JUST Chart of the Week: Companies That Prioritize the “S” in ESG Do Right by All Their Stakeholders

Over the past month, we have been tracking the market performance of companies that have prioritized their stakeholders throughout the COVID-19 crisis. We’ve generally seen that the stock prices of these companies excel in the market, and recently found that those that have been focusing specifically on their workers and customers during the crisis outperformed their peers over the last quarter.

Customers and workers comprise the “S” of ESG – the “social” impacts of sustainable investing – and it has never been more important than it is today that we see this “S” take center stage. We’ve seen a deepening interest in these issues from corporate and investment leaders alike, suggesting that, throughout and potentially following the coronavirus crisis, we might see greater focus placed on these two key stakeholders.

Over the last four years, JUST Capital has evaluated America’s largest public companies based on their performance across the issues Americans care about most, grouped into five stakeholders – workers, customers, communities, the environment, and shareholders – and published an annual Ranking based on this evaluation. In this uncertain time, stakeholder performance has never been more important, and we have been tracking how companies are supporting their stakeholders – including their workers and customers – throughout the crisis.

This week, we’re taking a look at our 2020 Rankings to see how companies that prioritized their customers and workers – the “S” in ESG – perform with regard to their other stakeholders. We constructed two sets of portfolios based on stakeholder scores: one for workers, and one for customers. For each stakeholder, we contrast the top 20% of each industry with the bottom 20%, and found that the top quintiles generally outperform the bottom quintiles with respect to all stakeholders.

What this means is clear: the companies that prioritize the “S” in ESG also do right by their other stakeholders, their communities, the environment, and their shareholders. Hence, the question is not whether to prioritize one or two stakeholders over others, but whether to jointly maximize stakeholder returns.

As our 2019 survey showed, the American public’s trust in large companies dropped 11% – from 54% in 2018 to 48% in 2019 – leaving less than half the population trusting corporate America. By investing in workers and customers during the current crisis – from prioritizing employee health, safety, and pay to providing aid, relief, and support to customers – companies have the opportunity to win back the trust of the public. As we return to shop at stores, apply for jobs, and/or invest our savings, we can expect to see corporations that choose their people over profits, and customers over cut costs, rise to the top.

We’re continuing to analyze how companies are performing in the market, as well as for their stakeholders, throughout the COVID-19 crisis. Check out all our coverage here, and stay tuned for next week’s chart, which will take a look at the financial performance of the top companies for workers and customers.

If you are interested in supporting our mission, we are happy to discuss data needs, index licensing, and other ways we can partner. Please reach out to our Director of Business Development, Charlie Mahoney, at cmahoney@justcapital.com to discuss how we can create a more JUST economy together.

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