The JUST Report: How Inflation Is Affecting Key ESG Issues
(Anna Moneymaker/Getty Images)
Inflation hit its highest level since 1981 in March (8.5%). Its causes and effects are starting to force some difficult conversations on core ESG and stakeholder priorities.
Take climate change, for example. The urgency of tackling climate risks by reducing greenhouse gas emissions is widely accepted, yet there is a clear need to lower gas prices and reduce dependence of foreign oil and gas.
President Biden, who identified transitioning to a clean economy as a pillar of his presidency, is now compelling energy companies to drill for more oil, allowing more gasoline with ethanol to be produced this summer (which is dirtier than regular gasoline), and releasing more oil from the strategic petroleum reserve than ever before.
Such realities make prognostications about a just transition of the energy complex all the more important, as the leaders of two of the world’s largest investment managers, Cyrus Taraporavala from State Street Global Advisors and from BlackRock’s Larry Fink, have noted. Bloombergreported that there are even indications that energy producing countries and fossil fuel companies are going to be given more clout at the UN’s COP27 in the fall (a big shift from last year)
Whatever your views on this, it hasn’t stopped many companies from acting. A research piece we released this week identifies what the components of a clearly communicated long-term climate transition plan look like and which companies are leading the way.
The effects of inflation are also affecting the relationship between America’s biggest employers and their workers. We see this show up recently in the organized labor movements at Amazon, Starbucks, and elsewhere. We heard about it on our workers panel at Nasdaq last week, where all three panelists (Chipotle, Intel, Prudential) emphasized the importance of listening to workers. And we read about it in Amazon CEO Andy Jassy’s first shareholder letter: “We’ve researched and created a list of what we believe are the top 100 employee experience pain points and are systematically solving them.”
Real talk about how we overcome these and other challenges is critical to building a stakeholder economy. You can rely on us to bring it to you.
Be well,
Martin Whittaker
This Week in Stakeholder Capitalism
Activision-Blizzard is converting 1,100 QA jobs to full-time positions and raising base pay. However, these QA workers do not include those planning to unionize at Raven studios.
Disney sets aside 80 acres in Florida for low-cost housing.
Thousands of Etsy sellers are striking this week over the company’s seller-fee increases.
Google unveils its plan to be 100% carbon free in its data centers by 2030. The company also announces a $9.5 billion investment in U.S. offices and data centers and expectations to create 12,000 new full-time jobs by the end of the year.
Intel announces plans to achieve Net Zero greenhouse gas emissions by 2040 and begins hiring thousands through workforce development programs for new facilities.
Walmart raises its truck drivers’ starting wages to $95 – 110K a year to combat labor shortages.
What’s Happening at JUST
With women accounting for about 70% of job losses in the U.S since the start of the pandemic, we worked with our survey research partner SSRS to ask Americans what our nation’s largest companies can do to support women’s return to the labor force. Read the findings here. To see what leadership looks like today on gender equity issues, we recently profiled three companiesleading on several key issues, and five companies leading on paid parental leave.
In March, the SEC voted to propose new climate reporting standards, and with corporate America soon facing new reporting requirements, we revisited our analysis from last December, which identified key criteria for how to best disclose emissions data. This week, we break down these four criteria – that climate commitments be understandable, comprehensive, innovative, and achievable – with details on which corporations can serve as models for their peers preparing to disclose.
Paul Polman and Andrew Winston feature the JUST 100 in their latest article in HBRshowcasing solutions – including to price the unpriced, adopt a true long-term mindset for investment decisions, and think in systems – for getting past flawed mental models that are holding ESG back.
The Forum
(Ceres)
“We’re talking about a risk that is likely to be larger or greater than the subprime meltdown, clearly worthy of our attention.”
- Mindy Lubber, Ceres President and JUST Board member, in a Barron’s interview about climate risk to corporations and the SEC reporting standards proposal.
“It’s employees’ choice whether or not they want to join a union. We happen to think they’re better off not doing so. … Regardless of how it all pans out, the one thing we won’t compromise is the customer experience.”
- Andy Jassy, Amazon CEO, in a wide-ranging CNBC interview released on the same day as his first annual shareholders letter.
“These numbers change so little and so slowly. What it tells me is that this institutional disparity based on race seems to be built into American society.”
- Marc Morial, National Urban League President and JUST Board member, in a Chicago Sun-Times interview about the economic and health data included in the new State of Black America Report for 2022.
Must-Reads of the Week
The Wall Street Journal takes a look at the history of companies trying to give their employees ownership stakes, showing how these attempts have failed in the past and considering new approaches for the future.
Pensions & Investments looks at the recent success of shareholder proposals for racial equity audits, and what the next big push is going to be.
The Welcome.US CEO Council – featuring CEOs from Google, Accenture, Bank of America, Adobe, and more – launches a new commitment to resettle and upskill newcomers from Ukraine and Afghanistan.
Former Unilever CEO Paul Polman and his “Net Positive” coauthor Andrew Winston explore the ways companies need to think more broadly about ESG – including in recognizing the benefits of paying living wages – in an editorial in the Harvard Business Review.
Chart of the Week
When we asked Americans what steps companies can take to support women returning to work, they identified pay equity, access to child care, flexible working hours, and a living wage as the top four. Read the detailed survey insights here.
Get to Know JUST
Jennifer Grancio
CEO, Engine No. 1
JUST Capital Advisor
JUST Advisor Jennifer Grancio, CEO of Engine No. 1, was recently interviewed by Time as the firm was named to its 2022 TIME100 List of Most Influential Companies.Grancio details how Engine No. 1 is engaging with major companies on key ESG issues and building on momentum from its victory in lobbying for change with ExxonMobil last year.
“Our point of view is these are public companies, and we own the public companies. If we care about workers and wages on the social side, and if we care about environmental impact, we should be holding these companies and working with them very aggressively as investors to get them to the right outcome,” she said.
Hear more from Grancio on ESG investing from our event, “The Strategic Imperative of the ‘S’ of ESG,” last week.
