The JUST Report: It’s Been Two Years Since the BRT Statement, How Are Things Going?  

(Koron/Getty Images)

Yesterday was the two-year anniversary of the Business Roundtable’s embrace of a stakeholder approach in its revised Statement on the Purpose of a Corporation. The anniversary sparked considerable debate this week over whether companies who signed it are actually doing anything about it. A high profile Harvard Law School study concluded the answer was a clear “no,” and said the statement was “mostly for show.”

It’s coinciding with a wave of attacks on the stakeholder capitalism and ESG investing space more broadly, including from those who believe it’s all greenwashing and corporate hypocrisy; those who think the whole thing is a front for liberal political activism by unelected corporate leaders; those who believe the stakeholder approach is defined by governance reform and new regulation (such as the Harvard researchers); and those who fear it’s detrimental to investors and free market enterprise in general.

Some of this criticism is certainly justified. We’d be the first to agree, for example, that better and more reliable data on what companies are actually doing on stakeholder performance is much needed. But as I wrote with JUST director Peter Georgescu in Fortune this week, real stakeholder capitalism is not about political activism or greenwashing. It doesn’t need corporate governance reform in order to be pursued. And done right, it certainly doesn’t harm investors.

Our polling shows the public wants a more evolved form of capitalism that works better for them. What does that mean? Simple. It means running businesses that create good jobs; empower workers; provide for upward economic mobility and equality of opportunity; treat customers with dignity and respect; build healthy, prosperous communities; safeguard our planet; lead with integrity; and generate profits and returns for investors.

If you want to see how well the public thinks America’s biggest companies are doing on upholding their promises, I’d urge you to take a closer look at our polling this week. The results are surprisingly positive.

When it comes to actual performance, I can tell you that the vast majority of BRT signatories land in the top half of our overall rankings. We’ve found BRT signatories also pay their typical worker 5.3% more, have 22.3% less greenhouse gas emissions, give 370% more in charitable contributions, are over 3x more likely to report having diversity and inclusion targets; and 2x more likely to include ESG performance into executive compensation. As we describe in the Fortune piece, they’re also doing way better for their shareholders. Year to date, JUST’s indexes of the top companies on stakeholder performance – the JUST 100, and the JULCD  – have outperformed the Russell 1000 by 300 basis points and 37 basis points, respectively.

As the University of Virginia’s Ed Freeman (a pioneer of stakeholder theory) told us this week, shareholder primacy is an insufficient guide because, “What causes a company to be profitable is how it manages its other stakeholder relationships. And I think we’ve come to understand that.” Thanks Ed, we couldn’t put it any better ourselves.

Be well,
Martin Whittaker


This Week in Stakeholder Capitalism

Anthem CEO Gail Boudreuax joins Target’s board of directors.

Northwestern Mutual launches a $100 million impact investing fund for Black communities.

PayPal is scrapping late fees for “buy now, pay later” purchases.

Peloton CEO John Foley shares a progress report on the company’s $100 million pledge to combat racism and inequity, including raising wages of hourly employees to $19 an hour.

What’s Happening at JUST

Martin and JUST board member Peter Georgescu penned an op-ed for Fortune explaining why, despite rising criticism, stakeholder capitalism is what America needs. Alan Murray featured the piece, along with our most recent BRT-related polling insights, in Wednesday’s edition of CEO Daily, and Marguerite Ward at Insider explores what might be driving some of the shifts in the survey data.

Our editorial director, Rich Feloni, spoke with UVA Darden School of Business professor Ed Freeman on how stakeholder capitalism has evolved as a theory over the past 50 years, and what he thinks of recent attacks on it. “Companies have to make money,” he said. “It’s a lie to say, well, they’re only stakeholder capitalists if they put making money second. No, what they might do is see them as connected.”

Vox featured last week’s survey insights showing an uptick of support for corporate vaccine mandates in this deep dive on the challenges companies are having navigating the issue.

Martin was also quoted in FT’s Moral Money defending ESG against recent critiques, saying, “Sure, ESG is by no means perfect…but to write off the entire ESG space as misrepresenting what they’re doing and having no impact at all is just plain wrong.” Dive deeper in his post on LinkedIn.

Virgin Unite features an editorial by JUST’s Yusuf George, PolicyLink’s Mahlet Getachew, and FSG’s Kendra Berenson unpacking what’s driving the actions in our CEO Blueprint for Racial Equity and how corporate leaders can get involved by sharing how our standards development can help support their work.

We’re heading to SXSW! Or … almost! Our panel “Building Tools to Advance Inclusive Capitalism” – featuring our own Alison Omens, Jean Case of the Case Foundation, Charisse Conanan Johnson of Next Street, and Otis Rolley of the Rockefeller Foundation – is live on the panel picker platform. But to make SXSW happen, we need your support! Simply follow this link to register and vote up our panel!

The Forum

(JP Yim/Getty Images)

“The Statement on the Purpose of a Corporation reflected the view of our members that to succeed and profit over the long term, they needed to consider the interests of all their stakeholders – invest in their employees, keep the trust of their customers, partner with their suppliers and be a good member of their communities – to ensure all their enterprises flourish far into the future. The best modern CEOs have been running their companies in this way for a long time, they signed the Statement as a better public articulation of their long-term focused approach and as a way of challenging themselves to do more.”

“We’ve never approached clean energy or climate solutions as charity work. This is a business investment like all the other investments that Apple makes. … [Ignoring climate is] not just bad business, it’s almost dangerous to operate your business in a way that isn’t mindful of the impact on our planet and what it’s doing to people, to real lives.”

“Five years into Etsy’s program, we find that our overall employee retention is significantly higher than the industry average, and is higher among parents than non-parents. Women get promoted at the same rate (or slightly higher) than men. Half of our executive team are women, along with 43.7% of senior leaders and nearly a third of our engineers (about double industry benchmarks)…and women and men take parental leave at the same rate.”

Must-Reads of the Week

CNN Business highlights why tying CEO pay to environmental metrics is one of the most effective ways to combat climate change.

Axios reports that climate change – and a company’s plans to address it – became a main theme in many Q2 quarterly calls.

More on the “Great Resignation”: The Washington Post reports that nearly a third of all American workers under 40 have considered changing jobs during the pandemic.

Bloomberg reveals that women’s board gains pushed a majority of the S&P 500 into the 30% club, with at least 30% of their boards comprised of women.

The World Economic Forum releases a study on how behavioral differences affect the gender pay gap. One interesting finding? Men graduating college typically held out longer for higher-paying offers, with women on average accepting a job a month before their male colleagues.

Chart of the Week

This week’s chart comes from our updated polling on the second anniversary of the Business Roundtable’s redefined Purpose of a Corporation. Currently, 65% of American workers believe that companies are doing well in promoting an economy that serves all Americans, a 20% increase since 2019, yet we see a different story when we explore perceptions around how companies are impacting individual stakeholders. Explore the insights here.

Have questions about our research and rankings?  We want to hear from you!