The JUST Report: Pence Likens ESG to Chinese Communist Party Scorecards

(Justin Sullivan/Getty Images)

The fierce debate over what stakeholder capitalism and ESG is or is not took a sharply political turn this week. Mike Pence’s WSJ editorial, in which he compares ESG to the Chinese Communist Party’s Social Credit System, was a repudiation of the entire stakeholder idea and spotlighted the overt political dimensions of the conversation. 

JPMorgan Chase CEO Jamie Dimon pushed back against the criticism in typically direct fashion. “I’m not woke. And I think people are mistaking the stakeholder capitalism thing for being woke,” Dimon said at a conference this week. “All we’re saying is when we wake up in the morning, what we give a shit about is serving customers, earning their respect, earning their repeat business.”

Paying people fairly, creating good jobs in the U.S., investing in communities, respecting customers, embracing moral leadership, advancing accountability – based on 7 years of polling, these are the things that constitute good business, not adherence to political dogma. Even on a topic such as race, where political division is more pronounced, we see agreement. Our 2022 Racial Equity Survey, complementing this year’s Corporate Racial Equity Tracker, found that 77% of Americans (including 69% of Republicans) agree that racial equity in the workplace cannot be achieved without all workers being paid a living wage. 

In his superb new book, “The Man Who Broke Capitalism,” The New York Times’ David Gelles examines these themes through the story of former GE CEO Jack Welch and his famously myopic focus on short-term earnings (our own Rich Feloni interviewed David this week). Needless to say, the book doesn’t have a happy ending. It does, however, pose a critical question: Who will be the heroes of American capitalism for the next generation? 

Be well,
Martin Whittaker

This Week in Stakeholder Capitalism 

Goldman Sachs reports it has “made about a billion dollars of investments so far” toward its $10 billion commitment to its One Million Black Women initiative.

McDonald’s investors voted for a civil rights audit at the company but voted down Carl Icahn’s animal rights proposal. 

Microsoft plans to “nearly double” its salary budget and increase the amount of stock options by at least 25% to retain staff and help workers cope with inflation.

Moderna’s CEO pledges to donate most of his $4 billion fortune when he retires. 

Wells Fargo employees push to organize a union across the bank’s workforce.

What’s Happening at JUST 

This week our director of corporate equity Ashley Marchand Orme joined CNBC’s Squawk Box to discuss insights from our 2022 Corporate Racial Equity Tracker – a comprehensive resource detailing disclosures from America’s 100 largest U.S. employers on their commitments and actions to cultivate diversity, equity, and inclusion within their workplaces and communities across six dimensions and 23 metrics. Scroll down to Chart of the Week for a snapshot of where companies are leading and lagging.

Our latest survey research shows that Americans are more united on racial equity issues than you may think – 69% of Republicans, 84% of Democrats, and 76% of Independents agree that racial equity in the workplace cannot be achieved without all workers being paid a living wage. Explore what else Americans want companies to prioritize today.

The Case for Living Wages is a new report produced by the Cambridge Institute for Sustainability Leadership, Shift, and Business Fights Poverty and informed by JUST Capital’s wages research through our roundtable and interview participation. Its core premise – that paying a living wage creates value for companies and allows companies to uphold their values – echoes the impetus behind our Worker Financial Wellness Initiative, cited within the report as providing companies with assistance in implementing assessments of worker pay and benefits.

JUST Events

Moving the Needle: Tracking Corporate Progress on Racial Equity is a virtual convening that will uncover how our nation’s largest corporations are measuring up today and evolving those racial equity commitments into real, measurable action. Leading investors, asset managers, and corporate leaders will share their latest playbooks, benchmarks, and priorities for moving the needle on equity and advancing opportunity while creating value for all stakeholders. JUST Capital will highlight trends and takeaways from the 2022 Corporate Racial Equity Tracker. Sign up to join here. 

The Forum

(Patrick Pleul/Getty Images)

“They should pretend to work somewhere else.”

“Most consumers don’t sift through hundreds of pages of campaign finance documents. Our objective was to equip the consumers and employees of these companies with the knowledge of where they actually stand when it comes to values and supporting the LGBTQ community.”

When I think about it in those much more human and practical terms, it’s easier for me to entertain a counterfactual and imagine a world where yes, Welch made a company like GE more efficient, but he did it without laying off 120,000 people in his first three years. He didn’t do that because he had to, it was not because the company was unprofitable…but because he wanted the company to be more profitable. He wanted to boost the EPS and thus began the game that unfortunately so many companies and CEOs are still playing, which is just this exercise in trying to do whatever they think Wall Street wants to see, to keep the stock price going up. That, sadly, is the world we still live in today.”

Must-Reads of the Week

Andrew Edgecliffe-Johnson in the Financial Times and David Gelles and Hiroko Tabuchi in The New York Times report on increasing Republican attacks on “woke capitalism” and key ESG issues like climate change.

Fortune releases “Maximum Wage,” the 10 most overpaid and the 10 most undervalued CEOs in the Fortune 500 with Stéphane Bancel of Moderna being the most undervalued when examining performance vs. pay. 

The Wall Street Journal explores how median wages for workers have shifted during the pandemic. Compensation for 275 of the S&P 500 was higher in 2021 than in 2019, but the rest decreased. Forty-one companies said they paid their median workers below $30,000 in 2021. In 2019, that figure was 56.

President Joe Biden outlines his plan to fight inflation in The Wall Street Journal, after an op-ed criticizing his “train-wreck economy” was released a few days earlier.

Bloomberg reports that five companies including Apple, Johnson & Johnson, Waste Management, and Altria have seen shareholder proposals demanding racial equity or civil rights audits pass this year. 

Chart of the Week 

This week’s chart from our 2022 Corporate Racial Equity Tracker shows what percentage of the 100 largest U.S. employers have disclosed commitments and actions across six specific dimensions, with Education and Training Programs, Anti-Discrimination Policies, Racial/Ethnic Diversity Data featuring the highest rates of discloure, compared to Pay Equity, Response to Mass Incarceration, and Community Investments, where companies are lagging behind. 

Get to Know JUST 

Cambria Allen-Ratzlaff
Managing Director and Head of Investor Strategies
JUST Capital 

This week, JUST welcomed Cambria Allen-Ratzlaff to our team as our new Managing Director and Head of Investor Strategies. Cambria brings a wealth of expertise in corporate governance and asset management to JUST, having most recently served as Corporate Governance Director of the UAW Retiree Medical Benefits Trust. Since 2013, Cambria’s co-chaired the Human Capital Management Coalition, leading a group of 36 institutional investors with over $8 trillion in assets under management. She’s also sat on the SEC’s Investor Advisory Committee since 2019.   

We sat down with Cambria to hear her perspective on where ESG investing is heading, the growing importance of human capital to investors, and what role JUST can play at this key moment. “We need to make sure that investors are front and center and talking about this, and that incorporating information that may look novel to some traditionalists into the investment process is just a normal part of the process. They’re probably doing it already, and there’s really nothing special about it. In fact, it’s increasingly irresponsible to ignore these factors,” she said of how ESG fits into investment strategy.

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