JUST Capital has grown up since it was little more than a
2015 TED Talk by hedge fund mogul Paul Tudor Jones that
proposed society rethink capitalism.
Over the past 50 years, we as a society have come to
view our companies and corporations in a very narrow, almost
monomaniacal fashion with regard to how we value them,
Jones told his audience. We have put so much emphasis on
profits, on short-term quarterly earnings and share prices, at
the exclusion of all else. Its like we have ripped the
humanity out of our companies.
The prioritizing of profit over everything else has been bad
for workers, the hedge fund manager argued. Profit margins have
soared, but worker pay relative to that of the companys
CEO has gone down. Higher profit margins do not increase
societal wealth; what they actually do is exacerbate income
inequality, and that is not a good thing.
Capitalism, Jones admitted to the audience, has been very
good to him he is, after all, worth an estimated $4.7
billion. But somewhere along the way, in the race for profits,
JUST Capital, which Jones co-founded a year before his talk,
aims to fix what he identified as the ills of corporate
capitalism by identifying the most just, or good,
companies. It hopes to encourage capital to flow into these
good companies and, in so doing, reward them for focusing on
more than profit alone.
Heres how it works: The New Yorkbased
not-for-profit surveys members of the public to understand how
they measure Corporate JUSTness, asking them what
they value most in a good company. The JUST Capital team then
scores how companies perform relative to this data, coming up
with an index of the most just companies. Explaining the
endeavor at TED, Jones said JUST would let the public be the
guide. Maybe what well find out is that the most
important thing for the public is that [companies] create
living-wage jobs or make healthy products or help, not harm,
the environment. At JUST Capital, we dont know. Its
not for us to decide. We are but messengers. But we have 100
percent confidence and faith in the American public to get it
In other words, JUST Capital is putting its faith in the
wisdom of the crowd, betting not only that the public can
identify what it values most in good corporate behavior, but
that this can translate into better-performing companies.
According to a 2016 JUST Capital report, the not-for-profit
had, up to then, polled over 50,000 members of the
American public, as part of a continuous, multiphase series of
However, the actual number of people polled to develop the
core inputs that make up JUST Capitals key assumptions
what the public cares most about from corporations
was only 209. From these interviews, JUST Capital came
up with a list of 188 items important to people, which the
not-for-profit then distilled into 36 components
comprising issues such as pays a living wage,
provides paid time off, provides a safe
workplace, does not do business with repressive
governments, creates jobs in the U.S., and
has environmentally responsible management. JUST
Capital then ran these components by the much larger group.
So what issues do Americans care most about in corporations?
Providing fair pay and benefits, JUST found, followed by
treating employees well, making safe and beneficial products,
and protecting human rights. That a company be well governed,
make money, and create jobs in the U.S. were less critical.
Having established what Americans care about, the JUST
Capital team turned to the more challenging task of scoring
companies according to how they perform on these metrics. Here,
JUST like a number of other organizations interested in
so-called ESG (environment, social responsibility, and
corporate governance) issues uses a variety of sources,
including companies own disclosure and corporate
governance reports, government data, and crowdsourced
information from organizations like employer-review website
Glassdoor. JUST also has a research board and relies on a group
of experts for insights.
The organization published its first rankings in
which it rated 897 of the 1,000 largest publicly traded U.S.
companies last year, comparing performers to their peers
in each stock sector. The top performer in the retail sector,
for example, was CarMAX, which ranked top among its 49 peers
for worker pay and benefits. Other high scorers included
Microsoft and Google parent Alphabet. In late 2017, JUST, in
partnership with Forbes, will publish an overall list
of its top companies (currently, firms are only ranked relative
to their peers).
But does any of this matter for investors looking for
returns on their capital? JUST Capital says it has evidence it
does: In May the not-for-profit announced the findings of a
proprietary study showing that just companies demonstrate lower
market risk and a higher return on invested capital.
Supported by nationwide polling, JUST Capitals
methodology scores companies on the issues that matter most to
the American public, says JUST Capital senior analyst
Hernando Cortina. Not surprisingly, this holistic
approach encompasses a wide breadth of issues and places a
greater importance on worker pay and benefits, worker
treatment, leadership and ethics, and customer treatment than
most other data providers. Cortina says that when it
comes to scoring companies, unlike most mainstream ESG data
providers, JUST is at pains to source its information from a
variety of places, not just the companies themselves.
Not everyone, however, is fully convinced by the method
behind JUST Capitals efforts. As one diversity expert who
spoke with Institutional Investor points out, plenty of fund
managers and initiatives already provide investors with
insights into good, or sustainable, companies. Today a growing
number of efforts especially those being deployed
in-house at firms rely on more than corporate outputs
alone. And not all rely for their baseline on the wisdom of
crowds: To some, these notions of justice seem self-evident,
without a need for polling data. A pit stop at a local coffee
shop, or a trip to the corner store to buy a gallon of milk,
would show as much.