News Flash: New Independent Index Shows ROI of Enterprise Engagement Strategies

JUST Capital, a Goldman Sachs ETF first announced last year and covered in ESM, has created a new independent analysis of 890 public companies, with more on the way, to help investors and all stakeholders identify the organizations with the best practices related to engaging all stakeholders—employees, customers, communities, etc.—as well as minimizing negative impacts on the environment. The goal: motivate CEOs to disclose Human Capital Management practices and outlines.

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Companies disclosing “JUST” job policies “reported higher ROEs (Return-on-Equity) of between 1.2% and 3% for eight of the nine issues, supporting the case that investing in JUST jobs can and should be a win-win for companies and their workers,” says a JUST Capital statement announcing a new ongoing analysis of public companies. The report, available here, ranks companies based on a survey of Americans on the issues they consider critical to business, as well as “associated profit measures.” 

 

JUST Capital is the latest of a series of new funds based on ESG (Environmental, Social, and Governance) practices. The first known such index, the Good Company Index, was used to create the Enterprise Engagement Alliance’s Engaged Company Stock Index (ECSI) at TheEEA.org, which continues to significantly outpace the S&P 500 in the over six years since its inception. 

 

According to JUST Capital, “This is the start of an ongoing effort to gather granular data on workforce policies to better understand performance as it relates to all employees. Of note is that today, many policies—particularly for companies with significant front-line staff—may only pertain to headquarters staff. Our goal is to incentivize the expansion of these approaches to cover frontline, contract and part- time workers as well. Americans agree that leadership and transparency around worker issues are imperative to just business, and we believe companies can demonstrate the proof behind their purpose through additional disclosure on these issues.” 

 

JUST Capital points out that “the drumbeat for transparency around workplace practices has grown louder and more resonant. Companies leading the way on issues like gender pay equity, non-discrimination, parental leave and career development are taking initiative in a tight labor market to attract and retain top talent. And investors—like BlackRock CEO Larry Fink, who named Human Capital Management as a core engagement priority this year—are directing more attention than ever toward the “S” in ESG. However, per Peter Drucker’s ‘You can’t manage what you can’t measure’ mantra, we can’t even begin to benchmark and incentivize enhanced performance on these critical workplace issues until more companies disclose their actual policies. With greater transparency, we can better understand how companies think about their workforce—whether as a calculated cost or investable asset—and begin to measure how companies actually perform relative to their peers on creating JUST jobs.” 

 

The ratings and weighted scores are based on the following criteria cited by survey respondents as the issues most important to them and are almost precisely aligned with Enterprise Engagement and ISO 10018 Quality People Management Principles: 

 

• Workers: 25% - Worker pay and treatment are at the heart of just business practices

• Customers: 18% - Fair treatment, privacy and honest sales terms

• Products: 14% - Products and services should be high quality, fairly priced and beneficial to society 

• Environment: 13% - Companies should minimize pollution, reduce waste and protect the planet

• Jobs: 12% - Companies should create and maintain jobs both globally and in the U.S.

• Communities: 11% - At home and abroad, community support is essential to just business practices

• Company Leadership and Shareholders: 8% - Ethical leadership and value creation are considered key priorities for CEOs. 

 

Top scoring companies in the report include:

3M	Intel	PepsiCo
Alliance Data Systems	Jones Lang LaSalle	Qualcomm
Boston Scientific	Marriott	State Street
Eli Lilly	Nike	Symantec
Goldman Sachs	NVIDIA	Texas Instruments
Hasbro	PayPal