A few weeks ago TESLA, one of the most important companies of billionaire Elon Musk, was separated from the rating agency’s ASG index Standard and Poor’s. The acronym refers to environmental, social and corporate governance (ESG) criteria that seek to measure not only the economic or financial profitability of the company, but also the elements that make up said acronym. A question that arose in some financial journalism media was, if the company that produces ecological cars is out of said index, what can the rest of the companies expect? The answer is that it is not enough to be friendly with nature, the social aspect and governance also matter. In this regard one of the richest men in the world is giving a lesson on how not to run a company. The problem has been not having conditions suitable jobs.
The Sustainable Development Goals (SDGs), which are the continuity of the millennium goals and promoted internationally by the United Nations, consider that sustainability must include social elements. Among these is decent work and adequate remuneration. Economists find it difficult to understand the meaning of decent work, but it is a term coined by the UN and the International Labor Organization that speaks of adequately paid jobs, with social benefits, with the right to vacations and that do not violate dignity human. Although in Mexico it is not front-page news to have conditions of labor slavery and a high percentage of the salaried population has Social Security, the truth is that this cannot be generalized for the entire world. It is enough to look at almost any African or Latin American country to verify that there are still many people with jobs that could not be called decent.
Elon Musk has been in the news of the international business press not only because of what was previously described, but because he did not allow the continuity of work at home or any remote activity. He draws attention that a technology company does not use the platforms for the ordinary activities of its workers. The social aspect is what caused the company to be left out of the ESG index. Because they are international companies and listed on the stock market, it is necessary to have a Corporate Governance, perhaps that is not the reason why they were left out. The social factor must be analyzed and understood to realize that the underlying reason is here.
The two stock exchanges that operate in Mexico have incorporated ESG indices. However, so far it seems that the main variable to be in said index is the environmental one. In no way should we underestimate the attempts to have environmentally responsible companies, however, this is just a part of what makes up the non-financial indicators. The social aspect and corporate governance are on the same level and must also be considered.
The social aspect has two aspects: inside the company and outside. The first case refers to the working conditions of workers, social benefits, remuneration, inclusion and stress at work mainly. The labor reality in our country is that the vast majority of large companies would not pass this test. It is enough to review the salary paid in companies that produce fried foods, cookies and other junk foods. It is well known that the large restaurant consortiums pay truly miserable wages under the argument that they are compensated with tips. It is also advisable to review the work environment to know the level of stress generated by the work environment. In summary, in the social aspect, within the company, there is much to be done.
The social aspect, outside the company, refers to the reputation that the organization has, as well as the scope of its product or service. Thus, a company that cares for public gardens, that donates computers to public schools or communities in need, can have a good reputation. This helps to have a better evaluation in the social aspect, but there remains the part within the company: the one with the workers themselves, in this regard, my conviction is that in most cases it is a street lamp and darkness of the house.
Professor of the master’s degree in Economics, FES-Aragón-UNAM and UDLAP Jenkins Graduate School.
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Lessons from Elon Musk or teaching someone else a lesson