Recent research from Sift, the AI-based fraud prevention platform, has revealed what it calls a “surprising generational divide”. It seems that Gen Zers – those born between 1997 and 2012 – express a significantly higher willingness to engage in online payment fraud compared to other generations. What’s more, some 33% of Gen Z respondents – much higher than other age groups – “either know someone who has participated in payment fraud or have done so themselves”.
As a father of four Gen Zers, I naturally found this to be somewhat unsettling. However, far more important is the analysis of why exactly this might be happening. First, it’s clear Gen Z is experiencing extremely high levels of economic distress and anxiety relative to other generations, brought about by student debt, exorbitant prices for houses, rental property and health insurance, a tough job market, and a general inability to afford even day-to-day necessities. What’s more, the research found that they feel much lower levels of corporate and brand loyalty. Indeed, Gen Z sees large corporations more as a cause of their broader economic problems than a pathway out of them.
Sift recommends companies build trust with Gen Z by “emphasizing their social responsibility”, helping them with payment management and flexibility, and prioritizing responsive customer service. These are all things we have heard in JUST Capital polling over the years in relation to just company behavior towards customers. According to our own surveys, Gen Zers also want to see CEOs advance climate solutions (70% vs 66% general population); uphold women’s reproductive rights (64% vs 57%); and protect LGBTQ rights (58% vs 51%). They are also more likely to say they would accept moderately less pay in order to work at a just company (23% vs 18%).
Gen Z makes up 20% of consumers in the U.S. and, in 2021, reportedly had a combined buying power of $360 billion. Undoubtedly it has grown since then as more of Gen Z join the workforce. They are the workers, the shareholders, the community leaders of tomorrow. Being just seems to be critical to winning their hearts and their support.
Be well,
Martin
August 6th 2024: Investing in Care: Proving the Payoff of Caregiving Benefits
Join us for a candid discussion about the challenges and opportunities of investing in caregiving benefits and potential positive outcomes for doing so. How are companies currently leading on caregiving benefits? What do you need to know about your workforce to create quality offerings? Learn first-hand from a company’s journey to significantly expanding their caregiving benefits.
Speakers:
Donnebra McClendon, Global Head of Culture and Inclusion, Dayforce
Joseph Fuller, Professor of Management Practice, Harvard Business School
Nicole De Santis, Partner, BCG
Ashley Marchand Orme, Director of Equity & Stakeholder Leadership, JUST Capital
Our friends over at The Conference Board are hosting a panel of expert economists on August 21 to discuss AI’s impact in the labor market, how it can cause or solve labor shortages, and more. Sign up here.
The Wall Street Journal reveals that many recent college graduates are heading to cities in the South due to better hiring prospects and lower cost of living, a job migration that hasn’t happened in several decades.
Are your company’s DEI efforts at a standstill? Fast Company speaks to twelve experts on why corporations need to move forward with their plans regardless of the political climate.
A Bloomberg opinion piece argues that the supposed gulf between rising productivity and flat wages is a “bi-partisan delusion”.
Following up on last week’s story, The Hollywood Reporter reveals that Disneyland workers have ratified their contracts with higher wages and sick leave.
Mashable reports that video game voice actors are following in the footsteps of the film industry, and are going on strike for protections against AI.
Bloomberg reveals that women now actually make up the majority of low-paid workers. Explore the implications here.
This chart comes courtesy of Axios, which shows that despite a blip in Q1, inflationary pressure is on the way down, with experts suspecting a rate cut may be coming in Q4. Explore the data.
The COVID-19 pandemic exposed weaknesses in global supply chains, resulting in increased attention to supply chain risks, including child and forced labor. Recent EU regulation will require additional due diligence on global supply chain risks and large companies like those within the Russell 1000 that operate across regions will experience pressure to evaluate the effectiveness of their policies or face significant penalties abroad. We also see in our polling that human rights issues in supply chains are fairly important to the American public, ranked at 11th in 2023.
At the same time, domestic workers are increasingly prioritizing freedom of association and collective bargaining. In late 2023 polling of the American public’s view on business, “majorities from every political party (92% of Liberals, 86% of Moderates, and 74% of Conservatives) [were] in support of collective bargaining.”
In response to this environment of heightened scrutiny and public polling data, JUST Capital and RepRisk partnered to analyze trends in risk incidents among companies in the Russell 1000 Index over the last decade with a focus on the most recent three years (2020-2023) and key issues including Supply Chain, Child and Forced Labor, and Freedom of Association and Collective Bargaining. We then examined how and if disclosure of policies and actions to mitigate these risks influence their incidence.
Supply Chain Risk:
Unsurprisingly, RepRisk recorded an increase in risk incidents related to supply chains such as human rights risks, geopolitical risks, poor labor practices and use of conflict minerals during the pandemic for Russell 1000 companies. However, the count of these incidents has returned to pre-pandemic levels in the last three years. As vendors and suppliers are considered part of the supply chain, supply chain risks were found to be linked to companies who are held accountable for the actions of their suppliers. Heightened regulatory scrutiny underscores the need for comprehensive risk management strategies to ensure compliance and mitigate potential liabilities across global supply chains.
Child and Forced Labor Risk:
According to the UN, child labor incidents globally declined between 2000 and 2016. However, conflicts, crises, and the COVID-19 pandemic have reversed this trend, pushing families into poverty and forcing more children into labor. Though the majority of Russell 1000 companies have not been linked to child and forced labor, a small subset have, despite regulatory efforts and the reputational consequences.
Freedom of Association Risk:
Freedom of association risk refers to violations of workers’ rights to organize and collectively bargain, and includes, for example, interfering with union formation and participation, retaliation against striking workers, and refusal to comply with union agreements. Over the last three years, RepRisk has captured an increase in freedom of association risks within the Russell 1000 companies. This coincides with increased attention to workers’ rights issues in the US, highlighting the growing importance of addressing labor rights and maintaining ethical employment practices.
Over the past 10 years, the recorded risk incidents are linked to a subset of just 192 Russell 1000 companies. In the more recent three-year period, this subset has narrowed down to 106 companies with recorded risk incidents.
Across all four risk categories, there have been 902 risk incidents in the last 10 years, with 291 incidents reported in the last three years.
JUST Capital takes RepRisk’s data in these four areas and rolls them into a singular data point called Labor & Human Rights Controversies in the Supply Chain, which are then filtered for the highest severity.
In JUST Capital’s 2024 Rankings, there were 87 unique risk incidents of this type, distributed over 54 companies, following the trend of a high concentration of risk incidents in a small number of companies.
Of the 36 industries JUST Capital evaluated between 2020 and 2023, 13 had no companies with risk incidents, 10 had one, 9 had two, and 4 had greater than two. These four highest risk industries are Retail, with 9 risk incidents, Clothing & Accessories and Food, Beverage & Tobacco, both with 6, and Restaurants & Leisure with 5. Risk is defined by the number of incidents in an industry – rather than percent, as industries vary in size – with the highest-severity risk incidents regarding labor and human rights in the supply chain.
When analyzing a portion of JUST Capital’s human rights data in conjunction with risk data, we found that there was no clear relationship between industry risk and industry disclosure of policies and actions to mitigate these risks.
JUST Capital Policy and Action Data Points
JUST Capital identifies human rights data points assessing the degree to which companies are actively auditing and reporting on human rights within their supply chain as well as taking remedial action. You can learn more about the below policies and actions and our methodology HERE.
Policies:
Actions:
The following graphs reveal the percent of companies within each of the four highest risk industries that are disclosing policies or actions on the six data points above that JUST Capital uses to assess a company’s human rights efforts.
Rates of disclosure of global supply chain risks and associated actions vary among industries. This is evident in the comparison between Clothing and Accessories vs Retail. Retail reported the lowest percent of disclosure, while Clothing & Accessories showed the highest rate of disclosure amongst high-risk industries. This is likely due to the fact that Clothing & Accessories is a more heavily regulated industry as companies produce a similar product whereas Retail involves a variety of products, limiting the ability to standardize disclosure requirements.
When compared to industries of a similar size, high-risk industries were found to have lower rates of disclosure. For example:
Discussion
Industries with no – or minimal – risk incidents had high rates of disclosures of sustainable human rights practices. However, industries with known exposure to human rights and supply chain risks had high rates of disclosure as well, indicating that rates of disclosure do not necessarily mitigate incidents of risk. Rates of disclosure could be indicative of legal requirements applying more heavily to one industry, pushing for further human rights due diligence, e.g. disclosure of remedial action plans or reporting the findings of human rights audits. Perceived salience or applicability to the human rights space plays a role, leading to a natural order of leading and lagging industries. Companies in industries that rely on global supply chains are going to have somewhat high disclosures compared to less clearly implicated industries. Risk mitigation in the form of these six data points is not foolproof. For example, reference of the UNGPs may be indicative of a company’s commitments, but did not influence the number of risk incidents occurring. Across all industries, more work can be done to mitigate these types of risks, especially in light of increasing scrutiny on these issues from the American public. In a mixed-policy, region-dependent environment, standardization benefits companies trying to ensure compliance.
About this Partnership
JUST Capital is an independent nonprofit dedicated to demonstrating how just business – defined by the priorities of the public – is better business.
JUST Capital engages RepRisk as their third-party data partner for collecting data on systematic risk incidents, as reported by media and other stakeholders, taking into account incident severity, relevance, and prominence, and scales these by a company’s global revenue to account for the increased attention that large companies experience.
This week, we saw some powerful numbers that support the investment case for just business leadership.
First, our own data. As of June 30, 2024, our flagship broad-based index of top companies in every sector – the JUST U.S. Large Cap Diversified Index – has out-performed the Russell 1000 cap-weighted benchmark by 1.5% year-to-date and by 13.8% since its inception almost 8 years ago. The JUST 100 (the top 100 companies in our overall rankings) has outperformed its benchmark by 6.7% this year and by 44.8% since its launch in 2019. The spread between the top 10% and bottom 10% of companies in JUST Capital’s rankings is especially impressive, and we’ll be releasing those numbers soon. As a reminder, these are companies that, compared to their peers, invest more in workers, pollute less, give back to communities more, create more jobs, and do right by all their stakeholders. Companies that are more just, in other words.
Second, a new report this week by Bain & Company determined that over a 10-year period, companies in the S&P 500 that created the most value for customers, employees, suppliers and communities also had the highest shareholder returns. The chart below summarizes the data so I won’t repeat it here, but it makes a compelling case for stakeholder value creation.
Finally, a word on fund flows. Even with ESG seemingly in decline and out of favor, it was fascinating to read in Axios this week that ESG funds made up 21% of all alternative capital raised this year as of April. Whereas US ESG stock-market funds saw $8.8 billion of outflows in the first three months of 2024 (and $13.2 billion of outflows in 2023), U.S. alternative asset firms raised $27 billion for ESG funds in 2023, and another $17 billion in the first four months of 2024. European firms reportedly raised $98 billion in total over the 16 months.
For investors, the search for superior risk-adjusted returns transcends pretty much everything. Whether it’s in more passive index investing, active trading, or strategic alternatives, applying a just, stakeholder-based lens can be the key to future success.
Be well,
Martin
Rather than our traditional “Quote of the Week”, we want to highlight that in the wake of the assassination attempt on former President Trump, CEOs across sectors are speaking out on what this means for America, the election, and business. Read anonymous interviews from Fortune or a collection of statements from Axios.
August 6th 2024: Investing in Care: Proving the Payoff of Caregiving Benefits
Join us for a candid discussion about the challenges and opportunities of investing in caregiving benefits and potential payoffs for doing so. How are companies currently leading on caregiving benefits? What do you need to know about your workforce to create quality offerings? Learn first-hand from a company’s journey to significantly expanding their caregiving benefits.
Speakers:
Donnebra McClendon, Global Head of Culture and Inclusion, Dayforce
Joseph Fuller, Professor of Management Practice, Harvard Business School
Nicole De Santis, Partner, BCG
Ashley Marchand Orme, Director of Equity & Stakeholder Leadership, JUST Capital
Fortune looks at how, across the board, bosses and employees differ in their perception of how much time and productivity will be saved by AI.
PwC estimates that AI will add over $15 trillion to the global economy in 2030, through productivity increases and consumption-side effects. Learn more here.
Axios reports that The Society for Human Resource Management (SHRM) dropped the word “equity” from DEI strategy, stating, “by emphasizing inclusion-first, we aim to address the current shortcomings of DE&I programs, which have led to societal backlash and increasing polarization.” While DEI continues to be under fire, USA Today reports that the majority of companies are standing by their commitments.
Similarly, Axios argues that ESG is not going away.
Marathon Oil agrees to pay $64.5 million in fines for violating the Clean Air Act, the largest penalty of its kind so far. The Washington Post has the full story.
Good news: There are fewer low-wage workers in America than ever before. Axios has the story.
This chart comes from a 10-year study from Bain & Company that found that companies that saw high financial value and high stakeholder value delivered the highest shareholder returns. Explore the data here.
“America’s political class was in the final stages of self-righteous detachment from the economic and social conditions of the nation it ruled.” So writes Oren Cass, Chief Economist at American Compass, in a NYT op-ed this week recalling the indifference of political elites to the emerging opioid epidemic in 2011. A searing critique of elected leaders, the fundamental dereliction of duty he describes – to actually listen to what Main Street America has to say about their hopes, fears, and dreams – drives to the heart of our system of capitalism and our mission too.
Would a more just capital market have spotted, and reacted to, Purdue Pharma’s role in the opioid crisis a little earlier? Can socially-destructive corporate behavior or unethical business leadership, even if it’s highly profitable, somehow be curtailed? Conversely, would corporations who seek to create value for all their stakeholders be fully rewarded for their greater alignment with the public interest?
We think so. Certainly our investment research would support that.
Take ethical leadership, integrity, and accountability to stakeholders, for example. They are issues that have often ranked highly in the public’s list of priorities. Had Boeing – which for the last three years has scored very poorly on ethical leadership in our rankings – put more emphasis on this, who knows, maybe they could have avoided many of their recent travails (which deepened this week with their justice department plea deal Justice Department plea deal).
Writing for Fortune’s CEO Daily, Diane Brady notes of Pat Shanahan, the frontrunner to become the next CEO of Boeing, that the keys to his success will be his ability to, “build trust with an unhappy workforce, as well regulators, suppliers, investors and a disgruntled public.”
Stakeholder leadership, in other words.
Be well,
Martin
“Writing and thinking are not separable activities. I think when you lose your writing ability, you actually lose your thinking ability to some extent. And if we outsource judgement, we will lose the ability to think critically.”
Our friends over at the Brookings Institute take a look at how AI is projected to affect income equality in the U.S. While overall optimistic, this line stands out: “Finally, let’s zoom out once again, this time to consider the oft-repeated claim that there will always be new jobs. This has been true since the Industrial Revolution, but whether or not it continues to be true has major implications for inequality in the future.”
CNBC reports that several of the largest fast food chains are testing AI drive-thru ordering as labor costs continue to increase.
Fortune reports that Intuit is laying off 1800 employees from one sector of the business to add 1800 in another sector focused on expanding their AI use.
AI is proving to be a boon for nuclear power companies, with Vistra and Constellation Energy topping the S&P 500 as investors look for companies feeding the artificial intelligence industry’s demand for energy. Reuters has the story.
The Geek Way looks at how AI job loss claims may actually be wildly overexaggerated. Dig into the data here.
JUST Board Member Arianna Huffington teams up with OpenAI’s Sam Altman on ThriveAI Health, a customized, hyper-personalized AI health coach that will be available as a mobile app and also within Thrive Global’s enterprise products. Learn more here.
The Wall Street Journal looks at data from the latest NFIB report which shows wages are rising at small businesses, but employment isn’t. Learn more here.
Axios examines a new report that shows that workers and wages are actually doing the same or better than they have historically in the past 50 years.
Our latest research partnership with Revelio Labs looks at the financial security of employees across America’s largest publicly traded companies, particularly when it comes to entry level and retail jobs. This chart shows the top 5 and worst 5 areas of the country when it comes to starting retail pay. Read more of our wage analysis here.
We’re halfway through 2024 already, if you can believe it. So as the Independence Day celebrations continue, I thought I’d take a moment to reflect on where things stand in the world of corporate justness.
Overall, I’d say that despite a wider sense of societal instability, the corporate stakeholder space feels relatively steady. Americans’ chief priorities remain firmly centered on pay, jobs, and economic security. The debates and discussions around corporations’ role in society continue, but have become markedly less heated and divisive, and more private, measured and–dare I say–meaningful. Corporations for the most part are focused on gathering data, developing strategy, and generally getting on with the business of understanding what their stakeholders want and working hard to give it to them.
This inevitably means different things to different companies. Some are doubling down on worker-related investments. Some are focused more on branding and communication issues. Others are shifting their priorities entirely. The announcement this week by Tennessee-based rural retailer Tractor Services that it is discontinuing or reorienting certain practices (including its DEI and carbon emission commitments) to focus more on things that “tie directly to business” is an interesting case in point that has attracted a lot of attention. Whichever way you look at it, corporate leaders are very sensitive to the shifting sands of stakeholder expectations and how they align with their core business interests.
I expect things to get more challenging in the second half of the year. The next generation of ChatGPT will undoubtedly shock, amaze and pose some existential questions about morality and business in the modern age. The Presidential election will likely bring varying measures of disharmony and disruption whichever side of the aisle you’re on. According to many commentators, this week’s SCOTUS “Chevron” ruling could up-end the entire regulatory status quo facing businesses in America.
In my view, all of this makes JUST’s role more important. When it’s at its best, American business is an incredibly powerful force for good that is essential to a more just and perfect Union. It helps support the freedoms, liberties and opportunities that define our collective future. Creating the incentives for that is where we will stay focused.
Wishing you and yours a wonderful weekend!
Be well,
Martin
To understand the financial security of employees across America’s largest publicly traded companies, JUST Capital and Revelio Labs analyzed the amount employees’ wages exceed the local living wage necessary to cover basic budgetary needs. Here’s what we found.
CNBC looks at how AI is eating up corporate tech budgets, but not on the customer side–a majority of the investment is going to training and outfitting their employees.
Must Reads
The Wall Street Journal highlights how Tractor Supply Co has walked back their DEI and environmental initiatives after weeks of criticism on social media.
Bloomberg wonders if “social media labels” would wind up being even worse than “cigarette labels”, examining how that industry used those warnings to escape liability and regulation.
The New York Times examines the pros and cons of the growing list of top employers covering egg freezing, which, while immensely helpful for many workers, points to a potentially growing schism in work/life balance and expectations.
Our latest research partnership with Revelio Labs looks at the financial security of employees across America’s largest publicly traded companies, particularly when it comes to entry level and retail jobs. This chart shows the top 5 and worst 5 areas of the country when it comes to starting retail pay. Read more of our wage analysis here.
This week’s call by the U.S. Surgeon General for tobacco-style warning labels on social media products is the latest chapter in one of the defining corporate justness narratives of our time: the impact of social media on the mental health of children and teens.
It’s something that we at JUST have grappled with over the years. Public polling suggests that 86% of Americans are concerned about the impact of social media on children; that 50% of parents of children younger than 18 feel their child(ren)’s mental health has suffered because of social media use; and 83% of likely voters believe social media platforms should be required to protect their minor users.
In step with the polling, bipartisan political pressure for action is growing. For example, Over 40 states are suing Meta claiming the company designed addictive features which resulted in serious mental health problems for children.
As of writing, Meta has emphasized its position that Congress should pass legislation which would require parental consent to join social media if a child is under the age of 16. Currently most social media sites require the account holder to be at least 13-years-old. At the same time, big tech firms have implemented safety features to support a safe, positive online experience for teens.
The question at the center of this is a just one: how will these firms address a critical stakeholder issue that is central to their business model while balancing their near and long term profits?
Be Well,
Martin
“I want to touch on AI to close. There’s a lot of buzz about AI, we have 1,000 wildfire cameras in the state of California, and of the 1,000, 600 of them exist in our footprint. AI was enabled on all 1,000 cameras last year and the results are tremendous. AI is picking up wildfire hits faster than humans…so that’s a very effective post-ignition layer of protection that we intend to move forward and install more cameras.”
CNBC examines our data and highlights companies that are providing the best paternity leave for Father’s Day.
The BBC takes a look at one of the first sectors to be hit with AI job loss–copywriters–and how, amid massive team cuts, the sole job of many that remain is to make AI articles sound more human. Dystopian, much? And on a broader scale, the Financial Times reports that the IMF has “profound concerns” over AI labor destruction.
In a follow-up from last week’s article over the security concerns surrounding Microsoft’s new “Recall” AI feature, which automatically takes photos of your screen at random intervals, the company will now delay the release until it can tackle the security challenges it poses. Reuters has the full story.
For Father’s Day, GQ interviewed 13 new father’s on how having paternity leave (or not) affected the first weeks with their newborn.
SHRM analyzes the Supreme Court decision siding unanimously with Starbucks against their employees in a lawsuit over the firing of several workers who were attempting to unionize in Memphis.
Business Insider reports that the Surgeon General has called to implement a Surgeon General’s warning on social media due to plummeting mental health among teens, but others think that this “warning label” will prove infective when compared to actual government regulation.
The NY Post looks at the growing trend of companies eliminating middle managers, and how it is effecting new entrants to the workforce.
This chart comes from this Washington Post article highlighting the latest Ipsos polling that shows a majority of Americans support DEI initiatives, and even more so when they’re given a description of what those initiatives entail.
