In these times of unrest, both in the U.S. and globally, it’s hard to imagine the majority of people agreeing on anything. Yet our annual surveys – which over the last five years have reached nearly 100,000 people – consistently show that the American people agree about one very important thing: The role and responsibility of big companies.
Regardless of age, political affiliation, income, location, ethnicity, and gender, people want companies to stop prioritizing shareholders and start sharing success with all stakeholders. Most importantly, people want companies to prioritize employees by investing in good jobs, fair pay, equal opportunity, health care, retirement planning, career development, as well as paid time off and parental leave.
In short, people want the American Dream back. And the institutions of free market enterprise are starting to listen.
This week, the Business Roundtable, which represents the largest and most influential companies in America, put out a new Statement on the Purpose of a Corporation, committing to a new ethos in which the purpose of a corporation is to benefit “all stakeholders – customers, employees, suppliers, communities and shareholders.”
It is a move of historical significance, a throwback to the days of Henry Ford, when industry leaders believed the health of a company was tied to the health of communities in which it operated and the prosperity of its workers. Ford knew that his workers were his customers, and believed for his company to be successful, they had to be able to afford his cars. His company was the largest employer in the U.S. for decades, and his approach influenced a generation of future business leaders.
From the 1940s through the 1970s, this approach to free-market capitalism propelled one of the greatest expansions of social mobility and economic growth for our nation. The original Johnson & Johnson credo from 1943 – that the company worked to optimize the interests of customers, employees, communities, as well as its shareholders – is just one example of this approach in action. Likewise, the opening pages of the 1964 Annual Report for General Motors, at the time the largest corporation in America, evidence a company recognizing the value being created by and for all its stakeholders.
So what happened? As Ford Foundation President Darren Walker recently explained at the Aspen Ideas Festival, “the economy was redesigned with the set of incentives that we have today.” In 1970 economist Milton Friedman wrote his infamous treatise for The New York Times Magazine entitled, “The Social Responsibility of Business is to Increase its Profits.” While the piece itself contains plenty of nuance, the title captured the hearts and minds of CEOs, boards, and investors, and became the mantra for an era of short-term, profit-maximizing, winner-takes-all capitalism that has dominated our economy for the last 49 years.
For investors, Wall Street, and the corporate management class, the wealth creation effect has been unparalleled. But we also have a Gini coefficient and income inequality levels of a developing country. Eight families have as much wealth as half of humanity. And of all of the wealth generated in 2017, 82% went to the richest 1% of the global population. As many now recognize, this system is no longer sustainable.
Fast forward to this week and the Business Roundtable announcement. In the accompanying press release, the organization’s Chairman, Jamie Dimon, stated that the “American Dream is alive, but fraying,” and that corporations need modernized principles that “push for an economy that serves all Americans.” These views echo those of many other business, finance, and political actors across the ideological spectrum who understand that such fundamental change is needed. Like the Business Roundtable, these leaders, and their organizations, are committed to centering business and finance on the noble purpose of serving all of free market enterprise’s beneficiaries. They know that a more just, inclusive, and moral form of capitalism must emerge if capitalism itself is to survive.
The good news here is that there is a significant and credible body of independent research to support the case that this approach is also better for business. Our own work consistently shows that companies that invest in worker pay and well-being, treat customers fairly, produce beneficial products and services, reduce their environmental impact, and support the communities in which they operate, invariably outperform their peers in the market.
In the coming months and years, those who believe in the fundamental good of free market enterprise must set about reconstituting our economic system so that it matches the next generation’s vision of capitalism and creates prosperity, innovation, and success for everyone. Companies have a decisive role to play in this transition. The new Statement on the Purpose of a Corporation is a great step in the right direction and we applaud the Roundtable for its leadership.
CEO Martin Whittaker spoke out on the importance workforce policies in a Fortune OpEd, outlining the “sobering picture” revealed by our recent analysis, the Win-Win of JUST Jobs:
“It’s still the wild west of workforce policy disclosure with little direction on how to best measure issues like pay equity, paid time off, paid parental leave, flexible work, diversity and inclusion policies and targets, provision of day care services, worker training policies, and tuition reimbursement. The lack of standards on this also means investors are unsure of how to evaluate the information once it is disclosed.”
Read more on the takeaways from this analysis in this Fortune editor’s pick.
On the road to a more just marketplace, America can only get so far without the bold efforts of its corporate leaders. And tech companies, which have contributed to some of our nation’s most pressing challenges – from data privacy to income inequality – may currently stand at the forefront of solving them.
Microsoft, this year’s top company in JUST Capital’s Rankings of America’s Most JUST Companies, announced yesterday that it would invest $500 million in affordable housing in the Seattle area – a move that signals a long-term commitment to the company’s local community.
Arriving on the heels of fellow tech giant Amazon’s announcement that it would build new campuses in Long Island City and Richmond, Microsoft’s announcement also reflects an ambitious effort to tackle the impacts – including growing income and housing inequality – that it has had on the local communities where its industry is concentrated, not unlike Salesforce CEO Mark Benioff’s initiatives to support San Francisco’s homeless population.
And this is not the first time that Microsoft has done so – its efforts to address data privacy issues and expand paid parental leave policieshave positioned the company head and shoulders above the competition. And not only with regard to ethical concerns – Microsoft has outperformed its peers in recent quarters, and its latest commitment is just another example of the company’s proactive efforts to address issues before external factors, including the market, force its hand.
In our Rankings, Microsoft ranks not only first overall, but is also tied for third for the work it does to maintain strong relationships with communities. A few other key metrics that drive Microsoft’s high performance in the 2018 list of America’s Most JUST Companies include:
As more and more U.S. companies seek to align their business practices with the priorities of the American public, Microsoft’s efforts to address its societal impacts can and should serve as an example to companies across all industries – not just in the tech sector – of how they can support a form of capitalism that works for all the people it serves.
This article was originally published on Forbes.com.
The opioid epidemic is being called the worst public health crisis in American history. Drug overdoses are now the leading cause of death among Americans under 50. And Opioid addiction has developed such a powerful grip on Americans that some scientists have blamed it for lowering our life expectancy.
How to reflect this important and alarming issue in our rankings has been a matter of intense discussion. Our rankings are based on the voices of the American people – with 10,000 contributing to this year’s survey and 72,000 over the last three years. Throughout this work, it has become clear that the harmful effects of a company’s products, and the actions of corporate leaders on matters of social concern, are integral to just corporate behavior. And in our polling on the opioid issue in particular, almost a third of Americans noted concerns with companies linked to the opioid industry.
In our rankings universe, three of the nation’s largest drug distributors – Cardinal Health, McKesson, AmerisourceBergen – as well as three of the nation’s largest retailers – CVS Health, Rite Aid, and Walgreens – are heavily implicated in the crisis. Accordingly, we’ve been following news reports, litigation, and related fines throughout the year, and have already factored into the scoring model a range of inputs related to the opioid crisis to penalize these companies where appropriate and necessary. The issue gained greater urgency in mid-October when The Washington Post and 60 Minutes brought to light new whistleblower accounts from a former DEA deputy assistant administrator.
The reports’ criticism of the three major drug distributors – who control 85-90 percent of drug distribution in the U.S. – centers on them “turning a blind eye to pain pills being diverted to illicit use.” The reports cite as an example one pharmacy in Kermit, West Virginia, a town of just 392 people, which ordered and was supplied with nine million hydrocodone pills over two years.
All of the drug distributors and retailers in our ranking universe have made sizeable settlements to resolve allegations related to the distribution of opioids in recent years. Specifically, they’ve paid fines totalling more than $341 million over the last seven years. This has already been factored into this year’s rankings.
However, until we are confident we can fully and accurately reflect corporate behavior on this issue, and until the industry-wide actions being taken to help address this national crisis have had the chance to take effect, the Food & Drug Retail sector, specifically the six drug distributors and retailers, will remain “Under Review.” Furthermore, no Seal will be awarded to an Industry Leader in this industry.
As we move into 2018, we’ll continue to track ongoing developments, including:
We will update our rankings to reflect these developments, and prior to granting any company the JUST Seal, we will be seeking assurances from companies in the sector that they are working together to shape industry-wide and individual company-led actions to help stop this growing crisis in the U.S.
To say this year has been one of tumult, upheaval and breathless change is an understatement. Corporate America has not been immune, as they seek to respond to the relentlessly shifting political, social and economic landscape. No longer can business take a pass on matters of morality. They are becoming powerful social organizing forces. They must choose a path.
Today, JUST Capital, in partnership with Forbes, has released the 2017 list of America’s Most JUST Companies, our annual ranking of the largest publicly-traded U.S. corporations. This is more than just a ranking. It is a venue for those who would build a more just marketplace. It is a resource for anyone seeking information on how the companies they work for, buy from, invest in, or care about are doing on the issues that matter most to them. It’s also a guide, or roadmap, for companies seeking to regain the trust of the American People – for the companies ranked by JUST Capital are evaluated not against some expert notion of good citizenry, but against the values and priorities of the American people themselves.
The rankings are based on some of the most comprehensive surveys ever conducted on public attitudes towards corporate behavior, involving 10,000 American respondents in 2017, which we produced in partnership with one of the nation’s foremost data science organizations, NORC at the University of Chicago, using its powerful survey tool AmeriSpeak.
Ultimately, our goal is to harness the power of the private sector to drive positive change on the issues Americans care about most – worker compensation and well-being, customer treatment, product impacts, environmental pollution, strong communities, job generation, ethical sourcing and supply chains, transparency and more. Providing the rankings is the start. Driving their usage, so that markets incentivize and then reward just corporate behavior, is the key.
By having the public define this new business performance benchmark, we believe we can help to build trust in big corporations as a force for good, breathing new life into the idea that capitalism and markets can indeed serve the broader best interests of society. In other words, it doesn’t have to be a win-lose binary battle between shareholders and society. When compared to the overall universe of the 1,000 largest public corporations, our JUST 100 top performers across all industries:
America is a country that thrives on change, diversity and free market enterprise – precisely the conditions required to redefine the meaning of business success. JUST Capital’s rankings help provide a new moral compass for this inevitability, with the JUST Seal, awarded to the top performing companies, proudly displayed to light the way.
Check out the 2017 list of America’s Most JUST Companies, which includes the JUST 100 list of the top companies across all industries in absolute rank order, as well as the Industry Leader list, featuring the 33 top performers by sector. The companies will also be featured in the December 26, 2017 print issue of Forbes magazine, with additional feature stories online.
