Companies are following the public’s agenda, not politics–and it’s paying off

Despite accusations of 'woke capitalism,' companies continue to invest in the issues the public cares about, according to JUST Capital's research.
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The politics of environmental, social, and governance (ESG) strategies and stakeholder capitalism have become fraught in the United States over the past year.

Lawmakers on the right are denouncing corporate actions as “woke,” while those on the left accuse companies of not doing enough. Many anticipate congressional hearings on corporate and investor positioning on ESG and stakeholder capitalism to intensify over the coming months. CEOs are becoming more circumspect about speaking out on divisive social issues. Some companies are reportedly “green hushing,” and choosing not to speak openly on sustainability goals for fear of being targeted or called out. One executive, as reported by The New York Times, said at the World Economic Forum’s Annual Meeting in Davos recently that he hopes ESG “just goes away.”

At the same time, it is becoming increasingly obvious that the world needs the private sector’s leadership now more than ever. The general public, according to the latest Edelman Trust Barometer, continues to trust business ahead of other institutions to lead in a complex and divided world. Our own polling at JUST Capital shows it’s something the vast majority of Americans want. And as Fortune’s Alan Murray pointed out in December and again from Davos, it seems that CEOs, deep down, are on board

At the heart of this lies the concept of the stakeholder-led company, or as we call it, a just company–a company that sees the creation of value for each of its principal stakeholders, including workers, customers, communities, and shareholders, and the planet itself as the path to competitive success, stronger returns, and lasting widespread prosperity.

JUST Capital’s 2023 Rankings of America’s Most JUST Companies show how the largest U.S. companies are already doing this.

Each year, JUST Capital surveys Americans on a fully representative basis to identify what issues they see as most important for companies to tackle. The issues are also weighted by the public according to their relative importance. The JUST team then gathers data from multiple public sources to assess how the Russell 1000 (the 1,000 largest publicly traded companies in America) perform on each of the issues. The overall rankings reflect how the companies compare on a relative basis across every issue.

This year, “paying a fair, living wage” emerged as the most important issue in our polling for the third time in a row. Recent wage hikes from major employers like Walmart and Bank of America suggest that many companies understand the importance of this issue. And as our surveys show, Americans are increasingly looking for a job where their pay keeps up with inflation and other rising costs.    

Many of the ranked companies have embraced the idea that listening to what the public wants, and acting accordingly, is the best way to create lasting competitive advantage. They also believe, as we do, that it can be a powerful unifying force. Across every demographic group that we survey–regardless of political affiliation, race, gender, age, or income group–Americans are united in wanting companies to prioritize workers as the most important stakeholder and see “paying a fair, living wage” as the most important business issue. 

The companies that perform well on the criteria we observe, on average, create more jobs, pay higher wages, provide more career development training, offer more paid parental leave, and outperform on myriad factors relative to their peers. Equally important: they have higher profit margins and return on equity than the Russell 1000 average and pay more in dividends. If an investor purchased an index tracking JUST 100 companies at its March 2019 inception, the index would have generated 13.3% in excess returns compared with the Russell 1000 by Dec. 30, 2022.

Far from seeing companies pulling back or reversing their commitments to their stakeholders, we’ve seen the opposite. The companies we engage with (we saw a record 350 participate in our 2023 rankings data review cycle, up by 41% from last year) continue to drill down on investments in human capital, climate and sustainability solutions, diversity, equity, and inclusion, and the needs of their customers and the communities where they operate.

Navigating today’s complex social, economic, and political conditions while staying focused on core business operating priorities is perhaps the greatest challenge currently facing corporate leaders.

This is not about politics. It’s not about adhering to some ESG label or doctrine. It’s about business and markets driving competition to build a better future for all of us. And it all starts with the American public.

Martin Whittaker is the CEO of JUST Capital.

The opinions expressed in commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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