The JUST Report: Is Warren Buffett a Stakeholder Capitalist?
Warren Buffett’s public holdings are more likely to be outperformers on stakeholder value. So concludes an analysis released by Bain this week, which notes that his portfolio companies are predominantly in the top half of a global universe of 1,300 companies measured on employee, community and customer performance criteria, with one-third in the top quartile. It’s not quite clear precisely what the measurement criteria are, but the point remains: the world’s #1 investor, by coincidence or intent, has disproportionately allocated his capital to companies that align value creation for stakeholders with total return for shareholders.
A Forbes article published this week by JUST Board member and former Y&R CEO and Chairman Peter Georgescu delves deeper into the historical connections of corporate stakeholder performance, reminding us that, despite recent divisiveness and rollbacks, stakeholder capitalism is not a new idea. Indeed, its practice across decades of American business history has resulted in perhaps the greatest value creation success ever: the establishment of the American middle class.
Per Axios reporting this week, the performance of the highest ranked companies in the JUST Annual Ranking compared to the lowest ranked companies brings this into sharp relief. Between January 2018 and August 30, 2024, the top 10% of companies in our rankings has beaten the bottom 10% by 92.85%. The performance of the JUST ETF tells a similar story. With a one-year return of 27.20%, the fund has surpassed not only the broader Russell 1000 index (by 0.62%) but also that of other U.S. large-cap ESG-focused ETFs. The JUST 100, which includes the top 100 companies from JUST Capital’s rankings, has outpaced its benchmark by 13.91% over the past year and an impressive 51.39% since its 2019 launch.
These are the kind of returns the Oracle of Omaha himself would be proud of.
Be well,
Martin
Quote of the Week
“How can Costco afford to pay so much more than other retailers, and provide its customers such low prices? Jim’s answer is always the same: paying your fellow workers well isn’t altruism, it’s good business. Costco’s employee turnover is a fraction of the rest of the retail industry – 8% compared to 60% – and its stock performance is so much higher.”
- Zeynep Ton, co-founder of the Good Jobs Institute (and partner to JUST) speaking in her recent Ted Talk about how Costco shows why “good jobs” are good for business. Listen to the full speech here.
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JUST In the News:
CNBC took a deep dive into some of the most interesting policies featured in our Top 10 Companies That Treat Employees Best list.
Axios spotlights JUST Capital data to make the case that ethical investing can produce financial returns.
Policy Highlights the Top Companies That Treat Employees Best
JPMorgan Chase
JPMorgan Chase offers a minimum hourly wage of $20, which exceeds the Russell 1000 average and represents the third highest minimum wage among banks. The company also supports new parents with 16 weeks of paid parental leave for both primary and secondary caregivers and families with various caregiving services.
Cigna
Cigna prioritizes transparency by sharing highly detailed workforce demographic data by gender, race/ethnicity, and job category, reinforcing its focus on fostering an inclusive environment. Additionally, Cigna supports its employees’ work-life balance with key benefits including 18 days of paid time off and seven days of paid sick leave annually, paid parental leave, flexible scheduling opportunities, and emergency backup dependent care support.
Dayforce
Dayforce sets a high standard in the Software industry with its generous and inclusive parental leave policy, offering 17 weeks of paid leave to all caregivers. This is the highest offering at parity among the Top 10 companies and far surpasses the Russell 1000 average of 11 and 8 weeks of paid parental leave for primary and secondary caregivers, respectively.
Read about more leading policies here.
JUST AI
NPR reports that California is angling to be the first state to require safety standards for powerful AI models, particularly around testing for safety around a program’s ability to hurt our cyber infrastructure or shut down critical systems.
Must Reads
Axios reports on the slow trickle of companies dropping DEI from their companies, with Ford being the latest after external pushback. Meanwhile, Intelligencer looks at whether the attacks on corporate DEI programs are just encouraging companies to “hide” what they’re doing, and Forbes argues that dropping DEI programs is a short-sighted business strategy.
For Labor Day, The Washington Post looked at the swaths of disabled employees who make less than federal minimum wage due to an obscure law.
News Nation reveals that with the job market cooling, companies are offering lower salaries for new positions than they did in 2023.
Yahoo Finance reports that nearly 10,000 employees from Hilton, Marriott, and Hyatt went on strike this week for better pay and conditions.
Chart of the Week
This chart comes from a report of JUST Capital data by Felix Salmon at Axios, and shows that if you had invested in the top 100 companies in the JUST Ranking over the last few years, you would be outperforming the S&P 500, particularly if you shorted the worst. Dig into his research here, and explore some of our own index concepts here.
