We’re coming up on the 50th anniversary of the essay in which Milton Friedman argued the only role a corporation had in society was to increase its profits. By the turn of the century, that idea became the accepted way of running a business – but, looking at where it’s led the United States, the majority of Americans are embracing an alternative, stakeholder capitalism.
Since 2015, JUST Capital has surveyed more than 96,000 Americans on what they believe U.S. companies should prioritize when it comes to just business behavior. For the past three years we found that four out of five Americans (79%) agree that employees don’t share enough in their companies’ success, and that a majority believes that companies prioritize their shareholders above both employees and customers. While we agree there is room for improvement, arguments in support of shareholder primacy, or against stakeholder capitalism, in the summer of 2020 are difficult to understand – since they are out of sync with the voice of the American public, institutional investors, shareholders, and corporations themselves.
In August 2019, The Business Roundtable (BRT). issued a groundbreaking new Statement on the Purpose of a Corporation that has shaped the dialogue around stakeholder capitalism over the past year. Shortly after, JUST Capital released its “Roadmap for Stakeholder Capitalism” and the results of our 2019 Survey, detailing the Issues and stakeholders the American public wants U.S. companies to prioritize most to restore declining trust and create an economy that works for all Americans.
The key takeaway? Across many demographics – liberal, conservative, high- income, low-income, men, women, millennials, and boomers – Americans placed worker-related issues like pay, benefits, and treatment at the heart of just business practices. They also prioritized customer treatment, community support, environmental protection, and shareholder return – aligning them overall with the BRT’s view that companies must serve all their stakeholders.
According to a recent OECD report on the makeup of the owners of global equities, “institutional investors hold 41% of global market capitalization, much of which is in the form of passive indexing.” Larry Fink – CEO of the world’s largest asset manager, BlackRock – has written extensively on the topic of stakeholder capitalism, stating “each company’s prospects for growth are inextricable from its ability to operate sustainably and serve its full set of stakeholders. … The importance of serving stakeholders and embracing purpose is becoming increasingly central to the way that companies understand their role in society.”
As JUST Capital stated in our response to the DOL’s proposed rule change for ESG in retirement plans, the American people are the ultimate beneficiaries of American companies, through their ownership in ERISA-sponsored plans, other retirement plans and ownership vehicles, and the final taxation and regulatory power of the U.S. Government.
Per the OECD, “14% of global stock market capitalization is held by the public sector. Either through direct government ownership or through sovereign wealth funds, public pension funds and state-owned enterprises. And in almost 10% of the world’s largest listed companies, the public sector holds more than 50% of the shares.” Those public pension fund beneficiaries are the type of average Americans JUST Capital is reaching with our polling efforts. The OECD goes on to say that “with public sector ownership at these levels, it will be important to consider how political priorities directly and indirectly influence corporate decisions as well as their economic effects on ultimate beneficiaries such as tax-payers and pensioners.”
During this summer of protests around racial equity and injustice, JUST Capital hosted a discussion with representatives from two of America’s largest pension funds, the New York City Employees’ Retirement System and the California State Teachers’ Retirement System (CalSTRS). The conversation explored how many CEOs have responded with statements to support racial equality and commitments to improve their company’s efforts, but focused on the fact that investors want to know if companies are going to “put their money where their mouth is.”
“When we talk to companies, they certainly like to tell us all the great stuff they are doing to promote diversity in their companies, but we have no way to evaluate that,” said panelist Michael Garland, assistant comptroller for corporate governance and responsible investment for the New York City Office of the Comptroller, which oversees the city’s pension funds. The comptroller recently sent letters on behalf of the city’s employees’, teachers’, and board of education funds to the CEOs of 67 S&P 100 companies that issued supportive statements on racial equality, calling on them to affirm their commitments with concrete action by publicly disclosing their annual EEO-1 Report data. “We have no way to tell what’s real and what’s not,” Garland said, “so give us the numbers so we can actually assess your performance.” Garland also explained it is in the companies self interest to disclose.
While public companies have adopted stakeholder capitalism to varying degrees, the research shows that it is already the norm. A July 2019 Stanford University study based on a survey of over 200 CEOs and CFOs of companies in the S&P 1500 Index, found that “CEOs and CFOs claim that stakeholder interests already play a considerable role in the management of their companies.” The report went on to show that “89 percent [of the CEOs and CFOs surveyed] believe it is important or very important to incorporate the considerations of these groups in their business planning; only three percent believe it is slightly or not at all important. Furthermore, most (77 percent) do not believe that shareholder interests are significantly more important than stakeholder interests.” The Stanford survey went on to say that only half of the CEOs and CFOs surveyed believe their stakeholders understand what the company does to meet their needs, suggesting they are doing the work but don’t believe they are getting the credit for their efforts.
JUST Capital looked at how the Business Roundtable signatories scored by our methodology.
For the 134 signatories that were included in our 2019 Rankings, we analyzed those companies across five stakeholder groups – including Workers, Customers, Communities, the Environment, and Shareholders. Here’s how these companies stack up:
You can see that the 134 Business Roundtable signatories are performing well above average when it comes to serving their stakeholders, except for Customers, where we are measuring issues like creating quality, safe products that do not harm health, the environment, or society, and protecting privacy.
Specifically, compared to other Russell 1000 peers not in the JUST 100, the Business Roundtable signatories perform:
Timed with the one-year anniversary of the Business Roundtable’s landmark redefinition of corporate purpose, JUST Capital asked the public how they believe companies are performing as they shift from a myopic focus on shareholders to better serving the needs of all stakeholders. Out of the 2,000 Americans surveyed; the majority (63%) believe large companies are doing well in “building an economy that allows each person to succeed through hard work and creativity.” The overwhelming majority (90%) placed the onus on companies to “build an economy that works for all Americans.”
Versus last year, the results were encouraging, and represent progress – 58% believe that large, public companies are doing well walking the talk – by a margin of about 14 percentage points in the past year. As companies continue to invest internally and externally on implementing an approach that values all stakeholders, JUST Capital will continue to shine a light on their progress through our annual rankings in Forbes, investment products which feature top corporate performers by our methodology, and convenings celebrating profiles in leadership.
Two events this week highlighted the extremes of worker empowerment in America today. Once again, the defining social issues of 2020 – COVID-19 and racial equity – were the catalyst.
On one end of the spectrum, high-profile NBA players and teams from the WNBA, MLB, MLS, and more announced they would cease playing in order to protest the police shooting of a 29-year old Black man, Jacob Blake, in Wisconsin on Sunday. The national reckoning on racial equity remains a critical issue, and their actions have attracted widespread attention.
At the other extreme, the National Labor Relations Board (NLRB), in a series of five memos to their regional directors, decided that an individual speaking out about a company’s COVID safety procedure is not protected speech. This means that an employee can be fired for protesting the state of their company’s COVID-19 response even, presumably, if they feel their health is threatened. For a frontline worker in the middle of pandemic, this is obviously a major concern.
Our polling shows that the public increasingly expects companies to take a stance on societal challenges. It tells us that employee voice – the act of speaking up – is an important element of workplace culture. It is also clear that the relationship between companies and their workers continues to be the single most important stakeholder relationship a company has, both in the eyes of the public, and for long-term value creation. The SEC’s new requirement for public companies to disclose on human capital measures – another major development this week – is testament to this.
Employee activism on social issues is part and parcel of being a just company. It shouldn’t matter if we’re talking about an NBA star, a line worker or a cashier – the ability to create space for workers to speak up on social issues is table stakes in the stakeholder economy.
– Martin Whittaker
American Airlines plans to lay off more than 17,000 workers because of plummeting travel demands.
Bank of America commits to paying for back-up childcare through the end of 2020.
PwC releases its first Diversity & Inclusion report.
Salesforce announces that employees will be able to work from home until August of 2021.
Target unveils a racial equity plan for the company, including a $10 million pledge to advance social justice in its communities, and creating the REACH committee for developing internal actions the company can take.
Wells Fargo prepares to pay nearly $8 million to resolve hiring discrimination accusations.
Our editorial director, Rich Feloni, sits down with Jim Tankersley to talk about lessons from his new book, “The Riches of This Land.” Read how the post-World War II economic boom was powered by the lowering of barriers for women of all races and non-white men, and that an inclusive, worker-centric approach to business is the way to once again capture some of that growth and benefit all Americans.
Denise Hearn argues in Responsible Investor that investors’ interests may not always be aligned with those of society and showcases JUST performance data in The Strange Success Logic of Stakeholder Capitalism.
With layoffs increasing across a variety of industries, The New York Times shines a light on often-overlooked job sharing programs, and CNBC reports on how average CEO pay climbed to over $21 million for the first time in 2019, and could rise higher in 2020.
The Aspen Institute asked 10 different business leaders what they believe must happen to bring stakeholder capitalism forward.
The New York Times’ Dealbook chronicles the incredibly strange stock market behavior during the pandemic and racial justice protests, and The Washington Post draws attention to the K-shaped economic recovery that shows stocks surging while inequality deepens.
The Wall Street Journal looks at how COVID-19 is expanding inequalities for workers between those who can work from home and those who can’t. Related, New York Magazine highlights the disparity between mass unemployment and that many U.S. households are richer than ever.
In our latest Chart of the Week, we explore the risk profile of companies and show that just companies have less volatility overall.
The COVID-19 pandemic has created a global health and economic crisis that has placed us all on war footing, and companies are at the frontline. JUST Capital knows that companies face unprecedented operational and financial challenges and are making difficult decisions each day, including how to support their workers, customers, and communities in the face of declining revenues. We also know that each company, and each industry, is different and so options available to some may not be available to others. The stark reality is that the strategic decisions companies, along with the government and civil society, make today will ripple across our economic system for years to come.
JUST Capital has always aspired to elevate the values and priorities of the American people to help guide corporate decision making and just business behavior. In these trying times, as business leaders are struggling to understand what is “just,” we’ve created the following guiding principles. These are embedded in the very essence of stakeholder capitalism and built around five years of public opinion research on what constitutes just business behavior. They are meant to help guide CEOs and corporate leaders as they craft their strategic responses to the coronavirus pandemic and likely recession.
As a companion to these principles, JUST has also created an ongoing digital tracker of corporate responses to the COVID-19 crisis to assess what’s happening on the ground, elevate best practices, and share what good looks like in this rapidly shifting landscape. We’ve also highlighting how some of America’s largest companies have already embraced these principles in their initial responses to the coronavirus.
Here are our five leadership principles and how they connect to what we’re tracking:
JUST Capital’s polling shows that the American public’s top priority when it comes to just business practices is the treatment of workers. Americans believe companies should pay workers a fair and living wage, provide robust benefits, and maintain a safe work environment. These practices are even more crucial today as companies face unparalleled concerns about survival and protecting their workforce.
For too long, millions of workers in the United States have been financially insecure, with many living paycheck to paycheck. Despite the longest economic expansion in U.S. history, 40% of Americans can’t cover an unexpected expense of $400, according to the Federal Reserve. The coronavirus has shone a bright spotlight on the financial vulnerability of our workforce and the existing structural inequalities in our economy.
As companies respond to the ongoing pandemic, they should, as much as possible, prioritize the health and financial security of all their workers, especially their low- and middle-wage workers, who will experience the most economic hardship. And while circumstances are changing rapidly, there is much companies can do to support those workers today:
JUST Capital is tracking corporate announcements related to: paid sick leave, temporary closures, one-time bonuses, and treatment of vendor and contract workforces.
We also know from our polling that the American public places a high priority on companies creating and retaining quality, stable jobs in the U.S.
Work structures and arrangements are changing rapidly for many Americans. Some are working from home for the first time while caring for children who can’t attend school. Others are still working at their place of business but taking on new roles and responsibilities. In immediate responses to this new reality, many companies have proven to be nimble and innovative. Companies should also adopt a similar mindset as they prepare for a potential recession, exploring new work structures and practices in order to avoid layoffs and additional hardships for workers:
JUST Capital is tracking companies’ announcements related to: work from home policies, layoffs and furloughs, outplacement services, and commitments to rehiring employees.
Government officials across the country are pursuing policies to stop the spread of coronavirus and minimize strains on our healthcare systems, families, communities, and businesses. Corporate America is well positioned to help implement efforts already underway and advocate for additional government interventions. While each company brings a unique voice and set of resources, there are a few actions that all companies can consider:
JUST Capital will soon be tracking companies’ announcements related to: stock buybacks.
The American public wants companies to support the communities in which they operate through local sourcing and support, charitable giving, and paying a fair share of taxes. Companies should assess how strategic choices could better support their suppliers, the government, and community members. They can:
JUST Capital is tracking companies’ announcements related to: community support, participation in relief funds, customer services, and supply chain practices.
Our polling has found Americans care deeply about ethical leadership, and we see that this is of utmost importance in a period of uncertainty. Also, nearly 60% of Americans believe that CEOs have a responsibility to take a public stand on important social issues. If there were ever an important social issue, supporting stakeholders in a crisis is it. CEOs and C-suite executives who are committed to practicing stakeholder capitalism should lead by example, vowing to be the first line of defense against a financial downturn. Leaders can:
JUST Capital is tracking companies’ announcements related to: executive compensation and pay cuts, as well as buyback and dividend programs.
This once-in-a-generation moment is the opportunity for all CEOs who have pledged their commitment to purpose-driven leadership and serving all their stakeholders to put those values into practice. Adopting a stakeholder-oriented response to this pandemic is key to minimizing its public health and economic impacts, and will help companies bolster their resilience to weather an economic downturn.
When companies provide paid sick leave, workers can stay home and protect their customers and the community from the virus, while also maintaining their economic security. When workers are fairly compensated, they can continue to buy the products they need, benefitting the overall economy. When companies prioritize customers’ health and meet their changing needs, this better serves Americans and strengthens customer loyalty. When companies recognize the importance of maintaining the financial stability of their suppliers, local communities reap the benefits. And when business executives lead by example by reducing executive compensation and companies pursue creative frontline job solutions like shift-sharing, we can minimize job loss while restoring trust.
Each year, for the last three years, our polling has shown that 80% of Americans believe that companies don’t share their successes with their employees and instead prioritize shareholder needs above all other stakeholders. At this time, it is critical for companies to take this moment to demonstrate a new commitment to walking the talk on purpose-driven leadership and supporting their stakeholders. This will be the moment where companies define their future, and make choices now that should support a faster recovery and long-term competitive advantage.
The world is gripped by fear. The market is plunging. Governments are locking down cities. Many of us are refreshing news sites and Twitter to understand the latest update. Of course, I’m talking about the coronavirus, or COVID-19, an international pandemic that’s leaving everyone anxious.
There’s been much (welcome!) talk about stakeholder capitalism, purpose, and a commitment to workers in the last year, from the Business Roundtable’s new statement of purpose to its presence as a main topic in Davos. The reality is that this is the moment for companies to put stakeholder capitalism into practice – to demonstrate their commitment to an American public that is increasingly skeptical about promises (according to our polling, less than half of Americans currently trust large companies). Every company – from the 181 that signed the Business Roundtable’s pledge to those espousing purpose and a commitment to workers and communities – should be acting now.
What should companies be doing?
First, paid sick leave. Every worker, regardless of classification, needs access to paid sick leave. And with too few tests available and concerns about hospital overuse, it can’t only be available when a worker has a proven case of COVID-19. We’re seeing announcements from companies like Walmart and Darden Restaurants on new sick leave policies. Fundamentally in this environment, workers need 14 days of leave. Companies should also press Congress to implement sick leave universally. This will level the playing field for those companies that are committed to doing the right thing for their workers and communities.
Second, we’re seeing many tech and white collar companies encourage or require employees to work from home. Those companies must also be thinking about their contractors, vendors, and suppliers. We’ve seen companies like Microsoft and Alphabet pledge to cover lost wages of hourly workers at their headquarters. Every company should include this as part of their calculation over the coming days and weeks. Stakeholder-run companies connect the interests of their workers to their suppliers and communities, and this is a critical example of that.
And third: Companies need to know the financial security of their workforce and ask if their workers are making ends meet each month. JUST Capital can help with conducting a financial stress test. This is the moment where recommendations like storing up a month’s worth of food is simply not possible for workers in financial distress. We know that 40% of Americans can’t afford a $400 emergency and according to our initial estimates, 10.4 million people (of the 20 million overall) who work at Russell 1000 companies do not make enough to support a family of three, even with a spouse working part time. It goes without saying that a pandemic is one of those emergencies – necessitating that people obtain additional medication, food, and healthcare.
More fundamentally, as a recession feels more likely, companies (and investors) must recognize that the last 10+ years of growth, buybacks, and tax cuts can and must cover the costs of keeping jobs and workers in those jobs. There is some evidence that an investment in workers, rather than layoffs and cost-cutting measures, along with operational efficiencies and agility can support the long-term resilience of companies. Studies have also shown that stakeholder-driven small businesses, post-2008, were more likely to rebound due to their stakeholder approach in a downturn.
This is a once-in-a-generation moment. Business leaders should be acting quickly to be sure they’ve defined their vision for and commitment to their workers, communities, suppliers, and long-term interest of investors. This is the social license to operate; this is stakeholder capitalism.
The climate crisis continues to be among the most discussed issues among politicians, business executives, investors, and community leaders, as evidenced by the latest World Economic Forum in Davos, Switzerland.
But it’s easy to talk about what needs to be done to confront climate change. Walking the talk — and taking actions that can halt or even reverse course — can require dramatically reforming business practices and often a sizable financial investment, at least in the early stages.
We’ve written about notable companies taking steps to protect the planet before, but since the beginning of 2020, several JUST companies have unveiled ambitious initiatives that we’ll be tracking closely over the coming months and years ahead, including:
Investing in environmentally sustainable companies is generally considered a noble endeavor — but not one that most investment managers eagerly advocate.
BlackRock, the largest money manager in the world, made headlines in January by saying it would embed sustainability as a central part of its strategy across its many portfolios. In a letter to clients, the company said it would start making sustainable funds core building blocks to its portfolios — including its target-date funds — and take other steps to make sustainable investments “standard.”
Moreover, the company said it would be reconsidering and exiting industries altogether that have a highly negative environmental impact, including thermal coal producers.
“Our investment conviction is that sustainability-integrated portfolios can provide better risk-adjusted returns to investors,” the letter said. “And with the impact of sustainability on investment returns increasing, we believe that sustainable investment will be a critical foundation for client portfolios going forward.”
Blackrock CEO Larry Fink reinforced the move toward sustainable investing in his annual letter to CEOs: “Given the groundwork we have already laid engaging on disclosure, and the growing investment risks surrounding sustainability, we will be increasingly disposed to vote against management and board directors when companies are not making sufficient progress on sustainability-related disclosures and the business practices and plans underlying them.”
Andrew Ross Sorkin, a financial columnist for the New York Times and CNBC “Squawk Box” anchor, explained the huge significance of Fink’s letter in a recent episode of The Daily podcast:
“He’s saying for the very first time, as the largest investor in the world, that climate change has to become an integral part of the investing thesis for companies. And more importantly, that CEOs and companies themselves now have to change and think about climate change. And if they don’t, he’s going to be pulling his money from them.”
America’s Most JUST Company, Microsoft recently made two bold commitments: By 2030, the tech giant will remove more carbon from the Earth’s environment than it produces. And by 2050, it will remove all carbon it has created both directly and through electrical consumption since its 1975 founding.
To achieve these ambitious goals, Microsoft laid out several new initiatives, including a shift to 100% renewable energy by 2025, electrifying its vehicle fleet at all of its global campuses by 2030, and the creation of technology to help its suppliers reduce their emissions. In coordination with the announcement, the company also signed the United Nations 1.5-Degree Business Ambition Pledge and created a $1 billion Climate Innovation Fund that will invest in new technologies.
Microsoft also said it will begin publishing an annual Environmental Sustainability Report to publicly track its progress toward these goals.
“I think what happens is if you’re creating a lot of profit and creating more problems for the planet or people, I think it’ll catch up with you,” Microsoft CEO Satya Nadella told CNBC about the initiative.
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Amazon CEO Jeff Bezos, who’s faced pressure from both climate change activists and Amazon employees to reduce the company’s significant environmental footprint, recently made a huge financial pledge to support climate science.
Bezos announced on Instagram that he plans to put $10 billion of his own money — which equates to about 7% to 8% of his estimated $130 billion net worth — into the “Bezos Earth Fund.” It will make grants to scientists, activists, and nongovernmental organizations (NGOs) for “any effort that offers a real possibility to help preserve and protect the natural world.” The fund will start its grant making in summer 2020.
Though it’s not yet known which organizations will benefit from the funds, Bezos said the money will be used for charitable purposes and not for private-sector investments.
“We can save Earth,” he wrote in his announcement. “It’s going to take collective action from big companies, small companies, nation states, global organizations, and individuals.”
Beyond Bezos’s personal pledge, Amazon has also made strides toward reducing its carbon footprint, and in September 2019, the company announced its plans to be carbon neutral by 2040.
Planting trees may seem like a relatively minor step toward reversing Earth’s warming trend. However, a recent study published in the journal Science found that planting half a trillion trees could reduce carbon in the atmosphere by about 25% — enough to negate nearly half of all carbon emitted by humans since 1960.
Therefore, when done on a massive scale, tree planting could make a significant impact.
Salesforce CEO Marc Benioff and wife Lynne are financially backing a new platform called 1t.org introduced at the 2020 World Economic Forum that will support an initiative to plant, restore, or conserve one trillion trees over the next decade. So far, more than 300 companies have signed on to the initiative, and Salesforce has pledged to sponsor 100 million of those one trillion trees.
Benioff championed how the plan has drawn the support of government leaders around the world: “Nobody’s against trees,” Benioff told CNBC. “The tree is also a bipartisan issue.”
Even some companies that still rely heavily on fossil fuels are trying to make up for that by finding better solutions. Delta Air Lines recently committed to becoming the first airline to go carbon neutral with a 10-year commitment to mitigate all carbon emissions.
The company said it will undertake efforts to reduce emissions with a fleet renewal program, more efficient flight operations, weight reduction, and the development and use of sustainable fuels.
“As we connect customers around the globe, it is our responsibility to deliver on our promise to bring people together and ensure the utmost care for our environment,” CEO Ed Bastian said in a news release.
The companies and CEOs taking a lead on climate change aren’t only doing right by their stakeholders by protecting our planet, but they are also mitigating risk and positioning themselves for competitive advantage in our climate constrained future.
To stay up to date on all the latest shifts companies are making to prioritize the environment, workers, customers, and more, sign up for our free weekly newsletter, The JUST Report, today!
The future of our economy and the livelihood of all Americans depend on corporate leaders doing the right thing. That means looking after all of their stakeholders, not just shareholders.
This transformational shift toward a more balanced form of capitalism is under way. In fact, at the 2020 World Economic Forum in Davos, stakeholder capitalism emerged as an urgent charge for business leaders. The need for companies to invest in their workers, take care of customers, support their communities, and protect the planet has never been more pronounced.
When it comes to turning words into action, certain CEOs have taken a lead in confronting some of the key issues their stakeholders face today. Here are a few notable examples — broken down by stakeholder — that any leader can learn from.
In our annual survey, Americans told us that fair pay and work-life balance are among their top priorities, and certain CEOs are taking a lead on those concerns.
PayPal CEO Dan Schulman has spearheaded fair and equitable pay practices to ensure that even lower-wage workers feel financially secure. PayPal performed an audit of its hourly workers and call center employees and found that 60% struggled to pay their bills at the end of month. In response, the company committed to raising the basic wages of the most affected workers, while also reducing the cost of healthcare for those workers by an average of about 60%.
“For me, paying equally is table stakes to attract the very best, diverse workforce inside PayPal.… Every company should do this,” Schulman said during our Quarterly JUST Call with PayPal late last year.
Dr. Tom Leighton, CEO of Akamai Technologies, has prioritized providing his company’s employees with a supportive workplace environment, offering an unlimited PTO policy and providing new parents with up to 18 weeks of paid leave.
Not only do employees benefit from these perks, but they help the company retain top talent — a challenge in the competitive tech industry.
When it comes to taking care of customers, companies need to consider product safety, data privacy, and fair pricing — all things the American public deemed important.
Apple CEO Tim Cook has been vocal about the need for companies to safeguard the privacy of their users, in a time when customer data mining and sharing is rampant. Beyond committing to strong customer privacy protections at Apple, he’s called on Congress to pass comprehensive federal privacy legislation.
Moreover, the company has integrated numerous privacy protections into its consumer technologies, such as Intelligent Tracking Protection, which reduces advertisers’ ability to track people’s movements on Apple’s Safari browser.
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Certain industries, including technology, have a disproportionately detrimental impact on the environment through their manufacturing operations, their packaging and logistics, and the energy consumption of their products.
Aneel Bhusri, CEO and co-founder of Workday — which ranks first in our 2020 Rankings for their environment practices — has set and achieved aggressive renewable energy goals. In 2018, the company signed the first-ever renewable energy aggregation deal with four other large companies, and in 2019, it reached its goal of using 100% renewable electricity. Bhusri says the company continues to work toward zero carbon emissions by 2021.
Hewlett Packard Enterprise, led by CEO Antonio Neri, is also developing forward-thinking practices when it comes to reducing energy consumption. The company’s labs are developing new types of system architecture that will greatly reduce the energy consumed by supercomputers and data centers.
Neri has also discussed how Hewlett Packard holds its huge supplier base to the same environmental standards and targets it has for itself, helping to drive change through its supply chain. And last year, the company committed to lowering its global greenhouse gas emissions by 60% by 2025.
“With a very large supply base, we have to make sure they operate and act with the same mindset, with the same targets,” Neri shared during our Quarterly JUST Call in January. “And then we have to make sure they deliver against those targets. So that is probably the biggest challenge, because it takes an enormous amount of effort to make sure we have the right systems in place to measure everything.”
Companies and their leaders are in a unique position to affect the economic opportunities and livelihood of their local communities, further helping the people who work for them.
Dr. Leighton of Akamai Technologies has championed providing significant work training and income opportunities among Akamai’s local region. The company’s Akamai Technical Academy, for example, provides a paid five-week training program for women, ethnic minorities, and veterans in its Cambridge, Massachusetts, headquarters who are looking to build a career in technology but may not have a technical background.
The company benefits, too, because the trainees get jobs at Akamai, helping to bolster the diversity of its own workforce.
UPS CEO David Abney is another executive who has advanced his company’s legacy for community investment. Under Abney’s leadership, the company has not only increased its commitment to diversity and inclusion in the workplace but also to increasing diversity among its suppliers. Between 2017 and 2018, the company increased its spending on diverse suppliers by 250%.
Even though U.S. corporations have a reputation for putting their shareholders’ concerns first, some leaders are finding new ways to engage them in their stakeholder capitalism objectives — and, in turn, drive greater shareholder returns.
Hewlett Packard’s Neri, for example, has made stakeholder issues and the discussion of how focusing on them will improve HPE’s long-term value a front-and-center conversation with its shareholders.
“Environmental, Social, Governance — including inclusion, diversity, sustainability, and so forth — definitely are becoming way more important than ever before,” he says.
We know from our work to expand just business practices and stakeholder capitalism among U.S. companies that CEOs are a driving force. These leaders are pioneers in creating and promoting practices that increase stakeholder impact and ultimately increase shareholder return.
To stay up to date on all the latest shifts companies are making to put stakeholder capitalism into practice, sign up for our free weekly newsletter, The JUST Report, today!
