SpaceX handed ‘same ESG rating as Russia after Ukraine invasion’

Elon Musk’s SpaceX was given a triple C rating in environmental, social and governance (ESG) by index provider MSCI prior to its initial public offering, the Financial Times has reported.

This is its lowest possible rating, putting it on par with the score awarded to Russian state after its invasion of Ukraine in 2022. SpaceX’s triple C rating means it is a laggard, with “high exposure and failure to manage significant sustainability risks”, according to MSCI.

The FT reported that the rating was issued on June 11, following investor and analyst concerns over its governance standards.

The company also scored one out of 10 and was given an orange flag in MSCI’s “controversies” category. According to the paper, this score is only given if a company is deemed to be indirectly involved in one or more ongoing, very severe controversies, or directly involved in one or more ongoing severe ones.

SpaceX shares had fallen by nine per cent at time of writing, marking its third consecutive day of losses, although its price is still higher than when it initially floated.

This is not the first time a Musk-owned company has come under scrutiny during an ESG assessment. In 2022, electric vehicle company Tesla was dropped from the S&P 500 ESG Index over concerns including racial discrimination and a lack of details on its low-carbon strategy. At the time, Musk described ESG as a “scam […] weaponised by phoney social justice warriors”.

On Monday, SpaceX also signed a major computing power deal with open-source AI startup Reflection, CNBC reported. Under the deal, Musk’s company will lease a portion of its Colossus data centre to Reflection for $150 million per month, beginning in July and running until 2029, totalling $6.3 in revenue if it runs to the end of its term.

There is a 90-day break clause by either party after the first three months. The company has previously signed a similar lease with Anthropic, which has a 90-day break clause after the first 180 days.