SpaceX was awarded the lowest possible environmental, social and governance rating by index provider MSCI ahead of the company’s record $75bn public float this month.

The triple C assessment means SpaceX has the same score as that awarded to the Russian state on MSCI’s ESG government rating scale in the wake of its 2022 invasion of Ukraine. It leaves SpaceX “lagging its industry based on its high exposure and failure to manage significant ESG risks”, according to MSCI.

The rating issued on June 11, just one day before the initial public offering, came as investors and analysts raised concerns about SpaceX’s governance standards.

SpaceX — whose stock has soared since its listing — also scored one out of 10 and was given an “orange flag” in MSCI’s “controversies” category. This score is given only if a company is deemed to be indirectly involved in one or more ongoing, very severe controversies or directly involved in one or more ongoing severe controversies.

Companies are only given zero out of 10 and get a “red flag” if they are deemed to be “directly involved in one or more very severe ongoing controversy cases”. Volkswagen was handed a red flag in 2022 following allegations of forced labour in the Xinjiang region of China. BHP was given one over its involvement in the Mariana dam disaster. Both companies have since been uprated.

In light of the IPO documentation and other publicly available information, “a poor controversies assessment, a very poor governance assessment and a low overall ESG rating should not surprise anyone,” said Frédéric Ducoulombier, a programme director at the Edhec business school’s Climate Institute. “This is very close to a governance horror story for public-market investors.”

ESG assessments by major index providers have previously drawn Elon Musk’s ire. After Tesla was dropped from the widely followed S&P 500 ESG Index in 2022 over concerns including claims of racial discrimination and a lack of details on its low-carbon strategy, Musk described ESG as a “scam . . . weaponised by phoney social justice warriors”.

Since SpaceX filed for its IPO, concerns have been raised over its share structure and limiting of shareholder rights, the concentration of control among insiders, potential conflicts of interest and a lack of board independence and remuneration oversight. Such worries have led to debate among European asset managers as to whether Musk’s company meets the continent’s flagship sustainability disclosure rules, which could limit the access of funds managing more than €6.5tn to SpaceX.

“It would be difficult for a serious ESG data provider, or for a fund applying its own ESG screening, not to identify major governance concerns at SpaceX,” Ducoulombier said.

Musk’s company — which incorporates satellite communications business Starlink, a space division and the AI start-up xAI — scored 3.2 out of 10 in MSCI’s governance metrics rating. This sets out with companies at a perfect 10 and deducts points “based on the presence of corporate governance flags”.

MSCI — one of the world’s largest index providers whose benchmarks underpin more than $17tn in assets — provides sustainability, governance and climate assessments of publicly listed companies and has about $1.27tn benchmarked against its sustainability and climate-focused equity indices.

MSCI applied its fast-track procedure to include SpaceX in its main indices, while fellow index providers FTSE Russell and Nasdaq recently adopted fast-track rules for megacap IPOs allowing SpaceX quicker entry. S&P Dow Jones Indices declined to alter its index inclusion timelines and has not yet added SpaceX.

SpaceX did not respond to a request for comment. MSCI declined to comment.