The JUST Report: Amidst The Chaos, Stakeholder Leadership Provides A North Star
Regardless of how the market rollercoaster we’re on plays out, the global economy is clearly being fundamentally reshaped. According to many commentators, the possibility of a recession or worse in America and around the world is still real. If tariff-induced inflation gets introduced to the mix, it’s a double whammy for households. And if it accelerates AI adoption, as some think, the pain for workers could compound.
I’ve spent much of the week thinking about what all this means for JUST Capital. The argument – captured in this comment by Scott Bessent – that this is all being done to benefit Main Street after decades of neglect warrants careful scrutiny. History teaches us that dislocations invariably tug at society’s fault lines and hit the economically vulnerable (i.e., Main Street) the hardest. Maybe this is different. Overall though, I’m coming to the (admittedly self-serving) conclusion that it makes just company behavior more important, and increases the performance dividend of stakeholder leadership.
Consider this: In the last major market shock during Covid, the most just companies outperformed their peers. From January 31, 2020 through the end of May 2023 the broad based JULCD (the “JUST 500”) beat the Russell 1000 by a little over 1% and the JUST 100 was up 11.8% over its benchmark. More highly ranked companies also displayed more resilience than their lower ranked counterparts when Covid hit, responding to worker and customer needs more effectively, and bouncing back faster.
Although the current tumult is driven by altogether different causes, I expect just leaders to similarly outshine their rivals (as our index track records suggest). Companies that excel in creating value for all their stakeholders possess greater brand strength, are more long-term growth oriented, prioritize productivity and innovation (including via technology), and are better at attracting and retaining the best people. They have strong cultures, care deeply about their customers, have tighter relationships with local communities and suppliers, and are more adept at navigating social and environmental matters. When market shocks happen, these companies are invariably better positioned. Walmart’s successful customer loyalty program was cited this week as a reason why the company may be more recession-resistant than others (see below for other examples).
Call it what you want – multi-stakeholder capitalism, just capitalism, better capitalism – it’s the kind of leadership that will stand companies in good stead in times of great uncertainty. It’s also the best chance we have of building a better future for America.
Be well,
Martin
Interested in more content like this?
Sign up for The JUST Report, our weekly newsletter that delivers curated, cutting-edge insights and leading best practices to help your company navigate change and deliver value for all of your stakeholders.
Sign Up Here.
Special Report: Reaction to Tariffs
Reactions from Trump’s tariffs have run the gamut across companies and investors. Here are just a few from the week.
Ford says they’re “not sweating”, as 80% of their cars are assembled in the U.S., and they’re working with the administration to “help grow jobs here” to assemble even more on U.S. social.
JPMorgan Chase CEO Jamie Dimon responded to the tariffs in his shareholder letter, saying that “the quicker this issue is resolved, the better”.
Levi’s CEO Michelle Gass assembled a task force to figure out potential options for dealing with the impact of tariffs, saying that any price hikes the company makes will be “surgical”.
Walmart is suspected of being more resilient thanks to its growing “Walmart +” program, which drove nearly half the total spend on the company’s website last year. The subscription service could give Walmart a buffer on raising prices.
Outside of specific companies, CNBC created a round-up of thoughts from several top investors and CEOs (some anonymous) on the impact of the tariffs. The BBC also reported that right now, some workers in middle America have a more positive opinion of the tariffs than business leaders.
Lego proceeded with the opening of a new production complex in Vietnam, reportedly undaunted by tariffs against U.S. trading partners.
QUOTE OF THE WEEK
(Getty Images/ Kayla Bartkowski)
“For the last four decades, basically since I began my career in Wall Street, Wall Street has grown wealthier than ever before, and it can continue to grow and do well. But for the next four years, the Trump agenda is focused on Main Street. It’s Main Street’s turn. It’s Main Street’s turn to hire workers. It’s Main Street’s turn to drive investment, and it’s Main Street’s turn to restore the American Dream.”
- Treasury Secretary Scott Bessent speaking to the press on what these tariffs are aiming to accomplish. Read CNBC’s full thoughts on this statement here.
JUST AI
CNBC looks at an alarming trend for companies – scammers using bots and generative AI to pose as qualified job applicants for remote jobs, and then, once hired onto a company, installing malware and ransomware on their servers.
MUST READS
Fortune looks at how Atlassian has bucked the return-to-office trend of other tech companies, and in the process, tripled the size of its workforce and nearly doubled the amount of candidates who apply for open roles. Explore the tenets that make their remote workforce possible.
The Guardian looks at marketing’s role in “woke” backlash to corporate activism, saying, “the contradictions of the brand purpose era are most apparent when looked at from the view of the average person. Social progress once came hand-in-hand with economic progress. Now, instead, social progress has been offered as a substitute for economic progress.” Read the full article here.
Bloomberg reports that TikTok is becoming an even bigger bargaining chip in the growing trade war.
Fortune examines some of the strategies CEOs are starting to implement to weather the tariff storm. Yahoo Finance takes a close look at Starbucks in particular, given that the majority of their coffee is imported from some of the countries receiving the highest tariffs. Meanwhile, a small business owner takes to the New York Times opinion section to discuss pricing woes these tariffs create, stating: “Bizarrely, the U.S. government can scramble its tariff policy faster and with less warning than I can change my retail prices. I face a critical business decision and lack the minimal level of certainty to make it.”
