MSCI is recognized as a leading provider of investment data and analytics. MSCI’s suite of indexes covers thousands of companies across the globe and are the backbone of investment funds offered by Vanguard, Blackrock, State Street, and others.

MSCI is also a leader in assessing how companies manage environmental, social, and governance risks. MSCI has developed an industry-specific framework that evaluates how companies address challenges such as climate change, resource scarcity, product safety, fair wages, corruption, among others. Rankings and the underlying detail provide investors financially-material – and often forward looking – information on how prepared a company is to manage or respond to dynamic risks and opportunities.

Sustainability data is available to investors by subscription and MSCI maintains a series of Sustainability and Climate Equity Indexes to which $1.3 billion was benchmarked at year end 2025.

In earlier posts we’ve explored some of the environmental and social considerations for Artificial Intelligence (AI). Just as consequential and interesting are the governance issues that arise in the development and roll-out of large language models or LLMs. In our view, there are larger questions about governance. Who develops, owns, oversees, regulates, and uses the technology, and how. Whereas the internet evolved in stages with the support of governmental and inter-governmental agencies, AI advances have largely been in the corporate realm. As a result, these questions are ones of corporate governance.

Ahead of its initial public offering (IPO), Space Exploration Technologies Corp. (SpaceX) received MSCI’s lowest sustainability rating “CCC”. Per MSCI, “Compared to global industry peers, they have very poor management measures relative to their aggregate ESG risks and opportunities. CCC-rated companies may also be presently or recently involved in significant ESG controversies.”

MSCI gave SpaceX a governance score of 3.2 out of 10 with concerns including the high concentration of insider control, board independence and oversight, the potential for conflicts of interest, and diminished shareholder rights.

In its IPO, SpaceX established two share classes. Class A shares available to the public are given one vote per share. Class B shares held by SpaceX CEO Elon Musk and other insiders are given 10-20 votes per share. As a result, Musk’s 42% economic ownership of SpaceX equates to a voting supermajority (79%). Class A shareholders are subject to a majority of the company’s economics – for better or worse – without much recourse.

Issuing its first credit rating of SpaceX (Baa1), Moody’s Ratings cited “elevated and financial execution risks” alongside “heightened operational, regulatory, and ESG risks.” Moody’s went on to highlight several governance concerns, including concentrated voting power, limited board oversight, and key-person risk.

We’ll see how corporate governance influences AI and its development but don’t expect Elon Musk to lose any sleep. In response to MSCI’s ESG rating, Musk posted on X, downplaying S(ocial) and G(overnance) concerns, “Unfortunately, electric rockets are impossible.”

Governance has historically been viewed as the ESG factor most intricately linked to financial outcomes.

ARCHIVE
The Battle For Search Supremacy, July 8, 2026
Red, White, and Blue, July 1, 2026
Growth?, June 24, 2026
MANGOS, June 15, 2026
Not Yet, June 8, 2026
Decoupling, June 1, 2026
Magnifica Humanitas, May 25, 2026
Smooth Seas, May 18, 2026
The Fed, May 13, 2026
Planes. Trains and Automobiles, May 4, 2026
Canaries, April 20, 2026
Integrity, April 13, 2026
Liquidity, April 6, 2026
Democratizing Private Equity – Part II, March 23, 2026
Democratizing Private Equity – Part I, March 16, 2026
Watching the Lights Turn Red, March 9, 2026
Watching the Lights Turn Green, March 2, 2026
Las Cucarachas, February 9, 2026
Gold Math, February 2, 2026
Uncorrelated, January 26, 2026
A Contrarian Trade? January 20, 2026
Woe is Me, January 12, 2026
Investing for Impact, January 5, 2026
2025

Tide Cycle Resources (Tide Cycle) is an investment advisor registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. A copy of Tide Cycle’s Forms ADV Part 2 and Form CRS are available without charge upon request. The opinions expressed are those of Tide Cycle. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Nothing contained in this document may be relied upon as a guarantee, promise, assurance, or representation as to the future. This should not be taken as specific investment advice. We recommend consulting an investment/tax professional before making financial decisions based on any information provided.

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