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The JUST Report: Show Me The Money…And The Impact

(Dean Mouhtaropoulos/Getty Images)

The campaign by activist investors Engine No. 1 and CalSTRs to push ExxonMobil to embrace a clean energy future is one we have been tracking closely. The oil major is coming off one of its worst years ever, and announced during its Monday earnings call that it would be building a $3 billion low carbon solutions business over the next five years.

Yet CalSTRs called the announcement “minor” and “inadequate,” rejected a new director proposal, and said the energy giant’s $22 billion loss “demonstrates the continued erosion of shareholder value and that incremental changes are not enough to restore investor confidenceand position the company for the global energy transition.”

Why is this so important? Because it illustrates perfectly what our friend George Serafeim of Harvard Business School recently wrote about, namely, that “investors are becoming sophisticated enough to tell the difference between greenwashing and value creation.”

With ESG investing growing at such a breathtaking pace, this issue is only going to get bigger. Morningstar reported that global sustainable fund assets climbed 29% in Q4 to $1.65 trillion, with net flows to U.S. ESG funds setting a new record of $51 billion in 2020, more than double the total for 2019 and nearly 10 times more than in 2018. (Most of these funds outperformed their benchmarks during the pandemic.)

Just yesterday, Moody’s forecasted that global issuance of sustainable bonds would also hit a new record of $650 billion this year, up more than three-fold from last year and representing 8-10% of total global bonds issued in 2021.

Even the SPAC (special-purpose acquisition company) market is getting in on the act. We found that roughly 45 sustainability-oriented SPACs launched over the past year, ranging in size from $100-400 million, with several now having a market cap above $1 billion.

All of this money, and all the money that flows after it, is eventually going to ask the question, what impact did we have? Are we actually moving the needle on underlying societal challenges, and how do we know whether ESG performance is actually being delivered?

Demonstrating real authenticity of social and environmental impact is finally becoming the basis on which ESG investment products compete.

Be well,
Martin Whittaker

 

This Week in Stakeholder Capitalism

Amazon warehouse workers in Alabama will decide next week if they want to be the company’s first U.S. employees to unionize. Amazon goes on the offensive in response.

Darden Restaurants announced it will offer paid sick leave for employees to receive the COVID-19 vaccine.

Google will pay $2.6 million over claims that the firm’s hiring processes have been biased against women and Asians.

Mastercard pledges to reach a goal of net-zero emissions by 2050 – in its own operations and in its suppliers’.

What’s Happening at JUST

Martin Whittaker joined JUST board member Alan Fleischmann on SiriusXM to talk Leadership Matters – everything from how companies have supported their workers through COVID-19, to the growing expectations Americans have for corporate America, and more. Listen here.

Martin joined JUST Board Member Dan Ariely to discuss BeWorks’ 2021 Choice Architecture Report – exploring the ways companies can use behavioral science to improve their culture.

Yusuf George joined Judy Samuelson, Founder and Executive Director of the Aspen Institute Business and Society Program, for a conversation on how intangibles, such as reputation and trust, are beginning to have a greater impact on business value – particularly in these tumultuous times. 

This Week’s Forum
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(Paul Morigi/Getty Images)

“A level playing field will help us all. What do I mean by that? If all businesses have to abide by the moral and capitalist backbone of fairness, of employer and employee strength, of commercial strength – then we would not be faced with making these short-term choices of increasing our earnings on the backs of our employees…on the backs of our sustainability efforts.”

Ursula Burns, Former Xerox Corporation Chair & CEO, in the Rockefeller Foundation’s event “A Framework for Inclusive Capitalism


“I think more of us are saying it’s now time to cut the bullshit and get serious about attacking these difficult and interrelated problems before it’s too late. …And that’s the context in which I see an increasing resolve in the world of sustainable finance to invest in solutions and to very strongly encourage companies to take the long view, valuing stakeholders and positioning for a just transition to a net zero economy by mid-century. It’s what we all want, and perhaps to the surprise of those not well-versed in the world of finance, this sector is clearly going to play a major role.”

Jon Hale, Global Head of Sustainability Research at Morningstar, to JUST

 

“The growth has been phenomenal. …. [F]rom the $110 trillion assets that are being professionally managed, we are seeing 40 percent of global financial assets with an ESG consideration. And that will only increase.”

Anne Finucane, Vice Chair of Bank of America, to the Financial Times

 

Must-Reads of the Week

In the history of the Fortune 500 there have been only 19 Black CEOs out of 1,800. Fortune profiles them all here. Walgreens names Starbucks executive Rosalind Brewer as the company’s next CEO, increasing the list to 19. But Ken Frazier of Merck and Roger Ferguson Jr. have both announced retirements, leaving Brewer, Marvin Ellison at Lowe’s, and René Jones at M&T Bank as the only three Black CEOs currently leading Fortune 500 companies.

In honor of Black History Month, Business Insider shares a collection of essays and articles from Black writers for readers looking to further educate themselves about Black history and America’s history of racism.

EPI releases a new fact sheet showing how the Raise the Wage Act would benefit U.S. workers and their families. Of the 32 million beneficiaries: 31% would be African American, 26% Latino, and 59% women – many of whom have attended college (43%) and have children (28%).

Despite raising the threshold for inclusion in the 2021 Gender Equality Index, Bloombergannounced that a record number of companies disclosed data on gender equity and inclusion in their workforces, as well as improvements in the quality of disclosure.

Forbes’ Senior Contributor Jack Kelly predicts that the future of work is being able to work anywhere you want while receiving the same pay, rather than the pay cuts many firms are imposing now.


Chart of the Week 

Our latest ESG Chart of the Week takes a look at how industry leaders are at the forefront of the movement to disclose EEO-1 diversity data.

 

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