This summer, the Business Roundtable — CEOs from 181 of the biggest companies in America — signaled a new era of business purpose, one that serves not just shareholders but all stakeholders, including workers, customers, communities, and the environment.
Their vision, which elicited a mix of celebration and skepticism, catches up to what the American public has been telling us for years: They want business to serve all, not just a few.
The clear question is, what’s next? What can companies actually do to measure and improve their performance on these issues?
Bringing this vision of a more just, equitable, and fair economy to life is what JUST Capital does. Our research — which includes surveying more than 96,000 Americans across many demographics — has identified five distinct stakeholders the public wants business to serve, which mirror those in the framework recently adopted by the Business Roundtable, including how a company:
- Invests in its workers.
- Treats its customers.
- Supports communities, including its international supply chain.
- Impacts the environment.
- Serves its shareholders through good governance.
The metrics we utilize to measure justness within this framework give companies a clear way to monitor performance and benchmark themselves against their peers. Ultimately, we believe our approach represents the most accurate, timely, and comprehensive framework for assessing corporate performance on stakeholder capitalism.
So, what’s next? Here’s our answer.
8 Things Every Leader Should Do Now to Put Stakeholder Capitalism into Practice
Based on our work, here are eight key actions, that corporate leaders and boards could take today to align more closely with the stakeholder model.
1. WORKERS: Conduct a Living Wage Audit
Use the Living Wage Calculator from our colleagues at MIT to better understand geographic differences in cost of living.
Based on our 2019 methodology, the percentage of workers making a living wage averages between 28% in the Restaurants & Leisure industry to 88% in the Computer Services sector.
2. WORKERS: Improve Benefits, Both Traditional and Those That Provide Work-Life Balance
Ensure that healthcare meets your employees’ needs and that you’re supporting retirement planning. Then look at your flexible work policies and paid parental leave.
According to our 2019 assessment, 47% of companies provide hours that promote a work-life balance and 41% have parental leave.
3. WORKERS: Evaluate Your Diversity, Equity, and Inclusion Strategy, from Hiring to Retention
Have you conducted a pay equity analysis? Reported on Diversity & Equal Opportunity (D&EO) targets?
According to our 2019 assessment, 22% of companies disclose conducting a pay equity analysis, 83% disclose having a D&EO policy, and 11% report on D&EO targets.
4. COMMUNITIES: Create Educational and Employment Opportunities in Your Community
Are you paying a living wage in counties with high unemployment and poverty levels? Building a local employment pipeline? Eliminating hiring barriers for individuals with criminal records?
According to our 2019 assessment, 47% of companies disclose giving to educational programs, 24% have an apprenticeship program, 38% have a policy to hire veterans, and 1% disclose a second-chance policy.
Are you notifying users when privacy policies are altered or changed? Are customers given advance notice when their data may be used in new or different ways?
6. ENVIRONMENT: Be More Efficient in Your Use of Resources and Develop a Robust Clean Energy Strategy
Are you maximizing your use of renewable energy? Minimizing the use of fossil fuels? Reducing your overall energy usage?
According to our 2019 assessment, the average percentage of renewable energy in a company’s energy use portfolio is 23%.
7. SHAREHOLDERS: Link Executive Compensation to Performance on Environmental, Social, and Governance (ESG) Issues
Are you setting specific targets for ESG issues in executives’ incentive plans or other compensation packages?
According to our 2019 assessment, 17% of companies indicate a link between consideration of ESG risks and performance and executive remuneration.
8. ALL STAKEHOLDERS: Check Out JUST Capital’s 2019 Survey Results
This year’s full Survey Report — A Roadmap for Stakeholder Capitalism: JUST Capital’s 2019 Survey Results — is one of the most comprehensive bodies of public opinion research on corporate America ever compiled and utilized to measure companies.
The above to-do list is only one small part of the full report. For more invaluable information, including which business behaviors matter most to the American public, Americans’ views on business, and, most importantly, why it all matters, check out the full report available here.
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