Finance & Investment Marketing & Communications

The Win-Win of JUST Jobs:
Higher ROE When Companies Disclose Workplace Policies

Human capital issues increasingly important area for corporate leadership, as market participants call for greater transparency. Current disclosure largely lacking on gender pay equity, diversity & inclusion, paid parental leave, and other policies important to US workers.

By Sustainable Brands | Published 5 years ago | About a 3 minute read

Image: Elijah Hiett

Companies demonstrating greater transparency around key workplace policies prioritized by people in the US generate a measurably higher Return on Equity, according to an analysis published today by JUST Capital. The research supports the case that investing in workers can and should be a win-win for companies and their employees.

JUST Capital analyzed 890 of the largest public US companies, reviewing corporate social responsibility reports, company websites and other public data sources to assess each company’s disclosure of nine key workplace policies: gender pay analysis, diversity and equal opportunity policies, diversity and equal opportunity targets, paid time off, paid parental leave, day care services, flexible working hours, career development and tuition reimbursement. The policies reflect nine of the top worker metrics that the US public identified in JUST Capital’s surveys of more than 81,000 respondents over the last four years.

Despite calls from investors, policymakers and the general public for greater transparency on these human capital issues, only 18 of America’s 890 largest public companies, or 2 percent, disclose information on the nine workplace policies.

“Disclosure is a critical step toward enabling the market to properly benchmark performance and reward leadership on these important workplace policies,” said Martin Whittaker, CEO of JUST Capital. “Americans have consistently said that worker treatment is their top priority when it comes to just business behavior. The good news is that, for those companies that do invest in their workers, we are seeing a strong relationship with higher returns.”

JUST Capital’s analysis found that, for eight of the nine policies analyzed, companies that publicly disclosed those policies generated a measurably higher 5-year median ROE, specifically between 1.2 percent and 3 percent, compared to companies that did not disclose these policies. Out of the 890 companies analyzed:

86 percent disclose diversity and equal opportunity policies, and have an ROE advantage of 2.5 percent.
85 percent disclose paid time off policies, but did not have an ROE advantage.
68 percent disclose tuition reimbursements (ROE advantage of 1.2 percent).
72 percent disclose career development policies (ROE advantage of 1.4 percent).
45 percent disclose that they provide flexible working hours (ROE advantage of 2 percent).
28 percent provide detailed disclosures of their paid parental leave policies (ROE advantage of 2.2 percent).
23 percent disclose that they provide day care services (ROE advantage of 2.5 percent).
11 percent disclose diversity and equal opportunity targets (ROE advantage of 2.4 percent).
7 percent disclose results of their gender pay equity analysis (ROE advantage of 3 percent).

18 “Win-Win Companies” disclosed on all nine policies, demonstrating a commitment to transparency around these human capital issues: 3M, Alliance Data Systems, Boston Scientific, Eli Lilly, Goldman Sachs, Hasbro, Intel, Jones Lang LaSalle, Marriott, Nike, NVIDIA, PayPal, PepsiCo, Qualcomm, State Street, Symantec, Texas Instruments and Wells Fargo.

In addition to the analysis, JUST Capital’s “Win-Win of JUST Jobs” microsite features an interactive JUST Jobs Policy Tracker, which can be sorted by industry and issue, and details a disclosure assessment for each of the nine workplace policies for all 890 companies that JUST Capital tracks as part of its annual rankings. The goal of the project is to enable corporate leaders, investors, workers and other stakeholders to quickly understand the state of disclosure today, and identify ways to drive more transparency and workforce investment that better reflect the priorities of the American people.

The analysis comes weeks after the Securities and Exchange Commission’s Investor Advisory Council urged the commission to consider applying human capital disclosure requirements on public companies, stating, “For many of the most dynamic companies, human capital is their primary source of value” and is “increasingly conceptualized as an investable asset.”