When Workers And Investors Share The Wealth

Being stingy with pay and benefits can boost profits in the short term. But companies—and their stocks—may do better when they’re generous.

- Ryan Derousseau

Investing with the heart, while still earning a strong return, is the equilibrium that every socially conscious shareholder aims for. To achieve that balance, investors are in constant search of strong data—specifically, environmental, social, and governance (ESG) metrics that can help them screen out bad actors and identify the good.

For some of those metrics, the data has steadily improved. There is now research that shows a correlation between reduction of waste and stock returns, for example. The same depth of data has been elusive, however, for many social issues—including how companies treat their employees. That’s a conundrum in a society marked by growing wealth inequality, in which some investors are eager to back companies whose leaders share the fruits of success with the rank and file.

One group striving to close the worker-treatment data gap is Just Capital. Just, a non-profit founded in 2013 by a group that includes billionaire investor Paul Tudor Jones, has surveyed some 81,000 people since then to determine which corporate-behaviour issues the public cares most about. It ranks the companies in the Russell 1000 based on their performance on those issues. (The rankings are available online; they’re also the basis for the Just U.S. Large Cap Equity ETF, which launched in June.) In Just’s surveys, worker pay and benefits consistently rank at the top of respondents’ priorities.