- I think businesses will act out of self-interest.So, what we wanna try and do is provide the incentives.Now, why should companies todaythink about investing in climate solutions?Why should they think about investing in,their human capital or communities that need good jobs?They'll do thatbecause it will help them be better businesses.(upbeat music)- Martin, thank you so much for joining us today.It's great to have you here.- My pleasure.Thanks for having me.- So Martin, if you could start by just talking a little bitabout yourself at Just Capital.- Sure. So, I'm the CEO.Just was formed about 10 years agoby Paul Tudor Jones, Deepak Chopra,Arianna Huffington, Ray Chambers-- Know all of them. - A bunch of people whoreally care very deeply about business, about capitalism,but are also very activist philanthropists.And they felt that the private sector basicallyhad to do more if we're gonnareally address societal challenges,and we can talk more about that later.So they had a dream,it was called Just Capitaland they hired me to try and bring it to life.- So, the real sort of ethos behind it is thatto enact real change,basically you need money flowing in the right directions.So if you can get capitalism and shake itand get money going to towards the businesses that areyou know, behaving in the correct waythen you're going to get a self-fulfilling,this kind of self-fulfilling momentumthat other companies will then try to aspire to be those.- I think businesses will act out of self-interest.So, what we wanna try and do is provide the incentives.Now, why should companies todaythink about investing in climate solutions?Why should they think about investing intheir human capital or communities that need good jobs?They'll do thatbecause it will help them be better businesses.And so, we try to lift up leadership.We try to provide those incentives that the market needsin order to reward companies for leadership of that type.Because we live in a free-market economy,the market needs information and dataon how companies are actually doing those things.That's what Just Capital provides.We provide the information on which companies are leadingon creating value for different stakeholders,which companies could perhaps do a better job.You know, what are the stories of change?And most importantly, what's the business case, you know?What is the relationship-to-market performance?Competitive positioning and things like that.- So, Martin, for this conversationI'd love to start sort of bigger pictureand then we'll narrow down a little.What do you think really drives,I know this is a big question,but what really drives major social and cultural change?- Well, it's obviously many things.I think we have some basic sort of human traitsthat don't change and haven't changedsince the ancient Venetians were trading.- Right.- All the way through, the Joint-Stock Company,the East India Company, all the way through,major changes in how we structure markets,stock market, the equity markets, and so on and so forth.I think where we're at today isa period of perhaps more intense transformationwhere the role of business in societyis being questioned,the role of capitalism, is it working?And is it working for enough people?We do a lot of public opinion researchand we know that society expects more of business,wants business to do more,wants a path for themselves and their familiesto build wealth and drive prosperity,and so on and so forth.So, there's some enduring things that haven't changedbut I think we're in a moment now wheresort of feels like social, political, cultural forcesare coming togetherand they're particularly coming togetheraround this idea of business in society.- When you think about big business,do you feel that, is it ingrained in them nowthat they have a responsibility totreat their employees a certain way,to treat the environment a certain way?Or are they still far too focusedon returning money to shareholders effectively?And how do you try and align those two things?- Well, it's interesting the way you phrased that.'Cause you positioned it as,either they do that or they make money,there was almost a choice.And I don't, I think the premiseof how a company makes money is shifting, you know?Today there's a lot of money to be madein environmental solutions, you know?And addressing the climate challenge.There's a lot of value to be created by attracting,retaining, advancing your best talent.So, I don't see those things as a trade off.- I mean, I'll give you an example.I actually had a friend of minewho was starting a company recently,and it was food delivery.And they were gonna charge, if they could,it was the pots that they were gonnaserve their salads in.If they got them from China, it was gonna cost them $4and if they got them locally, it was gonna cost them $6.So, they could, to start out, and this is a startup,they could either be more sort of environmentally friendlyand get them locally and not make as muchor get 'em from China to start withand get them much cheaper.So, those kind of decisions is what I'm talking about whenit's like, am I trying to make more moneyor am I trying to be more responsible?- Yeah, and that sort of capital allocation decisionhas to be seen in the contextof the overall business, right?So, if your friend's in a startup situationand margins are razor thin,and they feel like, okay this is wherewe're gonna source now in order to stay alive,to have a viable business.If that's the difference maker,then the pressure's on really, quite honestly,to source the Chinese pots.Probably because that incentiveis really around their survival.I think though, you could look at it another way, which is,there are many things that we thinkwill make this company great,one of them is our environmental brand.We wanna market ourselves asan environmental leader as part of the product.Maybe we'll attract and retain consumerswho have more loyalty to us because of that.- Yeah. - I'm not sure thatthey would pay more for the productbut certainly you could positionthe company's brand in a different way,and maybe there's premium pricing, I don't know.But, so, the context of the business,it's a bit like investing in workers, raising wages.You know, we often see companies say,we're going to give frontline workershigher pay, higher hourly wage,and Wall Street sort of objects to that.And yet when you see companies nowinvesting in their workforce,investing in training, upskilling,you know, there's a return on that.And so, if you're looking over the long termyou think about capital allocationand the return of making those kinds of investments,whether it's the environmentally friendly,locally-sourced potsor whether it's lifting wages in the workforce.Like, how do you think about thatin the long-term business context?- So, talking specifically about ESG,it felt like that was a very hot topic in 2020.There was a lot of media attention on the subject of ESG,the pandemic shook up so many things.And where do you feel we are now on the ESG journeyand what needs to happen for usto sort of take the next leg up?- Yeah, you're right.The last few years,I would say going back to probably 2017/18,you couldn't go to a conference without major panels on ESG.Look, I've been in that space for,gosh since the late 90s.So, I've seen it go from a conversation in a roomnot much bigger than this one,where you could fit the entire industry in to-- To them being the main topic at Davos.- Exactly.It had a sort of feeling for me of being a bit bubbly.- [Jamie] Yeah, right.- There are a lot of people moving into the space,a lot of confusion around terminology,sustainable investing, ESG, stakeholder capitalism,social impact, impact investing,corporate responsibility.- Was that was there too much lip servicecoming into this world?Were people sort of saying green thingsto sound more environmentally friendly,but you needed to look at their actions morethan what they were saying to be clear on where they stood?- Yeah.In a word.I mean, I think, there's a lot of authentic actorswho were really seeing ESG as a wayto think about investment risk and performance,how to measure that,how to get a handle on how climate, for example,is gonna affect their portfolio over the long term.Totally legitimate.Really important thing to doif you're forward thinking, long-term investor.But there are also, I think, many managers who felt likethis is a way to gather assets.This is way to charge more.You know, we've seen fee compressioncome down across the market,this is a way to resist that.And then you have to ask, to what end?Was this flow of capital actually producing outcomeson the underlying environmental and social issues?Was that their goal at all?So, there's a lot-- And that is the disclosure good enough nowthat we know those answers or not yet?- No, I don't think so.I mean, we see, not in a macro sense,we see progress at the individual company level.I mean, that's what we do at Just Capital, you know?We're tracking now what companies are doingon investing in their different stakeholders,their workforce, their communities,their customers, the environment.So we are monitoring progress on a year-on-year,quarter-by-quarter basis.And I can tell you, honestly, Jamie,hundreds of companies across all the things that we measureare improving each and every day.And we're seeing data on that, you know?Is that producing the kind of outcomes on a systemic level?Are levels of income inequality coming down?Starting to see some evidence of that as wages increase.Are we really making a dent in climate changeand industrial greenhouse gas emissions?Not so much.- Are big business doing enough?Are big tech innovating enough in the right directionsto help the world get to that place?- So, let's start with the Paris Objective,net zero by 2050.We're tracking companies sort of making those pledges.How many companies are releasing dataand reporting on their emissions trajectories?It's hard to know.Is it enough, you know?It's very difficult to actually really sensehow companies are doing against their commitments.Are we really tackling the major sources of emissionsaround the world?And is technological advancement happening fast enoughso that when we get into 2030, 2040,which is really when the chips are down, are we on track?And at this point it's just, it's hard to know.- [Jamie] Yeah. - We don't know for sure.And we don't see enough transparencyof major emitters yet to really be able to knowthat company's on a path to net zeroor that company's on a path toa one or a two degree warming scenario.Like, that's a really interesting question.Could you, for example, measure which companiesare taking us to an actual warming scenariothat scientists tell us is manageableand which companies are actually taking usto a three or four degree or more warming scenario?- Yeah, and actually make that publicand then let the shareholders decidewhere they wanna be putting their money.- Right, exactly.So, it's difficult right now in terms of the,are we investing in the right kind of technologies?I see a lot of money flowing into technology.You see a huge amount of the market potential,but how much of that is real?How much of that will generate a return?And what's the market also for climate adaptation?I think we're gonna be seeing a lot of solutionsthat deal with rising sea levelsand increasing storm intensity and things like that.- A few more Just Capitals aroundand hopefully that will accelerate things.- I hope so, that would be great.That's the whole idea, to try and speed those things up.- Martin, I wanted to ask more specificallyabout Just Capital.You mentioned some pretty big names,people who started the company along with you,Arianna Huffington, Paul Tudor Jones.What does the future for Just Capital look like?Are you raising money now?I know you've got the Just ETF.How are you going about marketing it?How are you trying to drivean increase in assets under management?- So, just to be clear, no pun intended,Just is a 501(c)(3) not-for-profit.- Oh, I see, okay.- Yeah, so we do it,we poll the public to ascertainhow do people think about this idea of a just company?- So public opinion is a big part of what you do?- Absolutely, I think we've done,I think we've really, it's a key differentiator for us.We are, we've probably got some of the best data out thereon how Main Street America thinks about business today.And we're constantly taking the pulseof the public on key issues.So, we don't define what a just company isthe public defines it.We then track how big publicly traded companiesare performing on the public's priorities.With that we create investment products,which we partner with asset managers,asset owners to do that.We have invested a lot in media and the narrative,our partnership with CNBC, for example,we really get the stories of business leadership out therebecause that's a big sort of part of the incentive.We work with other nonprofits, we work with othercivil society organizations, academia and so on,on programs.And increasingly, which I think is really exciting,we're working with companies, the companies that we rank.The companies want to be better.So they come to us to say,"Hey, what does leadership look like?How can I benchmark myself?Give me the data to help me figure outwhat the game plan can look like at my company."- And you actually disseminate best practice adviceto these companies? - Absolutely.Yeah, yeah. - That's amazing.- Yeah, yeah, absolutely.So, we have programs in very specific areasthat are really driving change at scale.So you asked me about the future of Just,yes, we want to influence as much capital as possible.We want investment partners who want to take our dataand use that to drive performance,financial performance but also real impact.We've really made, I think,some of our most substantial advancesin the S of ESG, if you will,around human capital and society and communities,and workers in particular,because those are the things that matter most to the public.So, we're always focused on trying to, like I say,influence as much capital as we can,but really for Just, it's about scale.We wanna be the preeminent organizationthat is trusted as an objective sourceof data and information on how companiesare creating value for stakeholders,that's what we wanna be.And we wanna be not just that in America,we'd love to do that around the world as well.So, scale for us, reaching as many peoplein the public as we can,driving as many, as much change with businesses as we can,influencing as much capital as we canand really trying to get the global private sectormuch more focused on tacklingunderlying societal challenges as possible.- Well, Martin, it's very uplifting speaking to you.I wish Just Capital all the best and yourself the best.And thank you so much for taking the time to chat with us.- It's been my pleasure, thank you.(music chimes)
