Good morning.
Elon Musk is endlessly diverting. Yesterday’s installment was a “leaked” email from him titled “Remote work is no longer acceptable.” He wrote:
Anyone who wishes to do remote work must be in the office for a minimum (and I mean *minimum*) of 40 hours a week or depart Tesla. This is less than we ask of factory workers.
People who don’t like that message, Musk later said, “should pretend to work somewhere else.” Does that inflexibility mean Tesla will lose top talent? Maybe. But Musk is sui generis. What holds for him doesn’t hold for other CEOs—as he will be the first to tell you.
I’m slightly more sympathetic to Musk’s comments, reported here yesterday, suggesting ESG (environmental, social, and governance) investing is a scam. Readers of this newsletter know I’m bullish on businesses paying more attention to social goals. But ESG investing is tricky, for three reasons.
- First, we don’t yet have agreed-upon metrics for measuring ESG. It took centuries to build the financial infrastructure to reliably measure returns to shareholders. But we are just at the beginning of measuring returns to other stakeholders. There’s still too much of a “pick your metric” mentality.
- Second, lumping E, S, and G together into one framework creates confusion. There may be companies that are doing bang-up work on the S but neglecting the E, or vice versa. And no one I talk with has a clear idea of what the G contributes to the equation.
- Third, ESG portfolio investing isn’t the most effective way of driving corporate change. If half of investors shy from, say, coal companies, that just means the other half will get higher returns for buying the dirty stuff. And even if all public market investors turn their backs, there will always be private investors willing to pick up rejected assets at above-market returns.
Better for employees, customers, and investors to jointly hold companies accountable. Together, their influence is inescapable.
By the way, Musk’s ESG comment was in response to news that Tesla got kicked off the S&P 500’s ESG list—no doubt for flouting an array of rules. But whatever else you say about Musk and his rule-breaking, he does deserve credit for almost single-handedly changing the business dynamics around climate. Before Tesla’s market rise, corporate efforts to address the problem were dutifully pursued as a social obligation. Since Tesla’s ascent, climate has come to be seen as a mammoth market opportunity.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Sandberg out
Sheryl Sandberg is leaving Meta after 14 years leading operations. She told Fortune it’s “just not a job that leaves room for a lot of other stuff in your life.” And with Roe v. Wade seemingly set to be struck down, she said, “This is a really important moment for women. This is a really important moment for me to be able to do more with my philanthropy, with my foundation.” Fortune
Dimon comments
Jamie Dimon sees an economic “hurricane” on the horizon, though “we don’t know if it’s a minor one or Superstorm Sandy.” The former Business Roundtable chair has also hit back at those who frame “stakeholder capitalism” as being “woke.” “I’m not woke,” he insisted. “All we’re saying is when we wake up in the morning, what we give a shit about is serving customers, earning their respect, earning their repeat business.” Fortune
NFT charges
The U.S. Justice Department has slapped wire-fraud and money-laundering charges on Nathaniel Chastain, former product manager for NFT marketplace OpenSea. Chastain was already fired last year after being accused of insider trading. The charges allege he repeatedly purchased NFTs shortly before they hit the marketplace’s front page, making a fat profit each time. The Verge
EY ructions
Kelly Grier has quit as leader of EY’s U.S. business, after reportedly clashing with global CEO Carmine Di Sibio over that operation’s heft within the Big Four accountancy firm, and the fee it should pay to the mothership. Financial Times
This section was corrected on June 2 to note that Dimon is a former rather than current Business Roundtable chair.
AROUND THE WATERCOOLER
Password sharing
Netflix’s pilot crackdown on password sharing is apparently not going well, with some affected customers canceling their subscriptions. Analysts reckon the move may come too late for the streaming giant, which is hemorrhaging subscribers. Fortune
Chinese Kindles
Amazon has stopped selling Kindles in China and will close the e-reader’s bookstore there next year. The company did not give a reason for its decision, though given China’s strict censorship laws it’s easy to take a guess. Amazon says its other remaining Chinese businesses (cross-border e-commerce, advertising, cloud) will stay put. Reuters
Kirilling EU softly
Hungary, which just got massive concessions for its vote in favor of the EU’s oil-embargo–featuring sixth package of sanctions on Russia, now wants another: It wants Patriarch Kirill, the former KGB officer who heads up the Russian Orthodox Church and strongly backs the Ukraine invasion, to be spared personal sanctions. (Bonus read: Denmark has voted to scrap its opt-out from EU common defense policy, in another piece of blowback against Russia’s war.) Politico
Stablecoin predictions
Reeve Collins, cofounder of crypto firm BLOCKv, reckons algorithmic stablecoins are now done for, following TerraUSD’s collapse: “It’s just a bunch of smart people trying to figure out how to peg something to the dollar. And a lot of people pulled out their money in the last few months, because they realized that it wasn’t sustainable. So that crash kind of had a cascade effect.” CNBC
This edition of CEO Daily was edited by David Meyer.
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