The JUST Report: Reality Hits ESG

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How do you know an ESG fund is really making an impact? How can you be sure a company is doing what it says it’s doing, and truly delivering stakeholder value?

Regular readers will know these questions have been on our mind for a long time. Events this past week have shown the reality of what’s at stake

For starters, a report from Bloomberg drew attention to the fact that while the world is on the path to passing an all-time record of green bond issuance (previously set last year at $309 billion), we still for the most part cannot tell where this money is going.

We also saw an ousted former CSR chief at DWS, Deutsche Bank’s asset management arm, allege the company’s ESG funds did not match the level of commitment the firm claimed (which DWS denies) – just as the company announced the update of nine of its Europe sector ETFs to being ESG-centric.

What happened at DWS could have happened pretty much anywhere. It’s symptomatic of the state of the entire ESG industry, where clear, consistent, and objective measures of performance are still the exception, not the rule. This is gradually changing, of course, and it’s  no surprise, then, that JPMorgan Chase’s posting this week for a head of ESG integration highlights overseeing “a more robust process for evaluating ESG metrics across our discretionary and brokerage investment platforms” as part of the job description. The market will soon expect nothing less.

SEC Chair Gary Gensler knows this. “Labels like ‘green’ or ‘sustainable’ say a lot to investors,” Gensler said in a Principles for Responsible Investment webinar last Wednesday. “Which data and criteria are asset managers using to ensure they’re meeting investors’ targets – the people to whom they’ve marketed themselves as ‘green’ or ‘sustainable’?” Gensler announced that the SEC is reconsidering its naming rule for ESG funds, and has asked his staff to prepare a mandatory climate risk disclosure proposal for companies by the end of the year.

There is still much work to be done, both in terms of industry specifics and human capital metrics. But we’re making headway, and that’s why I am so proud to represent JUST Capital in the G7 Impact Taskforce’s Working Group on Impact Transparency and Integrity.

Be well,
Martin Whittaker

This Week in Stakeholder Capitalism

Activision-Blizzard execs step down in the wake of a gender-bias lawsuit and an employee walkout that called for changes to the company’s workplace culture.

CVS commits to raising the minimum wage of its employees to $15 an hour by July 2022. The increase will impact 30% of its workforce as “approximately 65% of employees earning hourly wages already make more than $15 an hour.”

Edwards Lifesciences establishes a $100 million Social Impact Investment Fund aimed at advancing racial equity through economic development, especially in predominantly Black and underserved communities in the U.S.

Goldman Sachs boosts pay among junior analysts and associates after reports of staff burnout.

L Brands agrees to release employees from NDAs in matters related to sexual harassment cases after a settlement with shareholders earlier this week.

Starbucks is raising its minimum wage to at least $12 an hour for all U.S. stores in October, and up to or above $15 in some markets.

Target commits to investing $200 million over the next four years to offer debt-free college education options to its frontline workers.

What’s Happening at JUST

Excited to announce that a new consumer app launched this week – ecountabl – designed to help people align their spending with their personal values on key issues like gender pay equity, human rights, worker pay, climate and sustainability, racial justice, and more. The platform utilizes JUST’s corporate stakeholder performance data alongside other providers to rate companies. Each rating is tailored to the individual based on prioritized personal areas of concern, and you can get a full read-out across dozens of issues with many of the largest companies in the world. Download the app here to start aligning your purchasing with your values.

SEC chair Gary Gensler announced the commission received 550 comment letters on climate disclosure rules and three out of four were in favor. You can read ours here.

We’ve highlighted two techniques for overcoming corporate DEI challenges that Ariel Investments co-CEO and Starbucks chair Mellody Hobson shared in our event last week with Case Foundation CEO Jean Case.

The Forum

“‘Doing good’ has gone from a rare side program to a business imperative that investors, employees and customers are vocally demanding. Stakeholder capitalism – the idea that companies should generate long-term value for multiple stakeholders, rather than short-term shareholder profit – is no longer something only social impact professionals think about. It’s expected and company leaders are paying attention. The pandemic sped up this trend, and leaders are now at an inflection point, faced with a new and growing charter to serve the many stakeholders in their communities.”

• Erin Reilly, Chief Social Impact Officer at Twilio, speaking to Forbes on how the perception around a company “doing good” changed dramatically this year.

“When you can actually see it and you can put a number to it with the 63 cents, and you can put a date on it and people can see where it actually falls, then it becomes a tangible issue. Once it becomes a tangible issue, then it becomes something that can be fixed.”

• Shannon Williams, Director of Equal Pay Today, on why assigning a number to Black Women’s Equal Pay Day helps push people to fix the pay gap.

“Everyone talks about their pay. The new generation is very open about it, so making sure you have fairness and are able to justify and explain that is extremely important.”

• Kathie Patterson, CHO at Ally Financial, speaking to The Wall Street Journal on how companies raising starting wages for new employees is forcing them to reflect on current employee salaries.

Must-Reads of the Week

MSNBC’s Stephanie Ruhle talks with Andy Slavitt about how vaccine requirements in the workplace can help take the country from a 70% to 80% vaccination rate.

JPMorgan Chase CEO Jamie Dimon pens a New York Times editorial imploring corporate leaders and legislators to offer a clean slate to the more than 70 million people with some type of criminal record, providing equal access to opportunity and creating a stronger, more resilient economy.

Another editorial in the Financial Times encourages asset owners to speak out to protect democracy because “corporations will not stop funding the legislators who are behind the voter suppression measures unless Wall Street investment managers ask them to, and investment managers will not take action unless asset owners ask them to.”

Bloomberg reveals that 65% of workers who could go fully remote would take a 5% reduction in salary to avoid ever going into the office again. The Atlantic unpacks how “remote work lays bare many brutal inefficiencies and problems that executives don’t want to deal with.” And The New York Times explores how to ensure remote work doesn’t introduce another type of inequality.

Axios reports on a study that shows people-facing jobs (restaurant workers, hospitality, and more) are getting a surge of job growth in areas where the vaccination rate is high. Meanwhile, Bloomberg writes about the explosion of job ads that disclose wages as employers get desperate for more hires.

The Washington Post examines how global supply chains continue to be disrupted with COVIDoutbreaks, leading to a crunch on back-to-school materials in the U.S.

Quartz examines recent studies questioning whether McKinsey’s research on the financial benefits of diversity within companies is actually wrong.

The Motley Fool explains why inflation has actually given workers a 2% pay cut in 2021.

Chart of the Week

In honor of Black Women’s Equal Pay Day on August 3rd – which is the approximate date that Black women must work into the new year to earn what their white, non-Hispanic male peers earned as of the end of the previous year – we’re sharing this chart from our recent report on how Pay Equity Analysis is a Critical Step to Advancing Racial Equity in Corporate America. Despite the fact that Black women only make 63 cents to the dollar of their white male colleagues, a majority of the largest U.S. employers don’t disclose conducting a pay equity analysis – a key step toward closing that gap.