Martin Whittaker, Chief Executive Officer, JUST Capital 
Interviewer: Lee Clifford, FORTUNE


Impact Initiative 2022 - From Rhetoric To Reality

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Impact Initiative 2022 - From Rhetoric To Reality


Good morning, um, hello and welcome to day two of the Fortune Impact Initiative. Um, I hope you were all able to join one of the breakfast round tables. Um, I had the pleasure of hosting the roundtable on meaningful compliance and it was very impressive seeing people so engaged at 7:45 a.m. On the topic of compliance. So hopefully you all enjoyed them and got some food as well. Um, so many of the people who have joined here at our gathering offer great examples of the kind of purposeful leadership we want and need more of in the world. And that is exactly what led fortune to create. Our newest membership community called Fortune connect. It's designed to help prepare those who aspire to become leaders of the future and we're really, really proud of this program. It's seen tremendous growth since its inception just over two years ago. And the goal is to create truly purpose driven leaders to help them understand the dynamics of stakeholder capitalism, what it means and how it works when society is demanding so much more from companies and to understand how to build true, truly equitable and inclusive workforces. The program is designed for mid career professionals who are rising fast on the executive track. I'm sure all of you have some of those in your workforce is in your organizations and I would urge you to consider putting them in this program. So we encourage you to check it out at fortune connect dot com before we dive into our main stage conversations, I want to thank our sponsors for bringing the impact initiative to life. Our founding partner ever fi our premier partner, the coca cola company uh and our partners, Project Management Institute, Rubicon, carbon and china. Thank you all. We could not do this without your support. Um A few very very quick reminders what's said here on stage and then break out sessions is on record what is said at your tables. Private conversations is not unless it's mutually agreed otherwise. If you want to tweet each other, go ahead but just tell each other first basically. Okay, earlier in the year we sent a survey to our member community and I encourage those of you who have yet to respond to share their input. Um We are the new kids on the block made with carbon neutral concrete, that's a sustainability joke I guess. Um And your input is very very valuable to us. I'd also like to invite you to sign up for the Fortune Impact Initiative newsletter which brings you the latest developments in the E S. G. Space and the insightful commentary you hopefully expect from Fortune. The newsletter is edited by Fortune Executive editor Peter Van um and he'll be joining us here on stage a little bit later. Okay on with our program how to advance stakeholder capitalism is a recurring theme that runs across our impact conversations while self interest should play a role mounting data reveals that companies who do right by all their stakeholders do better financially. I think we all know that by now, but there is a disconnect in public perception surveys show that americans think companies prioritize shareholders above workers. Our first guest is going to share some data driven insights on how business should respond as we explore ways to reduce economic inequality and make social progress. Please welcome Martin Whittaker, chief executive officer of Just Capital for a conversation with fortunes lee Clifford. Good morning. Alright, Martin, let's start with the day to convince us that paying a fair and living wage is good for business. I'm not sure I can do that. And how long do we have? 15 minutes? Um I think the data shows us that it's not really me that has to convince anybody of anything, it's in just capital's case, the american public and we do so much polling all around the country about what people want from business, um what kind of leadership they want from business. And we don't, we don't really frame it in terms of uh sustainability or DSG or anything like that. We really just ask them about what issues people care about, and I would say universally wherever we go, there's a very strong sense that people want companies to do more. People expect more of capitalism, they expected they wanted to work for them. Um you know, well into the mid eighties up to the high, high eighties and low 90% of respondents typically prioritize workers, most of us spend most of our waking hours at work. It's understandable, but they I think there's still a very strong sense in this country that is actually uniting us around um the access to the american dream um and wanting to spend one's time working in a dignified way being paid fairly having access to training and other opportunities and all of our data through the polling and survey work supports that. So I I always look to main street America, you know, and the voice of the public to really drive that forward and and companies are responding. You know, we see that in the rankings that we do and all the work we do with large corporations as well. Did your polling show that we're getting closer to people feeling like they can achieve the American dream or slipping away. It's definitely improved. We we were founded in 2014, We did our first nationwide survey in 2015. And um it was sort of a mixed array of results. We found a lot of issues around how companies interact with communities, how they treat their customers, international supply chains, human rights, climate change, things like that. Over the years, though, one group has become much more prominent, which is the worker, you know, our work this year showed that people value uh and this would be Republican, democrat. Um whatever democratic cut we we we take of the data fair pay and living wage is the number one issue by far, and if you're out of all the worker related criteria, um It's almost half the model at this point. So that issue alone, the relationship between a company and its workforce has become increasingly more important over the years. So you've said that in this day and age all leaders are human rights leaders, whether they want to be or not. Talk a little bit about about that. Well, it's about leadership of people. I think I think really what we are learning collectively as a business community is the importance, especially after Covid George Floyd 2020 was a the year where the S. A. V. S. G. If you want to think about it, took took the front seat. And I think we all learned a lot as leaders um about how to do that. What does that even mean? You know, I was in a breakfast this morning, we talked about the changing nature of leadership, uh the importance of empathy, uh the importance of finding leaders throughout your company wherever they exist, whatever level. Um And so I think we've learned a lot, but it was still early in the uh it was still early in this recognition of how human capital is a driver of business performance, uh and how a company uh you know, a company's purpose as it relates to societal impact and how you balance all of that with the rigors of of shareholder primacy and and I think that's really what I mean, I think the human element of business is going to define our future for the next generation. Talk a little bit about some of the big companies that you feel are doing a good job in our workers first. Sure. I mean, well we we uh rank companies on all array of issues, but I would say, you know, we see leadership in so many different places I'm thinking of. Hence Vestberg Verizon I you know, the leadership that I'm I witness on a regular basis from dan Shulman at Paypal, I'm lucky enough to be part of a advisory panel around their worker financial health, uh initiative and it's fascinating, works very detailed, it's very important um but that wouldn't have happened were it not for dan's leadership at Paypal, but there's leadership on lots of different forms as well. I mean I look at leadership in the BR. T. For example and how um what it took to bring forward that change that shift in definition of a corporation leadership of a different kind, you know, at a more a systems level. So I'm not an absolutist about leadership and I don't think that you have to do it this way. And our rankings are the definition of corporate leadership. Um I think it's the start of the leadership conversation, not the end. Can you tell us more about what Paypal is doing well the story goes that a few years ago dan did an employee survey, he assumed that, you know, they're wealthy, successful corporation that everybody would be super happy. And it turns out that a lot of their employees, particularly call center workers around the country were in a position of acute financial hardship and he didn't know that. And if he hadn't done the survey, he would not have known that and to his credit, I think when the results came back, it was like, okay, we gotta do something And he created a 4-point plan which rested on lifting wages, provided stock ownership, lowering the cost of benefits and providing financial education because you have to wrap all of that in sort of a financial literacy and that has been pushed down all the way throughout the organization now and, and uh, it's, it's very, it's very detailed work, its interactions with individual employees on how you manage on a, on a very, very tight budget and what things, you know, things like how health care, health incident can lead to, you know, bankruptcy or worse. You know, there's stories of people who now work at Paypal, who worked at companies previously experienced some, some event, Um, that took them down a very bad path. It's hard to recover from that. So that's life, you know, that's what happens to people in my company as well. Just so, even though we're a small business, but so I think, I think that's a very concrete effort. We actually have a partnership with just with paypal and now there's 13 other corporations that are part of it that are doing, taking that framework and applying it to their workforce in order to lift the financial wellness of their employee base. Interesting. We were talking backstage a little bit about another case study which is Disney where the ceo ran into some trouble. Tell us a little bit about your interpretation of what happened there. Well, it's now become a sort of a Touchstone of how not to speak up and out on on complex societal issues. And of course bob is no longer, you know, in the in the Ceo suite. Um not because of that. Um but but I think it beyond the headlines. I think C. E. O. S. And business leaders are in a complex position when asked to speak up or speak publicly about divisive issues or issues that are perhaps of great sensitivity and whether our, you know, people have very different points of view and what we've seen since then I think is is C. E. O. S pulling back from that public voice, focusing instead internally. I know that that's happening. Disney and other companies were rather than immediately going public with the point of view, companies are intentionally seeking out perspectives, not just from their employee base but from their customers and even from their shareholders in some cases. So, so I think there's a lot more private behind the scenes um level setting of how, how should we handle a complex issue like reproductive rights or like um voting rights. Yeah. You mentioned that a lot of Ceo, the biggest question they have for you is how do I be a leader on these issues and that there's a lot of talking between Ceo. Tell us a little bit more about that. Sure. I don't feel as though the vast majority of businesses that we interact with and and business leaders that I talked to, they don't need persuading that they should be perhaps investing more in their workers or creating value for their customers. I mean, it wouldn't be a Ceo if you didn't believe those things. It's the how how do I do this? You know, um not just how do I the Ceo to this, but how does my team, how does, how does my company balance these issues? And I think that playbook for, you know, how now we have this sense of of what a stakeholder led business might might look like. How to sort of prioritize the different needs of my stakeholders, how to put capital to work to generate value for my stakeholders. Um, and in doing so accelerate my overall business performance. You know, we've done a lot of work showing that shareholders leaving money on the table if if you're really not conscious of investing in your stakeholders. So I don't see stakeholder capitalism as sort of some political vehicle for Ceo exercise their their, you know, their political views. I see it is just a better way to do business and the numbers and all the data to support that, but I think how you do that, how, you know, you're doing a good job of that, what am I, what should I be measuring? What data do I need? You know, the TsG community for many years, I've been part of that now for 25 years, as often, times I've said this before, it's measured what it can, not what it should, and I think we're just now trying to figure out what really should we be measuring in order to know as a board member, as a Ceo, as a member of the C suite that we're on the right track, what what what should we be measuring? Well, um, one thing you could be measuring if you're focused on your employees is your employees, financial, health, you know, um uh, I am I an equitable employer, you know, how do I think about Fair pay? You know, there are not that many companies in the Fortune 500 that have done or made, um, certainly made public that they have done if not released the results of Fair Pay work. So, if you don't know, you can't take action and I think a lot of this begins with knowing and taking the trouble to really understand, you know, how are your stakeholders think about certain issues and how do I know, you know what really matters and then you can take action to see if you're making progress. We'd love to take some questions from the audience, so if you have one raise your hand and we'll get a microphone over to you. Okay, thank you, thank you martin jorgensen competent boards. So when we start thinking about that health of the the finance we have at the moment, also mental health issues, we also have climate change and we're going to probably see that climate change is impacting the health of families even more, which will then have an impact on the businesses, but also the pay to to those people working all of these businesses. How do you see the business leaders? And I talked actually Sudan about this, but how do you see that? How can we, as business leaders ensure not only right now we have just pay, but we also have it in in the future. Well, I I think that's a probably quite a complex answer, but but I would say it begins with understanding, you know, you mentioned mental health issues and the issues in the work force of course all those things are connected, we do tend to think about them in silos, but I think the best companies see the connections between them and are brave enough to explore those connections. Um but I think it begins by asking the right questions and listening, you know, I think of hubert joly a best buy, you know that turnaround began with him putting on the best buy shirt, going, working on the on the floor to get the ideas and how best how the people who are front and center in the customer interface thought, you know, what was their ideas? So you could apply that model in many different ways I think to lots of issues where you feel like you want to be a better employee and you want to connect those dots between those things. Um We just have a little under two minutes left. But I wanted to ask do you feel concerned about the future of capitalism or do you think capitalism is uh on a good track? I am concerned. I think uh the pushback against TsG and stakeholder capitalism is opportunistic, but it's also been quite remarkable to me that the sustainability E. S. G. World has been so vulnerable to that kind of um you know to those criticisms and and those attacks and I think SGS manufacture a lot of its own problems as well. Um I think the real issue here is how do you how do you make capitalism work for more people? How do people who are struggling to get by main street America main street anywhere in the world who wants that system to work for them if you don't if they don't believe that bad things happen. And so I really I'm a capitalist. I believe that business can and should be doing more to both drive forward solutions to systemic challenges that we have, and I think they'll be well paid for doing that. So to me, this is all about the connection. How do you re establish that connection, that faith, that business and capitalism? Free market enterprise is working for more people. We've got to get that right at the moment. That's the bit that I'm not. We tend to work in a very high level way when we talk about these things, but they've got to work at the kitchen tables. Otherwise, you know, I I'm very worried that, um, those ideals will not be, uh, will not be realized. Thank you so much. This is a great conversation. Thank you lee.