Big tech has been accused of doing some shoddy things this year, including enabling Russian interference in a presidential election, avoiding large amounts of taxes, and monopolizing the economy. But perhaps it’s too soon to call tech companies the new boo-boys of corporate citizenship. Comparatively speaking, at least according to a new ranking of corporate behavior, they seem to behave better than most.
The major new ranking of companies on responsibility issues shows a strong tilt towards tech. Intel comes in first among 1,000 companies analyzed. Microsoft is fourth. Alphabet (Google) is eighth. Salesforce is ninth. Of the top 10 companies on issues like pay, customer treatment, and environmental performance, only one isn’t a technology company (Accenture in sixth place).
The Just Capital rankings are different from others in that they are based on what Americans say is important about corporate behavior. Just Capital, which is part-funded by the financier-philanthropist Paul Tudor Jones, has polled tens of thousands of Americans over the last three years to understand what they care about. Consistently, they tend to emphasize pay, benefits, and worker treatment issues and that’s reflected in the ranking. About a quarter of the weighting goes to questions like whether companies pay living wages, provide access to health insurance, or allow paid time off.
“The tech companies do well on pay and benefits. They are growing so they are creating jobs. They have a lower environmental footprint than many of the older economy businesses. And they are making money, so they can afford to be generous and support local communities,” says Martin Whittaker, CEO of Just Capital, in an interview.
By contrast, retail and fast food brands come off poorly in the ranking, partly because they employ lots of people and tend not to pay them very well. Williams-Sonoma, for example, which owns Pottery Barn and West Elm, is ranked 815th for “pays a living wage” (meaning it probably often doesn’t). Similarly, Dollar Tree is marked down severely on “pays workers fairly compared to CEO.” (Last year, Dollar Tree’s CEO Bob Sasser made about $10.5 million including stock options, according to company filings). Amazon comes top of the retail sector ranking and 55th overall.
Though industries are all lumped together in the main ranking, Whittaker says individual companies will probably want to look to industry peers rather than across-the-piece. “We tell people to look at an apples-to-apples comparison and try and outcompete your peers,” he says. “We understand that Dollar Tree or Walmart is never going to be able to pay its employees the same as Intel. But they can still do better. They can still raise wages for those at the bottom of the wage spectrum for your company.”
Target has recently bucked the retail industry by raising hourly wages to at least $11 an hour, with a commitment to go to $15 an hour by the end of 2020. And major corporations are likely to have more money to spend in the years ahead, as the all-but-enacted corporate tax cuts take hold. So far, as Just Capital points out, most are choosing to increase dividend payments to shareholders or buy back their own shares, rather than invest in their workforces. A survey of 302 public companies in July found that 65% planned to use the tax windfall for dividends, while 46% said they planned stock buybacks. Home Depot recently said it would spend $15 billion to purchase its own shares (less shares in circulation normally means prices go up).
Like all corporate responsibility rankings, the aim with the Just 100 is to get companies to care about non-financial issues. Just Capital lets the brands see their data before it’s published, so they can add to it, question it, or do something about it. Whittaker hopes to make the business case that acting responsibly doesn’t mean reduced profitability. It could mean that brands are more attractive to customers, employees and responsibility-minded investors.
Given all the news about sexual harassment recently, Whittaker expects that to feature strongly in next year’s polling and to become an issue in the index. He’s also excited that Goldman Sachs is making use of the ranking to create an exchange-traded fund (EFT) of the highest scoring companies in each issue category. Like other impact-focused EFTs, it will allow everyday investors to put money into a basket of stocks that reflect their values (or come closer to their values). Nonprofits like the YWCA and NAACP are also planning to launch EFTs next year with the goal of empowering women and people of color in the workplace.