How to Measure Stakeholder Returns

This is the web version of CEO Daily. To get it delivered weekly to your inbox, sign up here.

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 Coins2Day, 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
[email protected]

TOP NEWS

Auto Tariffs

President Trump will reportedly delay potential tariffs on European car imports for six months. This would stave off a major trade dispute until later in the 2020 election season. The EU has refused to strike an early, limited trade deal with the U.S. (Whereas Japan, in roughly the same boat as Europe when it comes to trade disputes with the Trump administration, did just that). Politico

Google Data

Google has been secretly amassing the medical data of millions of people across 21 states—lab results, diagnoses and more—as part of an arrangement with hospital chain Ascension. The initiative is reportedly called "Project Nightingale" and the aim is to help Google design new software for care recommendations. The patients and their doctors were not informed about it, but Ascension and Google claim it's all legal. Wall Street Journal

WeWork and Legere

WeWork, having rid itself of one highly unconventional CEO in the form of Adam Neumann, is apparently talking to T-Mobile U.S. Chief John Legere as a potential replacement. Legere is of course quite a flamboyant character himself—and a successful one, being credited with a big turnaround at T-Mobile. Could he do the same for WeWork? New York Times

Capex Caution

New analysis of earnings reports shows big U.S. Companies are still holding back on capital expenditure, and the chill could deepen through the end of the year. Financial analysts at Refinitiv say capex grew 3.2% in Q3, which is around the same as the previous quarter, but way below the capex growth seen last year. The reason? Uncertainty about the economic environment. Financial Times

AROUND THE WATER COOLER

Aramco Climate

Saudi Aramco tells investors it will face climate change concerns, but it intends to keep tapping into new reservoirs. Scientists say we need to leave oil in the ground in order to give humanity a sustainable future. So the question is, at what point will this conflict come to a head? Coins2Day

Hong Kong

Hong Kong police say the city is on the "brink of total breakdown" following a second day of violence. The police again fired tear gas in the Central financial district in order to break up pro-democracy protests, and also on two university campuses. Yesterday, they shot a protestor at close range and a man was set on fire after confronting protestors. Reuters

Trade Megadeal

The world's biggest trade deal, covering nearly a third of its population, is likely to be signed next year. It's called the Regional Comprehensive Economic Partnership (RCEP) and it will take in 10 Southeast Asian nations plus China, Australia, Japan, New Zealand and South Korea. CNBC

VSCO Girls

If you've not yet wrapped your head around the VSCO Girl phenomenon, now's the time—because it has serious implications for makeup sales and the wider beauty industry. Coins2Day

This edition of CEO Daily was edited by David Meyer.

WE NEED YOUR HELP

Know a standout female leader at your company or another? Tell us about her! We’re taking nominations for Coins2Day’s upcoming Most Powerful Women Next Gen Summit, where we convene ascending leaders to converse about business, share advice, and connect with one another. It’s Dec. 10-11 in Laguna Niguel, Calif. Submit your nominations to [email protected]. They can register here.