The JUST Report: Silence Is Not An Option

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“The problems that are tearing at the fabric of American society require all of us – government, business and civic society – to work together with a common purpose.” So wrote JPMorgan Chase’s CEO Jamie Dimon this week in his 66-page annual letter to investors.

It’s fair to say the role of CEOs has changed markedly since 2005, when Dimon took over. Would a major bank CEO’s shareholder letter back then list 15 policy proposals – including building out the social safety net, and making it easier for people with criminal records to get jobs – or call out the need to tie executive compensation to diversity commitments, or increase the diversity of businesses with whom they partner? We think not.

CEOs have long lobbied for policies that directly benefit them – which explains the pushback against President Biden’s proposed corporate tax hike and Treasury Secretary Janet Yellen’s proposed global minimum corporate tax rate.

But what’s different today is that corporate silence on major social and sustainability issues is not really an option. The American people are increasingly looking to business for leadership on national issues. JUST Capital’s survey research, fielded with The Harris Poll, has found that the percentage of Americans who believe “CEOs of large companies have a responsibility to take a stand on important social issues” grew from 59% in 2019 to 68% in 2020.

That’s not to say speaking up is without risk. The more companies wade into social issues, the more likely it is they will run afoul of one group or another. This past week, for example, Senate minority leader Mitch McConnell criticized corporate leaders at Delta, Bank of America, and the MLB for their opposition to Georgia Republicans’ voting bill, warning companies to “stay out of politics” and that it was “stupid” for CEOs to “jump in the middle of a highly controversial issue.” (A day later, McConnell walked back his statement, noting that, “They’re certainly entitled to be involved in politics,” but expressing his frustration with what he deemed was an unfair reading of the bill.)

Navigating these complexities is arguably the greatest challenge CEOs face today. The New York Times’ Andrew Ross Sorkin put it well this week when he wrote, “business doesn’t have a political party. Its party is profit.” That is true. But as business performance becomes increasingly linked to social issues, the line between profits and politics will continue to blur.

Be well,
Martin

This Week in Stakeholder Capitalism

Amazon admits that yes, many of its delivery workers don’t have access to restrooms and are sometimes forced to urinate in bottles during delivery rounds. The NLRB also found the company violated the law in firing employee activists.

BlackRock breaks with Wall Street peers and agrees to undergo an independent racial audit of its operations, following a request from CtW Investment Group and SEIU. The firm also announces its lending costs will be tied to delivering on ESG and diversity targets.

LinkedIn is adding “stay-at-home mom” and more caretaker titles to the site, with the goal of normalizing common gaps in work history that many women deal with.

PayPal pledges to reach net-zero greenhouse gas emissions by 2040.

Target pledges to spend $2 billion with Black-owned businesses by 2025.

JUST Events

APRIL 15th at 12PM ET: One of the biggest stories out of the ESG world over the last year has been Engine No.1’s push to “Re-energize Exxon.” On LinkedIn Live, we’ll sit down with Charlie Penner of Engine No. 1, and Aeisha Mastagni of CalSTRS to learn about the case against ExxonMobil and why the company needs to transform for the good of all shareholders, how the investing environment has changed to make a campaign like this possible, and more. Click here to learn more and join the call.

What’s Happening at JUST

Yusuf George was quoted in an LA Times article on why corporate America is feeling so much pressure to respond to Georgia’s voting rights bill.

Alison Omens explains why, with the possibility of a $15 minimum wage on the horizon, we need to set our sights on the bigger target of creating more good jobs for more people.

Peter Georgescu takes to Forbes to explain why “America’s Middle Class Must Earn a Living Wage.”

JUST was proud to join the U.S. Impact Investing Alliance, B Lab, and a coalition of more than 50 impact-oriented organizations to call for the creation of a White House Initiative on Inclusive Economic Growth to coordinate federal policies that will reshape and rebuild our economy so that it works for all Americans.

The Forum

“That’s why we’ve been around 115 years. We’ve been able to manage between the goalposts that exist in Washington to forge ahead. And regardless of what administration is in place, our focus is moving to that clean energy future as quickly as possible because our customers expect it, and our shareholders expect it.”

• AEP CEO Nick Akins describing the company’s longevity during our Quarterly JUST Call

“As business leaders, we should use our platforms and lobbying power to advocate for federal protection and make clear that nobody – Republican or Democrat – should play politics with the right to vote.”

• Patagonia CEO Ryan Gellert writing for Fast Company on the three steps CEOs must take to protect democracy.

“It’s unthinkable to me that it has been normalized in American culture that you can work full-time and still be poor. That is antithetical to our idea of this country.”

• Ford Foundation President Darren Walker speaking to 60 minutes about the foundation’s giving strategy.

Must-Reads of the Week

Fortune explains why the fastest way to increase diversity and inclusion in corporate America is to tie targets to executive pay.

Newsweek reveals that, despite corporate lobbying to the contrary, CEOs from fast food companies like McDonald’s and Denny’s have told their investors that a $15 minimum wage won’t greatly impact their businesses.

The Wall Street Journal takes a look at how a 28% corporate tax rate wouldn’t actually impact companies equally.

The Hill looks at why the decimation of Big Steel, one of America’s oldest and most dominant industries for decades, should serve as a warning sign for any companies not concerned with climate change impacts on their businesses. Related, Harvard Business Review takes a closer look at what Biden’s sustainability agenda means for corporate America holdouts.

Quartz lays out the surprisingly compelling case for why companies shouldn’t cut the salaries of workers who are now working remotely from lower-cost states.

Chart of the Week

In this edition of our Chart of the Week series, we take a closer look at our charitable giving data to show that companies that give more pre-tax profits to charity tend to have a higher Return-on-Equity.