April 24, 2020 / 3:19 AM / a month ago

Breakingviews - Tesla gets board street cred it sorely needs

Hiromichi (Hiro) Mizuno, Executive Managing Director and CIO of Government Pension Fund (GPIF) attends the Paris 2017 Climate Finance Day at the Finance Ministry ahead of the One Planet Summit in Paris, France, December 11, 2017. REUTERS/Charles Platiau

NEW YORK (Reuters Breakingviews) - Elon Musk is making Tesla’s board more sustainable. On Thursday the electric-car maker unveiled Hiromichi Mizuno as its newest director. Until last month he was the investment chief of Japan’s $1.5 trillion Government Pension Investment Fund, the world’s largest. That experience alone will be valuable to Tesla. But it’s the clout that Mizuno developed and wielded in environmental, social and governance issues during his five-year stint at GPIF that will serve the manufacturer and its shareholders best.

Mizuno’s views on short sellers will have appealed to Musk, who is fond of berating or goading such players. Mizuno in December stopped lending the pension fund’s global equities to short sellers, arguing the strategy doesn’t fit with ESG-enlightened investing.

His appointment is far more important, though, for the stronger oversight he should bring to Tesla. Powering electric cars may be cleaner than running their internal combustion engine counterparts, but making vehicles is still a dirty process that can be improved. And there are social concerns, too: workers at the company have complained about issues from racism to safety.

Where Mizuno may have the most impact, though, is on Tesla’s governance. The board has been too supine over the years, acquiescing in everything from overly ambitious production targets to Musk calling a cave diver a “pedo”, or announcing on Twitter in August 2018 that he might take the company private.

That last flub, at least, prompted a board shake-up. As part of a settlement with the Securities and Exchange Commission over the tweets, Musk had to appoint an independent chairman, as well as two new board members. One of the latter, Oracle co-founder Larry Ellison was already a Tesla investor and describes himself as a “very close friend” of Musk. All in, seven of what was until Thursday a nine-member board either have some ties to Musk or were present and ineffectual during his more controversial episodes.

Adding Mizuno won’t quite even that out. But the ESG heavyweight is at least unlikely to take any of Musk’s antics lying down.

On Twitter twitter.com/AntonyMCurrie

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