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Tesla Inc.’s removal this week from an industry benchmark index is raising new questions about what ESG actually means to investors.

The strategy, widely seen as favoring industries ostensibly interested in sustainability (of the environmental, social and governance sort) started about two decades ago as a way to protect investors from risks tied to things like global warming, labor violations and discrimination. Since then, it’s morphed into a $35 trillion industry of its own and — as the market exploded — sown confusion about what metrics should be used to gauge it, and fury over the tsunami of what’s come to be called greenwashing.

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