JUST’s Latest Index Concept Shows Companies That Lead on Worker and Environment Issues Outperformed Peers by Over 20%

This report was authored by JUST Senior Director of Quantitative Research & Analytics Mona Patni and Senior Research Manager Laura Thornton.

As we continue to experience global heat waves, wildfires, and extreme weather, it is increasingly important that companies consider the ways in which climate impacts all their key stakeholders – including workers, customers, communities, shareholders, and the environment in which they operate.

In particular, workers stand to be keenly affected by climate change, which looms large over the well-being of their communities as well as the security of certain jobs and industries. Calls for transitioning to greener energy sources represent not only a vital step in addressing climate change; they also carry significant implications for workers and communities that have traditionally relied on the fossil fuel industry for jobs.

With Climate Week and Labor Day not far behind us – we were interested to analyze the companies that lead on investing in the needs of their  workforces and reducing their environmental impact. Building upon the collection of index concepts that JUST Capital launched earlier this year, we’ve constructed a new concept: the Workers & Environment Leaders, which tracks the top 20% of companies that perform best across all the Environment- and Worker-related Issues in our 2023 Rankings. 

What we found is that the Workers & Environment Leaders has outperformed the Russell 1000 by a significant 21.73% from January 2018 to July 2023.

The companies that are investing in both their workers and the environment are clearly seeing strong returns in the market, signaling that investors benefit when the transition to green energy is conducted with workers central to the conversation.

Amongst the companies included in the Workers & Environment Leaders, several stand out for their efforts to prioritize the health of both their workforce and the environment. 

• American Electric Power’s (AEP) seeks to ensure a “Just Transition,” retiring its coal-fired power plants and building toward a clean energy future. As part of these efforts, the company has developed a workforce repositioning strategy to support the relocation of employees displaced by plant closures either within or outside of AEP – something we discussed with AEP Chief Sustainability Officer Sandy Nessing at the 2023 JUST Leadership Summit. 
• In 2022, PayPal supported the Digital Finance for Climate Resilience Task Force in releasing a Framework for Action, which outlines solutions in digital financial technologies – such as digital payments or embedded credit – to help support low-income and remote communities especially vulnerable to the impacts of climate change. PayPal also partnered with JUST to create the Worker Financial Wellness Initiative, which supports companies in assessing and improving the financial health of their workforces. 
• As part of its broader climate commitments, Salesforce has identified three key guiding principles, one of which is to ensure a just and equitable transition to a more resilient society. Toward this goal, Salesforce established a $100 million fund in 2021 to accelerate ecosystem restoration and climate justice, with CEO Marc Benioff also committing $200 million from his investment fund. In 2022, the company announced $11 million in donations from this fund to 12 organizations – including American Forests, Conservation International, Fundación Natura, and more – many of which are using innovative solutions to address climate change while strengthening local communities and creating job opportunities around the globe. This year during Climate Week, Salesforce released a Corporate Climate Finance Playbook in collaboration with the Climate Policy Initiative, a resource to help corporate leaders accelerate climate finance strategies.

All of these companies have also set climate commitments through the Council for Inclusive Capitalism, which houses resources for companies on the journey to enabling a just transition.

The importance of this “just transition” cannot be understated. As we continue to face uncertainty for the workforce and climate alike, an integrated approach is essential in fulfilling the priorities of the public, which drive corporate performance in our Rankings as well as inclusion in the Workers & Environment Leaders index concept. Companies working toward a just transition are able to:

• Protect jobs in local communities by investing in workforce advancement – in particular, retraining and alternative economic opportunities that can safeguard the livelihoods of the most vulnerable workers.

• Foster innovation and enhance energy security by investing in renewable energy, helping to reduce reliance on fossil fuels while stimulating economic growth and job creation.

• Benefit human health by reducing air and water pollution and protecting worker health and safety, serving local communities with improved health outcomes and lower healthcare costs.

• Make communities more resilient to climate change by investing in more sustainable materials and practices like green buildings and alternative fuel vehicles. 

• Drive social equity by cultivating a diverse, inclusive workplace and setting ambitious climate targets that help serve vulnerable and marginalized communities most impacted by climate change.

• Ensure long-term economic stability by using resources efficiently and paying a fair, living wage that allows workers to meet the costs of basic needs.

Companies in the Workers & Environment Leaders not only outperform in the market, they outperform their Russell 1000 peers on many of the issues we track. As compared to the Russell 1000, Workers & Environment Leaders:

The Workers & Environment index concept – along with the others we launched earlier this year – are a powerful tool in our helping us continue to build the business and investor case for why just business is better business. They can be leveraged and licensed as is, or spark a conversation for how we might work together to craft a custom index or product. If you are interested in learning more, please contact us.