News Briefs: JUST Capital ETF Outperforms Russell 1000...Deloitte Survey--ESG Alive and Well
Here is the latest news in stakeholder management.JUST Capital ETF Outperforms the Russell 1000
Deloitte Survey: Sustainability Reporting Gains Momentum
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The JUST Capital ETF (exchange-traded fund) continues to outperform its benchmark Russell 1000 performance...A recent Deloitte survey of 300 executives finds that the European Union Corporate Sustainability Reporting Directive and other pressures are causing organizations to step up investments in ESG (environmental, social, governance) disclosures.
JUST Capital ETF Outperforms the Russell 1000
The JUST US Large Cap Diversified Index (JULCD) has outperformed the Russell 1000 cap-weighted benchmark by 1.51% so far this year and by 13.78% since its inception in 2016, according to JUST Capital. In addition, the JUST 100 (equally weighted index) has outperformed the Russell 1000 (equally-weighted) index by 6.65% year-to-date and by 44.77% since its inception.The JUST Capital ETF is based on principles similar to the Enterprise Engagement Alliance Engaged Company Stock Index, which outperformed the S&P 500 by 37.1% between 2012 and 2018. The index was created and managed by McBassi Inc. to test the potential impact of stakeholder engagement on share price performance over time. Companies were selected based on 13 sets of data on customer, employee, and community engagement.
JUST Capital found that all the five stakeholders it tracks delivered positive performance in the second quarter. Those organizations that focus on workers, according to its methodology, delivered the strongest performance, with a long-short spread of 4.68% above the Russell Index. Within the workers stakeholder category tracked by JUST, “outperformance was driven by both the top and bottom deciles whereas for remaining stakeholders outperformance was driven by the top decile.”
JUST Capital’s overall weighted score takes into account the 20 core Issues determined through its annual survey of American attitudes about business, which include “paying a living wage, creating a diverse, inclusive workplace, and helping combat climate change – across key business stakeholders: workers, communities, shareholders and governance, customers, and environment.”
Deloitte Survey: Sustainability Reporting Gains Momentum
Whatever pushback being reported in the media about ESG (environmental, social, and governance) isn’t affecting investments in sustainability reporting, according to Deloitte’s 2024 Sustainability Action Report. The findings are based on an online survey in January 2024 of 300 executives at publicly owned companies with a minimum annual revenue of $500 million or more.
According to the study’s authors, “Companies are making ESG reporting a strategic priority, with established cross-functional ESG councils meeting often and chief sustainability officers (CSO) generally leading the collaboration across the organization in overseeing disclosures. Ninety-eight percent of respondents are reporting some level of progress toward their sustainability goals and targets in the past year.”
Similar to the findings of a similar survey in December 2022 report, “more than half report having created a cross-functional ESG working group, and more than a third plan to do so. This is up dramatically from our March 2022 report when only 21% of respondents had an established group. Nearly all surveyed (98%) are now meeting at least quarterly, and 43% meet at least once per month. More than four in five executives report significant or moderate progress toward their sustainability goals and targets compared with a year ago.”
Brand reputation (20%) is considered a primary reason for reporting, according to the respondents. “Another 15% expect enhanced talent attraction, and 14% seek to realize pricing premiums for their products, highlighting how ESG reporting can influence external perceptions of the company. Meanwhile, half (51%) expect to see internal benefits like improved operational efficiencies, reduction in risk, or strengthened trust with stakeholders. By comparison, when asked to identify the top three expected outcomes of enhancing their company’s ESG reporting practices, respondents indicated that reduced risk (53%), increased efficiencies and ROI (52%), and both talent attraction and retention and brand reputation and enhancement (51%) could be positive outcomes of enhanced reporting strategies.”
The quality of data involved remains a challenge. “More than half of executives (57%) cite data quality as the top ESG data challenge for their company, and a majority (88%) report it as one of the top three challenges for their company. Most executives (81%) also report challenges related to documentation in their top three, including important control steps such as review, sign-off, and certification of ESG data—key processes and internal controls that are typically well established in financial reporting but generally less established in sustainability reporting.”
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