JUST Capital Releases 19 Index Concepts that Demonstrate the Benefit of Investing in Stakeholder Value Creation

This report was written by Mona Patni, JUST Director of Quantitative Research & Analytics.

Each index concept has outperformed its benchmark since inception, with the Accountability to Stakeholders index concept focused on good governance generating over 19% alpha. 

As part of our ongoing work to build the business and investor case for just business behavior, JUST Capital has released 19 new index concepts that demonstrate the power of investing in companies at the forefront of stakeholder value creation. 

Each concept features companies that score in the top 20% of our Rankings of America’s Most JUST Companies, which evaluate how the nation’s largest corporations perform on the Issues that matter most to Americans today. Each concept demonstrates that investors need not sacrifice returns to support companies doing right by all their stakeholders. 

Incepted on December 31, 2021, each concept has over a year’s worth of performance history, and to date, each one of them has outperformed the Russell 1000 benchmark with alpha ranging between 3.6% to 19.1%. The chart below demonstrates that throughout 2022 and even in January 2023, the indexes have continued to outperform and generate alpha:

JUST Capital’s full slate of index concepts include:  

• Stakeholder Indexes that feature companies leading on issues relating to Workers, Communities, Customers, the Environment, and Shareholders & Governance.
• Issue Indexes that feature companies leading on accountability to stakeholders, wages, DEI, workforce advancement, job creation, climate change, sustainable materials, and community development. 
• Benchmark Indexes that feature companies leading within the Russell 1000 Growth Index, Russell 1000 Value Index, Russell 1000 MidCap Index, Russell 1000 MidCap Value Index, and Russell 1000 MidCap Growth Index.

The top performing index since inception is the Accountability to Stakeholders Index with 19.1% Alpha. This issue index highlights the financial performance and impact of investing in companies that prioritize good governance with diverse, independent boards that oversee corporate performance on key environmental, health, safety, and social matters. JUST Capital’s “Prioritize accountability to all stakeholders” Issue accounts for 2.1% of a company’s score in our Rankings of America’s Most JUST Companies, and covers three metrics encompassing 10 data points, tracking Board Independence, Board Diversity, and Board Oversight of JUST Issues, including if ESG-related performance is linked to compensation for employees and executives.

The table below illustrates the cumulative performance and related alpha for all 19 indexes against their benchmarks from December 31, 2021 to January 31, 2023:

Explore additional top performing indexes within the other stakeholder and benchmark groups below and visit our microsite to explore all related charts and data. 

 

Workers

Outperforming Index Concept: Workforce Advancement Leaders 

Since Inception Alpha vs. Russell 1000 Benchmark: 12.3% 

According to JUST Capital’s survey research, Americans identified Workforce Advancement as one of the top Issues companies should prioritize, and our data set tracks corporate performance on five data points: Average Hours of Training or Career Development Per Employee, Career Opportunities Rating, Tuition Reimbursement, Retention Rate, and Internal Hiring Rate. This concept tracks the financial performance and social impact of an intersection of companies in our Rankings that prioritize upward mobility and the professional advancement of their workforces. The Workforce Advancement Issue accounts for 7.1% of a company’s score in our Rankings of America’s Most JUST Companies.

Compared to the Russell 1000, Workforce Advancement Leaders Are:

•  100% more likely to have disclosed the results of a pay gap analysis.
•  16.9% more likely to disclose workforce demographics.
•  49.9% more likely to offer apprenticeship programs.

 

Communities

Outperforming Index Concept: Jobs Leaders

Since Inception Alpha vs. Russell 1000 Benchmark: 11.6%

Americans agree that companies should serve their communities where they operate, and this concept helps investors track the performance of companies that prioritize job creation within those communities. Our data set covers four key Issues encompassing 42 data points, including Employee-Led Giving and Volunteering, Opportunities for Local Businesses, Local School Support, Percent of U.S. Jobs Created, and more. The Local Job Creation Issue accounts for 11.1% of a company’s score in our Rankings of America’s Most JUST Companies.

Compared to the Russell 1000, Jobs Leaders:

• Have 219.2% more U.S. employees.
• Are 193.7% more likely to offer apprenticeship programs.
• Are 7.7% more likely to disclose workforce demographics.

 

Customers

Outperforming Index Concept: Customers Leaders

Since Inception Alpha vs. Russell 1000 Benchmark: 3.6%

Customers are a key corporate stakeholder, and this index concept helps investors track the financial performance and social impact of companies that make customers a core priority. Overall, Customer Issues – including whether companies protect data privacy, make beneficial products, and more – account for 14% of a company’s score in our Rankings of America’s Most JUST Companies.

Compared to Russell the 1000, Customers Leaders: 

• Are 23% more likely to have a human rights policy.
• Emit 21.1% less CO2 per dollar of revenue.
• Have 3.3% higher ROE.

 

Environment 

Outperforming Index Concept: Sustainable Materials Leaders

Since Inception Alpha vs. Russell 1000 Benchmark: 8.3%

This index concept tracks companies that prioritize the environment through use of natural resources, renewable energy, and waste reduction practices. The IPCC’s August report found that unless there is an immediate, rapid, and large-scale reduction in greenhouse gas emissions, limiting warming to 1.5 degrees Celsius or even 2 degrees Celsius will be beyond reach. The “Uses sustainable materials” Issue accounts for 3.5% of a company’s score in our Rankings of America’s Most JUST Companies.

Compared to the Russell 1000, Sustainable Materials Leaders:

• Emit 49.5% less CO2 per dollar of revenue.
• Are 61.1% more likely to tie executive compensation to ESG performance.
• Are 27.7% more likely to have a human rights policy.

 

Benchmarks 

Outperforming Concept: JUST Midcap Growth Leaders

Since Inception Alpha vs Russell 1000: 17.8%

Within the benchmarks category, JUST MidCap Growth Leaders has been leading the performance since inception. The JUST MidCap Growth index concept takes the top quintile of companies in JUST Capital’s annual Rankings within the Russell 1000 MidCap Growth Index. This index concept exposes investors to a stylized benchmark portfolio concentrated around America’s Most JUST Companies.

Compared to Russell 100 companies, JUST Midcap Growth Leaders: 

• Are 60.5% more likely to tie ESG performance to executive compensation.
• Are 173.5% more likely to have disclosed the results of a pay gap analysis.
• Emit 35.5% less CO2 per dollar of revenue.

 

If you are interested in supporting our philanthropic mission by licensing our unique data, we are happy to discuss data needs, index licensing, and other ways we can partner. Please reach out to ESG Business Development Associate, Michael Wirtz, at mwirtz@justcapital.com.