These are the top 100 ESG stocks in America: The 2022 JUST 100
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Google has over 1300 bicycles that it uses to move between buildings on its campus. It is almost two miles in length.
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The rise of ESG investing attracts strong opinions — from the positive to the skeptical to the downright dismissive. For most executives at large companies, however, it’s not difficult to agree on the importance of ESG and Governance as core elements in business and leadership.
The left criticizes ESG, corporate America for greenwashing… “It’s all talk.” The right criticizes ESG and corporate America for greenwashing because they are embracing ‘woke-ism’… political activism. Businesses have no business accepting it. If they spoke to CEOs who said that it was in their best interests to consider stakeholder value creation because this makes society more healthy and the company more profitable, they might find a middle ground. Martin Whittaker is the founder and CEO of JUST Capital. JUST Capital just published its annual ESG ranking for large-cap, publicly traded U.S. corporations.
The 2022 JUST 100 ranking: The full list of companies
C-suite executives know that more investors vote with their dollars over the past few years. ESG fund assets now exceed the trillions. And with passively managed, indexed funds rising in popularity, shareholder power is being placed under greater control of giant asset managers like BlackRock. ESG momentum can’t be ignored by any firm no matter its size or fame. Warren Buffett’s Berkshire Hathaway witnessed shareholder resolutions focusing on ESG disclosures receive unrivalled support.
Elizabeth Levy is a portfolio manager at Trillium Asset Management and heads ESG strategy. In years past, I used to ask ESG-related questions of CEOs. If they did not roll their eyes at me, I’d get the impression that they were thinking about rolling their eyes. Levy shared that he was amazed at how many companies bring up ESG matters with all investors.
ESG is not just for external community members. Levy explained that ESG is important for companies because it helps them win talent.
ESG has become a key part of portfolio building and stock selection for a new generation. The labor market is going through generational changes, which means that ESG research will continue to be needed. JUST Capital’s annual review of corporate performance is the JUST 100, is a comprehensive ranking of the largest public companies in the U.S. on issues of importance to key stakeholder groups – workers, customers, communities, the environment, and shareholders – as well as to the American public(which the ESG researcher polls each year to weigh the various categories to which it has 241 ESG points).
ESG rankings as well as the underlying data are based on reporting by companies. According to Just Capital, there was a “large increase in disclosure across many data points this year” because more companies have been subjected to more scrutiny from regulators and shareholders. They also compete for more of the individual and institutional ESG investors.
Below are some highlights from the JUST 100 report for this year. These highlight not only the factors that lead to ESG success but also the American public’s views on important societal issues. ESG research continues to be a work in progress and it is difficult to identify a “just business”.
Five times more top ESG firms exist than the rest
Is bigger better?
JUST 100 certainly has the edge over the rest. A majority of these rankings are. Russell 1000 Index universe of large-cap U.S. companies, the companies that make the top 100 have 5.7 times the average market capitalization of their non-JUST 100 peers —$181 billion versus $31.5 billion. They also have 3 times the average global employment size of their non-JUST 100 peers — 85,917 versus 27,970.
They are all from U.S. technology giants, with 2022 No. 1 AlphabetThe bumped into MicrosoftThe ranking’s top spot. This is the only company that’s not tech-oriented in the Top 10. Bank of America.
Market pundits believe there is a link between ESG-focused leadership in the C-suite, the decline of government leadership and public faith in politicians. Whittaker does not see it in either/or terms.
“The Reason Why Paul Tudor Jones?” [the billionaire hedge fund founder of JUST]Whittaker explained that the reason he was behind it was because he believes the private sector should be doing more. But, this isn’t a question about abdication. It is a matter of how the best way to tackle major social problems. Do you think it is better to have the government do this or let the private sector? It is important that the private sector plays a part. The success of businesses is not determined solely by their shareholder value.
Public and government scrutiny is more likely for the largest companies.
For mega-cap stocks, the stakes are higher
Whittaker explained that the larger companies face greater pressure and more attention. Their CEOs speak out more about their activities. … For them, the stakes are higher.
ESG problems are more common in large companies. While the top 100 companies in the ranking score higher on recycling, renewable energy usage, carbon reporting and business travel emissions, overall they are the biggest emitters — 2.4 million more metric tons of CO2 (Scope 1 and 2() than their Russell 1,000 peers.
Whittaker stated, “If you’re interested in large companies that reduce their emissions, then those with the greatest potential to do so are the largest emitters.”
The culpability logic is applicable to other ESG metrics. He said that the lowest-wage employers have more opportunities to make more money on workers.
2019 JPMorgan (No. (No.28 on this year’s list). CEO Jamie Dimon put in one of the worst performances. Katie Porter, a California congresswoman, quizzed him about his practice of paying less than a living wages to bank tellers. JPMorgan recently increased its minimum salary. Dimon, in his 2020 Annual Letter to Shareholders, focused attention on the issues of living wages and a federal minimum wage that is higher.
Bank of America recently increased its minimum wage from $11 to $21.
Larger companies have greater resources and the systems necessary to share more information. This proxy for ESG is when disclosures are made on pay equity as well as on climate and renewable energy investments.
Companies that outperform in ESG (led by technology) can afford departments and employees whose task is sustainability. Levy said that a smaller company might only have one employee. He manages Trillium’s funds, which are also invested in small-cap businesses.
Levy explained that more than their actions is the reporting they do. “Anyone trying to measure ESG (including ourselves) must have all of the available information,” Levy claimed. And that is what they publish in their glossy sustainability reports. She said that those with the best data and the highest quality reports will be the winners.
Levy claimed that Trillium’s top jobs are in the major tech companies. But, this isn’t just due to ESG marketing. “They are able to innovate with the help of their staff and budget,” Levy said. The roadmap is a guideline for companies that will follow it.”
Levy said that while regulators such as the Securities and Exchange Commission, under the new Chief Gary Gensler, push for more disclosure about climate and workforce issues and new regulation could help even the playing field between small and large companies in reporting.
Are they perfect? But they offer a lot. The mega-captechs stocks helped to set the market and brought down costs by buying large power purchase agreements. “It’s a net advantage the mega-captechs gave now, paving the path for small businesses,” Levy stated.
But not all stocks of mega-captech companies are on the right end of the ESG divide by 2022. One stock has dropped significantly in the JUST100 rankings.
Facebook can be owned by ESG investors
It will be 2021 Meta PlatformsFacebook (formerly Facebook), was the No. 21 on the JUST100 list. Which year is this? Nicht even among the top 100. Oder 200. Or 600. Meta is ranked No. 712 is a drop of 691 places over the past year. The JUST 100’s failure to recognize its fall is a reminder of the limitations in ESG methods. Just Capital stated that Meta’s rank has been modified to reflect extraordinary and unique actions which aren’t adequately captured by the model.
It wasn’t an accidental downgrade. Even though its method ranked Facebook No. 21. It placed it at the top of its methodology. under ReviewThis was due to misinformation, hate speech and other incendiary content being posted on their platforms.
Given the evidence mounting and the internal documentation that supports this conclusion, JUST placed Meta in the bottom quarter of its rankings. This is 712 of 954 companies. It was the biggest drop of any company on the list.
This doesn’t capture how well Facebook does on many ESG metrics — No. Number 2 for tech companies on worker data (first on wages); 1. Among tech companies, having achieved net-zero emission within its own operations; on the way to becoming water positive. 2 in the communities category — among only two internet companies to sign a business pledge to employ previously incarcerated individuals (in all, only 26 out of the 954 companies ranked have signed the Fair Chance Business Pledge.) It’s also one of two online companies that has a program for veterans to mentor and recruit.
“Whittaker explained that this is an extremely difficult job. Their performance metrics are excellent. However, it is not always possible to get the whole company’s data. He said that Meta is a subject of much controversy and they too are clearly struggling.
JUST’s research team and board ultimately had to ask whether the model was truly capturing an individual situation. “And with Meta, it felt like it wasn’t,” he said.
Meta ranks first on nearly 40% of JUST’s ranking model, which includes worker issues. However, it’s far from enough. How does this huge controversy about an important issue in society get reflected in the model? Is it possible to feel that the extreme situations are reflected in this model? Whittaker asked. Whittaker asked, “Do they need to do that one thing better than all the others?” “We felt that there was sufficient reason to state, “We are still not certain.”
Trillium’s Levy believes that the Meta situation is now simpler for her as an ESG investor. This is her view of the failure in governance. “This is an issue we had discussed a lot,” she stated. “We don’t own Meta right now, and we haven’t for at least one year,” she stated.
Trillium, which owned Facebook, had attempted shareholder advocacy. Resolutions were filed, but Trillium chose to leave the stock because Mark Zuckerberg was the controlling shareholder. Levy explained that engaging is part of what Trillium does. We try to make them better, but eventually we realized that the controlling shareholder didn’t want to improve. We felt that the company wasn’t open to reconsidering core business principles, regardless of what dialog we had. The controlling shareholder didn’t need to hear from mere shareholders like us.
Facebook didn’t immediately reply to my request for comment regarding the JUST 100 ranking, which was published Tuesday morning.
Exxon Mobil: Why Exxon Mobil has been ranked No. The No.1 company in the oil-and gas sector
Meta would look great if Meta were only ranked on its math. However, Exxon Mobil is the surprising leader in ESG for 2022.
The 39% and 20% worker concerns weights are combined with the 20% community data weights that include local job creation. Exxon Mobil is able to break into the top 100 even as it has long been seen as a laggard — even within its own oil & gas sector — on climate. The environment category accounted for 10% of JUST 100 scores in 2022.
JUST Capital polls Americans every year in order to identify the top priorities. This shift has been evident with Americans being more likely to prioritise issues related workers, including local job creation, living wages, and other benefits.
Exxon No. 1 stood out for me, as did the energy companies, oil and gas firms and Exxon No. Whittaker explained. Whittaker said that he looked at the picture and realized that it was not a “just” company.
ESG models continue to evolve, which was also a result of Meta’s recent booting from the 100 best.
Whittaker stated that climate change is “an important issue but it’s not the only one”.
Exxon Mobil scores well in pay, the well-being of workers above and beyond what’s required by law, benefits and diversity equity and inclusion. These are all factors that help Exxon Mobil, along with other energy companies, to which ESG investors can get no closer than Meta. Levy is one of those who sees that ESG remains far away from standardizing industry processes.
She stated that ESG has been a part of our lives for over 40 years. “We started with companies we didn’t like to invest and don’t wish to continue investing in people-harming businesses.” Exxon Mobil has made climate and human lives incompatible, so it isn’t a company that I would want to invest. Exxon cannot be touched if we consider the regulatory and policy frameworks.
Read more JUST Capital’s annual rankingESG performance of corporates research methodology.
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