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How to Measure Stakeholder Returns

November 12, 2019, 10:47 AM UTC

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Good morning.

The Business Roundtable created a stir in August when it announced a new statement of corporate purpose, giving stakeholders—workers, customers, communities, the environment—an equal role with shareholders. (See my story on the change here.) But the announcement also underscored a problem. It’s a business truism that what gets measured gets managed. We all know how to measure shareholder returns. But how do you measure stakeholder returns?

One group that has been attempting to solve that problem for several years is JUST Capital, a non-profit started by hedge fund billionaire Paul Tudor Jones. The folks at JUST have developed a methodology for scoring all the companies in the Russell 1000 on issues that their polling shows are important to Americans. That includes treatment of workers and customers, as well as commitment to communities and the environment.

So how did the companies that signed the Business Roundtable statement do in comparison to their peers on these measures? Pretty well, it turns out. In an analysis provided exclusively to Fortune, JUST Capital found that 34 of the 134 Business Roundtable signatories it measured ranked in the top 100—including Apple, P&G, GM, IBM, JPMorgan, Salesforce and Accenture, among others. Roughly half—68—ranked in the top 200. The BRT members overall scored 22% better than the Russell 1000 average in their treatment of employees, 22% better on community issues, and 13% better on environmental issues. So it appears there is more than rhetoric going on here.

“These results indicate that the Business Roundtable signatories on average are performing quite well relative to their peers,” said Martin Whittaker, CEO of JUST Capital. But he added: “On both a collective and an individual company basis, there’s still plenty of opportunity to do more.”

By the way, the three Business Roundtable companies that fell in the bottom 10% of JUST’s ranking were: Aramark, Lennar and FOX. American Airlines barely missed joining them, ranking at #821.

If you are interested in more detail on how the companies ranked, you can explore the JUST Capital data here.

News below.

Alan Murray
@alansmurray
alan.murray@fortune.com

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This edition of CEO Daily was edited by David Meyer. 

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