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The No. 1 ESG issue for Americans isn’t climate change


Uber is used by drivers to drop passengers off.

Chris J. Ratcliffe, Bloomberg via Getty Images| Bloomberg via Getty Images

According to research organization Just Capital’s annual rankings of U.S. top companies on ESG metrics, there was a significant move in 2022. Meta Platforms dropped 691 spotsDue to concern about the spread of misinformation via Facebook and Instagram’s negative social impact, Uber TechnologiesThe No. 41. These were both unusual situations, however Uber’s rank may speak more to Americans about what is the most pressing issue in American politics when it comes environmental, governance, and social issues.

This is No. 1 issue, but that’s not revealed in the fact that Uber vaulted into the JUST 100 — it’s because Just Capital took the unusual step of denying Uber the “seal” that the top 100 companies usually get.

The 2022 JUST 100 ranking: The full list of companies

Uber and Lyft DoorDash — though neither made the top 100 overall like Uber — were placed “under review” by the ESG research firm in this year’s rankings because the data does not capture the fact that a significant proportion of their workforce are classified as independent contractors.

Business models are centered around gig workers

Corporate employees are usually the only ones who receive workforce disclosures as part of their transparency. Just Capital, for instance, found that 2.3% of Uber’s workforce was covered by the information it had at its disposal when it assessed the company. This included gig workers.

Martin Whittaker is Just Capital’s CEO. He says that when Just Capital sets out to make America’s annual “most just”, it does so with the goal of getting it “as correct as possible.” ESG’s contingent workforce model has not yet made it to the top of the list.

Whittaker explained that data is hard to find when you’ve built a whole business around contingent workers. The full-time workers I know are highly paid with great benefits. That data is available. However, we are aware that the company’s entire model was built on different relationships with employees and therefore we did not feel we could accurately tell this story. “It’s the exact same for Doordash, Lyft,” said he. We felt it was an evolving systemic story, and didn’t have a sufficient grasp of what that meant or how we could measure it.

The story of gig workers is growing as Gary Gensler takes over the Securities and Exchange Commission. considering a human capital disclosure requirementCompanies

It is not necessary that all employees be made staff by companies. This was a tactic that Uber has successfully resisted in the face of a California ballot initiative to reclassify independent workers. Whittaker explained that “what we don’t want is to do the knee-jerk thing.” This is easy to believe, and companies should have all workers working full time. While I realize that many people believe this, we must understand what the public thinks about it. We realized that it is highly ranked and we needed to do more.

Just Capital is certain that workers rank No. American people are the No. 1 ESG topic because it surveys the American public each year to establish the weightings. In 2022 the list had worker issues at almost 40%, while climate was 10%. Fair and decent living wages were the top priority. The number one issue was a living wage. Communities (20%) is partly a workforce measure because it incorporates job creation.

Workers being among top issues in public polling has been consistent in recent years, according to Alison Omens, the chief strategy officer at Just Capital, who during the Obama administration was a top adviser for the White House on private sector engagement. Omens indicated that the “intensity or urgency has increased.” Omens said that people now say with greater detail, “This is very important for me as a worker and parent to workers, and as an individual, this is something I want to see companies think differently about.” “I would argue that this is more about the intensity of the acuteness than any change in priorities,” she said.

Engine number 1. 1., which has recently achieved one of the most significant ESG activist investors victories by winning seats on Exxon Mobil’s board to pressure the oil giant to make greater progress on climate. now will be placing more focus on workforce issues.

Alphabet’s contingent worker issues

It isn’t just a problem for gig economy businesses that the ESG model has flaws when it comes down to assessing the growth of contingent workers.

Alphabet, No. 1 on the 2022 JUST 100, uses a vast contingent workforce — in 2018, the number of contingent workers at Alphabet surpassed staff employees for the first time and that temporary workforce continues to attract scrutiny. Alphabet has over 100,000 employees. However, it provides sufficient data to be able to perform well in ESG workforce metrics even though the workforce is split.

Just that has examined the intersectional demographics of Russell 1000 businesses found it to be among the top 11%. data about its U.S. workforceIt can be broken down by race, gender, ethnicity and job type. Annual audits are also done by it. pay equity analysesBy race, gender and age. It aims to enhance representation by double the Black workforce and increase the proportion of senior-level positions for underrepresented groups by 2025.

Just Capital says Uber does a great job with ESG, including measures related to climate change and data privacy. Uber recognizes the value of gig workers for its success and good public relations. While the issue of gig workers may not be a recent topic of debate, it is a fundamental one that has been subject to multiple disputes over time at different levels of government in countries around the world. There have also been numerous battles throughout its history with various factions within its network of drivers who are pursuing worker activism. Uber used its own data. ESG disclosuresSend an email to CNBC with details about specific programs drivers in the U.SOther overseas effortsAs a sign that the organization is focused on this issue,

Uber’s board gets stats regarding the satisfaction and retention of delivery drivers and workers. Uber also tied executive compensation in 2020 to a human-capital-related performance indicator that was based on satisfaction with delivery people and retention metrics. ESG researchers are still unable to compare the disclosure required to be able to draw a comparison with companies that not only reveal worker statistics but also employ most of their workers. Researchers will need to be able to assess how workers in gig economies are assessed, and encourage companies to share more information.

Trillium Asset Management’s portfolio manager Elizabeth Levy said that the issue of the gig economy and the potential use of contingent workers is an ESG concern her company is currently evaluating.

Levy stated that he has not yet found any pure gig economy companies, such as Uber, Lyft, or DoorDash in which he is comfortable investing. Trillium has not yet developed a policy for the workforce. This huge labor pool is not considered in any of the metric. She said that we don’t have sufficient information.

Uber was the highest-ranked company in the retail industry in 2022 Just Capital rankings. Its workforce must be compared to those of other frontline retail businesses, who are usually lower in pay and have fewer benefits. But as of now, no basic comparisons can be made between Uber and the rest of the retail sector — in which Walmart, Amazon and Target have all increased pay and benefits, such as education assistance.

Employment through the contractor-vendor model

Omens says that the Uber story, which is about contingent workers as a business model in many industries will rise in importance as ESG stakeholders concentrate more on the overall business case of good jobs. Researchers find it more difficult to assess gig workers or contractors if they are not considering other factors, such as wages and their pay and benefits.

Just Capital conducted an assessment of 100 employers and found that very few companies provide information on employees who work as hourly or on-site vendors or contractors. One of the 100 largest companies did not provide worker information for vendors and contractors, while six other companies provided data on hourly workers.

The pandemic raised awareness how insecure gig worker and contractor positions can be. Microsoft stated that it would pay contractors early on in the pandemic. However, work conducted by Mercer Consulting in March 2020 found that about two-thirds of companies employ contractors, and the majority did not provide compensation during the pandemic.

Omens explained that “the first step is to just have a higher degree of disclosure about what is occurring across the Uber workforce, and other gig economy workers.”

Omens stated that the tendency to rely on contractors in business has been viewed as a positive thing in the past. However, Omens explained that research will look to find flaws in this idea over the next few decades and show “how it’s not a good” thing. Stable workers are good for productivity and loyalty.

PayPal pays workers more, and increases productivity

Investment in employees can make a difference to productivity and resilience. based on researchIt has been shown that financial problems can be linked to mental sharpness. Therefore, more employers have taken steps to ensure worker well-being, which includes financial issues such as a living wage.

PayPalIt rose to the No. 1 spot in JUST 100 rankings. In 2022, 6 was the highest ranked company in JUST 100 rankings. This has been a focus of recent years on worker productivity and pay. John Rainey, PayPal’s chief financial officer, told CNBC by email that CNBC conducted a survey of employees in 2018, which revealed that many hourly workers and entry-level workers felt financially unstable and had difficulty meeting their monthly obligations. A metric was developed by the company that determines an employee’s disposable income. This is in addition to covering basic needs. 

The company was able to implement multiple improvements by focusing its attention on the problem and gathering the relevant data. PayPal discovered that many salaried workers at the higher ranks were having difficulties due to unanticipated expenses such as health care costs. Rainey stated that it was because we did not go far enough for employees at lower levels or in areas with smaller workforces. 

PayPal has estimated that as of 2021 it will have raised the minimum available income for entry-level and hourly U.S. workers to 18%. That is well over initial estimates which were as low at 4%.

Rainey said that “these investments have a clear, positive impact on turnover and engagement, customer outcomes, and the capacity to innovate.” We learned from our employees, that financial insecurity makes it harder to work fully and provide service to our customers.

Omens indicated that “We are definitely in a position where people understand that they have to do this from an employee perspective” Leaders worry about the lack of turnover in hiring. We hear B2B as well as B2C companies paying attention to employees and looking at financial security.

The Great Resignation, and the rise of labor

There are many concerns in the labor market today about retention and recruiting, along with more activist from employees at businesses. Starbucks AmazonOmens stated that companies are “hyper-aware” about the issue of workers and this was not true two years ago.

Levy stated that it was ill-advised for corporate managers to continue with low wages and poor benefits during the Great Resignation. It is also a head-in the sand decision to not keep track of the numbers. Levy explained that “if you’re afraid your workforce will quit, then know their salaries.” She said that she saw the strike numbers increase this fall and added that the striking workers are focusing not only on their compensation but also the future conditions of their workforce.

Since the 1970s, labor’s share in corporate profits has been declining. begun to climb again.

Whittaker explained that “the whole relationship between employers and employees is changing.”

PayPal is part of The Good Jobs Institute and Just Capital’s Worker Financial Wellness Initiative. Chipotle and Verizon (No. 9 on the 2022 JUST 100) are others. But the fact that it remains a small group of companies is indicative of how challenging it is for companies to hold up a mirror to their workers’ wages financial health.

ESG’s success lies in its ability identify and manage material risks for a company and to help management reduce risk. Operating margins are affected by labor costs. In a period of rising wages and inflation, it might become clearer which businesses generate profits through paying more than they produce. It’s an issue Wall Street is attuned toIn making stock selections for 2022

Levy stated that while profit margins have increased in recent years, worker wages have remained flat. The market will soon discover this and realize that these margins are not sustainable. They were based upon pay practices that were not setting up the company for future success. However, she is worried that, for the time being, companies still lack information. Although some firms don’t have the reports systems and resources necessary to track contingent workers properly, she stated that large corporations are not as transparent. 

Read more JUST Capital’s annual rankingESG Performance and Corporate Governance research methodology.