SpaceX has received the lowest possible environmental, social, and governance (ESG) rating of CCC from MSCI, a prominent ESG rating agency. This rating, which signifies a company is highly exposed to unmanaged ESG risks, comes just three weeks before SpaceX's anticipated $1.4 trillion initial public offering (IPO) on June 12, 2026, marking it as potentially the most valuable public listing ever.
The MSCI rating was heavily influenced by concerns over SpaceX's proposed governance structure. Critics, including letters sent by unnamed parties, describe it as the "most management-favourable governance structure ever brought to the US public markets at this scale." Key issues include a dual-class share structure granting Elon Musk approximately 80% voting control, a provision allowing only Class B shareholders (effectively Musk) to remove him as CEO or Chair, and a mandatory arbitration clause that would eliminate class-action lawsuits for shareholder claims under US federal securities laws. Furthermore, a reincorporation in Texas would raise the threshold for shareholders to bring a derivative suit, requiring ownership of tens of billions of dollars in shares.
Beyond governance, the rating highlights the significant environmental impact of SpaceX's operations, particularly the unaddressed carbon dioxide emissions from its Starship rockets. The United Nations University warned last year that commercial space activity is growing faster than current voluntary environmental guidelines. There is currently no binding international framework for regulating rocket emissions, creating a gap between climate finance regulations for other industries and the emerging space sector. The Financial Conduct Authority (FCA) in the UK, despite building a world-leading sustainable finance framework, has not addressed the space sector, creating a potential blind spot for banks underwriting the IPO.
This low ESG rating poses a challenge for the financial system's commitment to sustainable finance. The IPO is seen as a test of whether capital markets, including pension funds managing retirement savings, can hold companies accountable for better governance and reduced emissions. The banks in London's Canary Wharf, poised to earn hundreds of millions of dollars in underwriting fees from the deal, have an interest in not drawing attention to this gap in environmental regulation. MSCI's ratings, unlike credit ratings, are not subject to regulatory scrutiny for conflicts of interest and rely partly on unaudited ESG data provided by companies themselves. While MSCI states its methodology is transparent and that investors pay for ratings, not companies, the broader issue of ESG rating transparency and potential conflicts remains a point of regulatory focus.
