from the charging of its electric vehicles. Based on this data, the company’s carbon footprint was 2.54 million tons of carbon dioxide.^[3] This may seem small compared to other competitors, such as Ford, which reported 337 million tons of carbon dioxide in 2022, but the Tesla 2021 Impact Report was flawed. It failed to account for the full scope of the company’s emissions, predominantly its supply chain production, which is a major contributor to a company’s carbon footprint.^[4]

This year, Tesla released its 2022 Impact Report, which included its indirect emissions and provides the clearest picture of Tesla’s carbon footprint. The 2022 report included more Scope 3 emissions, resulting in approximately 4 million tons of carbon dioxide  as part of its supply chain, which is comparable to the total emissions of Serbia in 2021.^[5]

Deconstructing Tesla’s Carbon Emission Data

Tesla has claimed “the faster the world stops relying on fossil fuels and moves towards a zero-emission future, the better.”^[6] However, based on data it appears that Tesla is far from achieving Net Zero emissions. “Net Zero” emissions refer to cutting greenhouse gas emissions to as close to zero as possible, therefore emitting no more emissions than those that can be absorbed by the environment, ultimately equaling zero emissions. A variety of methods can be used to achieve this goal, including reducing greenhouse emissions, neutralizing the released greenhouse emissions with forest restoration, or carbon capture technology. There are also companies that allow for the purchase of “carbon offsets,” whereby companies perform activities that will remove a certain amount of CO₂ from the atmosphere. Nevertheless, carbon offsets are still an imprecise science and carbon capture technology is not yet well developed enough to be relied upon. Some companies have made public commitments to reach net-zero energy relying on offsetting goals. For example, Shell’s most prominent offsetting project is reforesting initiatives in Peru and Indonesia. ^[7]

A company’s carbon footprint is usually divided into three main groups or “scopes.” Scope 1 includes direct emissions from its own factories, offices, and vehicles. Scope 2 encompasses emissions stemming from heating, A/C, and electricity usage in company buildings. Scope 3 comprises all the extra, indirect emissions from supply chain manufacturing in addition to a products’ lifecycle emissions. Typically, companies only report their Scope 1 and 2 emissions, which can make their carbon footprint appear much smaller than it is. This strategy is often referred to as “greenwashing.”  Tesla’s 2021 Impact Report utilized data from scope 1 and 2 emissions, and only one category of scope 3 emissions, resulting in 2.5 million tons of carbon dioxide emissions.^[8] This year, Tesla published its 2022 Impact Report, which included categories 1, 3, 4, 5, 6, 7, 8, 9 and 11 of its scope 3 emissions, in addition to its scope 1 and 2.^[9] A clearer picture of Tesla’s total carbon footprint was provided by this disclosure. Tesla’s carbon footprint amounted to 4 million tons of carbon dioxide, an increase of 1.5 million tons from the previous year.

Seeking Honesty: The Tesla Transparency Dilemma

That Tesla this year made its scope 3 data available to the public in its 2022 Impact Report provides the industry with some much-needed additional transparency. A true commitment to transparency does not only require that Tesla report its carbon footprint (including its production), but also the methods it uses to disclose this information. Tesla presents its carbon emissions via graphs, which means it does not disclose exact numbers.^[10]

Other competitors in the industry, like General Motors, utilize scientifically based targets and have plans to become carbon-neutral in its products and operations by 2040.^[11] By 2035, the company will only offer electric vehicles. To achieve this goal, the company is investing $27 billion in research and development for autonomous and electric vehicles, in addition to its investments in gas and diesel cars. Ford also uses science-based targets and plans to achieve carbon neutrality by 2050. Additionally, it has established very specific targets for scope 3 emissions (emissions associated with its products, such as its cars).^[12] Likewise, it plans to invest heavily in electrification: $22 billion by 2025.^[13] 

Despite Tesla’s efforts to make all its information public, the company has fallen behind other automakers in sharing greenhouse gas emissions data. Ford, for example, has received “A” grades for its climate change disclosures since 2019, while Tesla received “F” grades from CDP, an organization that evaluates environmental disclosures. Although, Ford’s carbon footprint is much larger than Tesla’s, totaling over 353 million tons of carbon dioxide in 2020 (most of which are Scope 3 emissions), one contributing factor for this high figure is because Ford sold more than three times as many vehicles than Tesla in 2020.^[14] Moreover, most of Ford’s vehicles consume a great deal of fuel. 

Tesla Master Plan-Part 3

Although Tesla has issues with transparency, Elon Musk, CEO of Tesla Motors, an entrepreneur by nature, maintains a positive attitude. In March 2023, Tesla revealed “Part 3” of its ongoing “Master Plan,” where it announced plans for a “fully sustainable earth,” estimating it will take $10 trillion in investments to fully realize this plan. A large portion of Master Plan 3 involves the addition of renewable energy to the existing grid, the production of more electric vehicles, the installation of heat pumps in homes and buildings, the use of high-temperature heat delivery and hydrogen for industrial applications, and the construction of planes and boats that are fuel-efficient. While this is an exciting prospect, the details of how it would be achieved remain unclear.

These are bold statements for an organization whose combined scope 1 and scope 2 emissions increased nearly 4 percent last year despite making strides toward reducing the carbon footprint of its electric vehicles. As Tesla moves forward with Master Plan 3, it will be difficult to predict what will happen if more electric vehicles are produced and if the company extends its production “to less carbon-intensive” boats and aircraft.^[15] A well-known adage provides that “what is not measured cannot be managed.” Tesla’s goal of extending sustainability to the entire planet is commendable, but it is even more vital to identify the strategies for achieving those plans and disclose the effect that those plans will have on the environment after they have been realized.

Bitcoin and Solar City: A Tale of Two Environmentally Unfriendly Enterprises

Tesla’s failure to disclose its full production of carbon emissions was not its only environmental misstep. Tesla’s CEO, Elon Musk, has also caused controversy and speculations with activities that harm, more than help, the environment. In 2021, Musk caused alarm among environmentalists by endorsing bitcoin, which emits about the same amount of carbon dioxide per year as a small country. Following the backlash from the environmentalist community, he reversed his position, stating that Tesla would no longer transact in bitcoin due to its heavy dependence on fossil fuels and its environmentally damaging effects.^[16]

On a related note, Tesla’s acquisition of SolarCity, a company that installs solar panels, raised eyebrows due to allegations of conflicts of interest, since Musk is a major shareholder in both companies.^[17] Skeptics claim that the merger was intended to create the appearance of comprehensive sustainability, despite questions regarding SolarCity’s financial viability and environmental impact.^[18]

Musk’s long history of (1) failing to disclose information to improve his market position, (2) retracting his bitcoin endorsement in response to backlash from the environmentalist community,^[19] and (3) his suspicious management of SolarCity as an environmentally friendly company raises questions as to whether Musk’s real intentions are environmentally friendly .

ESG rankings: The Cherry on Top for Tesla Concerns 

ESG is an umbrella term that refers to a set of considerations that should be examined when investing in a company, such as taking environmental, social, and corporate governance aspects into account. A company’s ESG rating measures its commitment to environmental, social, and governance (ESG) standards.

In 2022, Tesla was removed from the S&P 500 ESG Index. Tesla’s removal from the index can be attributed to the “S” component for social and the “G” component for corporate governance.^[22] Altria, one of the world’s largest tobacco companies, has emphasized diversity programs within its organization, whereas Tesla has been accused of having an overwhelmingly white board of directors and unfair labor practices.

In the latest S&P ESG ratings, Chevron, a company long targeted by climate activists, edged out Tesla. The oil titan scored significantly higher on social issues than Tesla. An excerpt from Chevron’s 2022 sustainability report notes the employment of the first woman offshore platform engineer in Israel for its operations. Musk responded by saying, “ESG is a scam [that] has been weaponized by phony social justice warriors.”

Conclusion 

While Tesla’s innovative products have undoubtedly contributed to the EV revolution, allegations of non-disclosure or manipulation of information raise important questions about transparency and authenticity in corporate sustainability efforts. As consumers increasingly seek eco-friendly alternatives, it is imperative that companies like Tesla uphold the highest standards of environmental accountability and provide accurate information to make informed choices. Tesla’s practices not only deceive consumers but also undermine the credibility of the environmental movement and the collective effort to combat climate change. It is crucial for companies to prioritize true sustainability over superficial marketing tactics and deliver on their promises for a greener future. 

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^[1] About Us, Tesla (Nov. 10, 2023), https://www.tesla.com/about.

^[2] Manuela Andreoni, Spot the Greenwashing, N.Y. TIMES (May 23, 2002), https://www.nytimes.com/2022/05/20/climate/climate-change-greenwashing.html.

^[3] Tesla 2021 Impact Report, (Nov. 10, 2023), https://www.tesla.com/ns_videos/2021-tesla-impact-report.pdf. On page 68 of its 2021 Impact Report, Tesla disclosed its scope 1 and scope 2 emissions, as well as emissions under electric vehicle charging in category 11 of its scope 3, when adding these emissions together results in 2.54 million tons. Of the fifteen categories scope 3 emissions,  Tesla used only one, thus not disclosing all its information. For a better understanding of the different scopes of carbon emissions, see EPA, Scope 3 Inventory Guidance, https://www.epa.gov/climateleadership/scope-3-inventory-guidance (last visited Nov. 10, 2023). 

^[4] Id. As mentioned above, from its scope 3, Tesla only disclosed category 11, which is electric vehicle charging, omitting fourteen of the fifteen categories. Taken together,  these categories are also called supply chain production. 

^[5] 2022 Impact Report, TESLA (Nov. 10, 2023), https://www.tesla.com/ns_videos/2022-tesla-impact-report.pdf. 

^[6] 2018 Impact Report, Tesla 3 https://www.tesla.com/ns_videos/2018-tesla-impact-report.pdf (last visited Nov. 20, 2023).

^[7] Eloise Barry, As More Companies Make Net-Zero Pledges, Some Aren’t as Good as They Sound, Time (Nov. 15, 2021), https://time.com/6117635/companies-net-zero-greenwash/. It has been argued that companies that employ carbon offset techniques trade off harm in one place for good intentions in another.

^[8] Tesla 2021 Impact Report, supra, at note 3.

^[9] Tesla 2022 Impact Report, supra, at note 5.

^[10] 2019 Impact Report, TESLA (Nov. 11, 2023), https://www.tesla.com/ns_videos/2019-tesla-impact-report.pdf. As an example, Tesla describes its reduction in carbon emissions using graphs on pages 9 and 10 of this report.

^[11] General Motors, the Largest U.S. Automaker, Plans to be Carbon Neutral by 2040, GM (Nov. 11, 2023), https://news.gm.com/newsroom.detail.html/Pages/news/us/en/2021/jan/0128-carbon.html. 

^[12] Ford Expands Climate Change Goals, Sets Target to Become Carbon Neutral by 2050: Annual Sustainability Report, FORD (Nov. 11, 2023), https://media.ford.com/content/fordmedia/fna/us/en/news/2020/06/24/ford-expands-climate-change-goals.html. 

^[13] Ford Commit to Manufacturing Batteries, to From New Joint Venture with SK Innovation to Scale North America Battery Deliveries, (Dec. 4, 2023), https://corporate.ford.com/articles/electrification/ford-commits-to-manufacturingbatteries.html#:~:text=Ford%20this%20year%20announced%20its,Transit%20and%20F%2D150%20Lightning.

^[14] TCFD Ford 2022 Report, FORD (Nov. 11, 2023), https://corporate.ford.com/content/dam/corporate/us/en-us/documents/reports/tcfd-report.pdf. Page 29 of this report contains Ford’s 2020 carbon emissions estimates. For a revision of Ford’s sales in 2020, see https://fordauthority.com/fmc/ford-motor-company-sales-numbers/ford-sales-numbers/. For a review of Tesla’s sales in 2020, see https://ir.tesla.com/press-release/tesla-q4-2020-vehicle-production-deliveries. 

^[15] Tesla Master Plan Part 3, Sustainable Energy for All of Earth, TESLA (Nov 11, 2023), https://www.tesla.com/ns_videos/Tesla-Master-Plan-Part-3.pdf. The information can be found on page 12 of this document.

^[16] Hyunjoo Jin and Kanisha Singh, Tesla’s Musk Halts Use of Bitcoin for Car Purchases, REUTERS (May 12, 2021), https://www.reuters.com/technology/tesla-stops-taking-bitcoin-cites-fossil-fuel-use-mining-cybercurrency-2021-05-12/.

^[17] Lora Kolodny and Jeniece Pettitt, Why Tesla’s Solar Business Has Not Yet Taken Off as Elon Musk Promised, CNBC (Oct. 6, 2021), https://www.cnbc.com/2021/10/06/why-teslas-solar-business-has-not-yet-taken-off-as-elon-musk-promised.html .

^[18] Id.

^[19] David Vetter, What Elon Musk’s Bitcoin Decision Means for the Climate, According to Experts, Forbes (May 13, 2021), https://www.forbes.com/sites/davidrvetter/2021/05/13/what-elon-musks-bitcoin-decision-means-for-the-climate-according-to-experts/?sh=5060416a6d7b.

^[20]  Christiaan Hetzner, Elon Musk blasts ESG as ‘the devil’ after tobacco stocks beat Tesla in sustainability indexes, Yahoo! Finance (Jun. 15, 2023), https://finance.yahoo.com/news/elon-musk-blasts-esg-devil-154219376.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAEa5rLWxd5xLXd4KRLr11bSkR8OaJiakRaK2-TH-auSkxFk8yabgJLTncrZatLpxfxyj1Wzg3-ZUIawaIKUFrgjFy3Ceu9ytoBovz5DrWBZFofVdxWsCqeBKwYQ4P5TG9nUCEKdftq0U2GkrzCLHEGydE8B06lAqcB4qPhI18YUu. 

^[21] Ross Kerber and Hyunjoo Jin, Tesla cut from S&P 500 ESG Index, and Elon Musk tweets his fury, REUTERS (May 19, 2022), https://www.reuters.com/business/sustainable-business/tesla-removed-sp-500-esg-index-autopilot-discrimination-concerns-2022-05-18/.

^[22]  Eloise Barry, Why Tesla CEO Elon Musk Is Calling ESG a ‘Scam’, Time (May 25, 2022), https://time.com/6180638/tesla-esg-index-musk/.

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