In these uncertain times defined by low trust in institutions, rapid technological change, social tension and ecological breakdown, business leaders should understand that the expectations, concerns and hopes of stakeholders has never been more important. Given that 85% of a company’s value today is made up of intangible assets such as reputation and goodwill, business leaders are looking to understand how to preserve and strengthen this value.

At its core, a corporation’s long-term success is dependent upon the quality of its relationships with a range of stakeholders—customers, investors, regulators, local communities, non-governmental organizations, suppliers and employees. Maintaining a social license to operate today and creating new opportunities tomorrow requires building greater trust with your stakeholder network.

GlobeScan’s recently-released White Paper, “Building Trust: Why Transparency Must Be Part of the Equation”, identifies a number of critical insights around the future of corporate transparency, especially as it relates to increasing trust in business at a time when this is sorely lacking.

1. Transparency builds trust

With trust in companies and government particularly low at a time when these institutions are critically needed to help create a more just and sustainable future, it is becoming increasingly important for companies to learn how to be more open and transparent. Transparency is one of the most powerful tools that companies have to build trust among their stakeholders.

2. Transparency is about leadership

As building trust in business enterprises is essential to creating a more inclusive and sustainable economy, senior leaders must summon the courage to commit to corporate transparency. Companies that work closely with industry, non-governmental organizations, academia, governments, local communities and consumers can lead on creating new standards of openness and candor that other companies can learn from, aspire to and work toward.

3. Transparency is evolving

Transparency will continue to be redefined as society’s standards for corporate transparency are evolving at a fast pace. Rapidly changing cultural norms will be driven by increasingly empowered stakeholders and by disruptive technological innovation that makes information more accessible.

4. Transparency enables stakeholders to hold companies accountable

As expectations for corporate transparency continues to grow, so too will stakeholders’ ability to hold companies responsible for their actions. Increased public scrutiny will likely push companies toward more responsible behavior, benefiting employees, consumers and other stakeholders.

5. Transparency enables companies to weather challenging circumstances

If a company does make a mistake that could be potentially damaging to its reputation, there is compelling evidence that it pays to be open and honest. By telling the story themselves in a truthful and candid manner, proactive companies can sometimes get ahead of detrimental information and may be able to strengthen their relationships with stakeholders.

6. Transparency is increasingly being driven by consumers

According to a GlobeScan global public opinion study, three-quarters of consumers worldwide expect companies to provide full transparency on their products and services. Consumers increasingly demand that the products are made with safe, non-toxic ingredients and materials with minimal negative environmental and social impact. Consumers increasingly demand that corporations take good care of their employees, including fair pay, good benefits and safe working conditions.

Buffer, a technology firm with a mission to help clients manage their social media platforms, is widely perceived to be a leader in corporate transparency. Buffer states that a “default to transparency” is one of their core organizational values. As employees, they view transparency as an effective way to work remotely and establish a culture of trust. As a team, they view transparency as an effective way to work remotely and establish a culture of trust. As a company, they view transparency as a tool to help others.

For Patagonia, providing transparency throughout its supply chain means they are committed to documenting social and environmental performance in a public manner. Lauded as a leader in corporate social responsibility innovation, Patagonia takes a proactive approach to ensure that social and environmental impacts are minimized over the lifecycle of their products. Patagonia’s goal is to ensure that products are manufactured under safe, fair, legal and humane working conditions throughout the supply chain. Patagonia demonstrates transparency on supply chain performance through a section of their website called the “Footprint Chronicles.”

When employees walk through the lobby of Apptopia Inc, a mobile-app market analytics firm, they pass a bank of large screen monitors displaying the kind of data that many companies guard tightly: monthly revenues, client numbers, customer churn. When employees log in to their computers, they can see even more, down to the status of every potential client relationship in the works. Apptopia CEO Eliran Sapir views transparency as a motivation for employees to keep the company moving forward. Apptopia is part of an emerging wave of companies embracing corporate transparency as they disclose their finances, performance data, and salaries for all employees to see as technology makes it easier to share information.

The International Living Future Institute’s Just Program is an organizational transparency platform and disclosure tool. The Just program provides an innovative and holistic transparency platform for organizations to reveal much about their operations; including how they treat their employees, their levels of employee engagement, where they make community investments and social performance within their supply chains.

In a similar fashion to the Institute’s Declare Program , the Just Program acts as a “nutrition label” for socially just and equitable organizations. This approach requires reporting on a range of categories including diversity and inclusion, equity in the workplace, employee health and well-being, employee benefits, community stewardship and supply chain management. Based on policy statements and corresponding data supplied across twenty-two indicators within the six categories in Just, a score is assigned to recognize increasing levels of performance. This performance data is then summarized elegantly on a Just label.

The Just Program has helped participating businesses better align human resource policies and practices with stated organizational values. Just-labelled organizations have found that the move to improve corporate transparency has deepened levels of employee engagement, loyalty and retention. In addition, when organizations candidly share insights about the need for improvement in specific indicators, they have found the disclosure process will often lead to powerful and productive conversations. These conversations allow the organization an opportunity to share power and accountability more broadly and make progress developing a high-trust culture.

As organizations begin to understand the need for a greater organizational focus on issues of diversity, equity, inclusion and employee engagement, the Just Program allows the participating organization to benchmark themselves against a robust third-party social justice framework. JUST Program participants can also benchmark their performance against competitors and against other businesses in their region. In addition, the Just Program offers participants a clear roadmap on how to demonstrate improvement in performance over time.

Randolph Meiklejohn, Principal at Goody Clancy, commented, “Our firm pursued the Just Label in order to reinforce the value of transparent business practices we had already implemented and to encourage our firm to do more. As a direct result of Just, the firm shared gender pay equity data for all design positions for the very first time.”

Shiloh Butterworth, Chief People Officer at PAE , noted, “The Just Label helped to reinforce our triple bottom line values and our commitment to People and Planet. With a clear focus on transparency, the Just program also inspired employees to openly discuss how we could get better and how we can drive more social change in our communities.”

Melinda Rosenberg, Partner at WRNS Studio, states, “Our firm’s success hinges on our people and we run our business with their interests at heart. The Just process helped us be more transparent about the good work we were already doing, while giving our firm the tools and a roadmap for improvement in other areas.”

Kim Shinn, Principal at TLC Engineering Solutions, states, “The employee engagement that is engendered through transparency generates a strong culture for continuous improvement that ripples through the organization, moving social equity indicators, as well as important business indicators like revenue growth and profitability.”

The Just 2.0 User Manual is available to all interested parties as a free download at https://living-future.org/just/. Organizations can begin to conduct a social equity in the workplace self-assessment to uncover relative strengths and weaknesses. Organizations can request the scheduling of an on-demand webinar so they can better understand the business case for increasing organizational transparency and making investments in employees, local communities and supply chains.

We are always eager to bring more organizations into the Just Program. If your organization is ready to move forward with a submission to earn a Just 2.0 Program Label, you can make a formal submission through the Institute’s membership portal. Organizations that intend to make a formal application can ask to receive a toolkit that will simplify and expedite the submission process. Please direct your request for the scheduling of an Introduction to Just webinar or to receive a Just 2.0 application toolkit to just.support@living-future.org.

In 2014, the International Living Future Institute launched a social justice transparency platform and disclosure tool. The Just Program framework helps organizations assess progress across six areas of social impact including diversity and inclusion, equity, human health and well-being, employee benefits, community stewardship, and responsible purchasing. When organizations complete a Just Program submission, they are eligible to earn the Just Label. The Just Label helps communicate valuable information about the organization’s level of commitment to their employees and their ability to foster a thriving organizational culture.

The Just Program can be leveraged as a powerful recruiting tool and enhances both candidates’ and organizations’ abilities to determine best-fit matches. The Just Label especially helps organizations attract millennials, as this generation has shown a preference to work for organizations that demonstrate high levels of corporate social responsibility. Since the millennial generation has consistently shown a preference to work for organizations whose values align with their own, it is reasonable to suggest that those organizations that excel at diversity, equity, and inclusion will be particularly attractive to this cohort.

There is evidence to suggest that employees are more fully engaged when employers are transparent about all aspects of business operations including corporate strategy, human resources management, sustainability initiatives, operating principles and values, leadership succession and planning, financial health, product development and innovation, philanthropic priorities, and stakeholder engagement practices. A transparent work environment leads to greater trust, and trust in an organization is paramount to its success. While a high level of trust can improve retention rates, it also encourages employees to become more actively involved in problem-solving. When employees feel connected to the organization and mission, they can fully embrace their professional roles and see themselves within the larger context of the organization, leading to greater success for all.

The Just Program offers participating organizations a tool to improve on existing gender equity practices and initiatives. Practically, the Just Program allows for specific performance assessments such as female participation in senior leadership, gender pay gap calculations across all pay classes, the provision of paid gender-neutral family leave, the provision of a robust retirement savings plan, and the implementation of a living wage. Further, the Just Program advocates for organizations to focus explicitly on developing a culture of inclusion.

Version 2.0 of the Just Program was launched at the Living Future unConference in May of 2019. Just 2.0 complements existing sustainability and Corporate Social Responsibility (CSR) programs such as B Corp and Global Reporting Initiative (GRI). The Just Program allows for recognition of existing certifications, standards and performance awards. For instance, with the Equitable Purchasing Indicator, Just seeks to recognize organizations that commit to minimum levels of goods and services procurement from certified disadvantaged businesses. These certified disadvantaged businesses include Minority-Owned, Women-Owned, or Veteran-Owned Small Businesses. More information about the Just Program can be found at https://living-future.org/just/

The Value of Diversity

We have made slow and incremental progress with awareness that diverse organizations tend to perform better than those organizations that demonstrate low levels of diversity. The link between company financial performance and gender diversity has strengthened in recent years with the emergence of a body of academic and qualitative research that links well-rounded and inclusive work environments with superior financial returns.

These findings have caught the attention of senior leaders and boards. In larger institutions and corporations, diversity efforts are led by roles such as Chief Diversity Officer (CDO) or Vice President of Diversity and Inclusion. According to HR Consulting Firm Korn Ferry, almost 60% of the Fortune 500 companies have CDOs or equivalent. Many large organizations accept the need to include a CDO in the C-Suite because they understand that a diverse and inclusive workforce is a key strategic imperative and integral to accomplishing their business objectives.

The value of diversity in the workplace has been challenged recently by a manifesto published by a former employee at Google. One of the manifesto’s main conclusion was that women are underrepresented in the technology sector because their biological differences from men tend to make them less suitable for the job. The author also suggested that biological differences were, in part, a reason why women were not fully represented in senior leadership. It should come as no surprise that the response to this manifesto has been swift and vocal.

As noted earlier, there are numerous studies and research projects that have been published in the past several years that offer compelling insights into how diversity improves business operations and financial return. I am highlighting a few of these reports that I believe provide substantial evidence that diverse organizations are more likely to thrive and to out perform their competitors.

The Numbers

After analyzing 1,600 corporations across all sectors, Morgan Stanley found that companies with better gender equality tend to have stronger fundamentals and better risk-adjusted performance. For companies in the tech sector, the link between gender diversity and performance is noteworthy. Morgan Stanley found that, over the five-year period ending in 2016, highly gender-diverse tech companies returned on average 5.4% more on an annual basis than the average yearly returns of their peers with less gender diversity.

Jessica Alsford, Managing Director and Head of Morgan Stanley’s Sustainable and Responsible Investment Research Team, states “Gender diversity can improve team decision-making and improve innovation capabilities for development of new products or services. It can also create alignment with diverse customer bases and, thus, open up untapped business opportunities.”

Credit Suisse Research Institute published a landmark study in 2014 “The Credit Suisse Gender 3000: Women in Senior Management”. The study concluded that gender diversity or the greater representation of women in senior roles was not just ‘nice to have’ but linked to excess stock market returns and superior corporate profitability.

The Credit Suisse report encompasses 27,000 senior managers at over 3,000 companies across a wide range of sectors and may well be the largest of its kind. It examines whether the evidence continues to link gender diversity to better performance and looks specifically at firms with more than 50 percent female representation in senior management. The report concludes that returns for shareholders are highly correlated to the percentage of women in top management.

Companies where women accounted for 25 percent of senior leadership outperformed at a compound annual growth rate of 2.8 percent; this increased to 4.7 percent at companies where women comprised 33 percent of senior leadership; and then jumped to 10.3 percent at companies where more than 50 percent of senior leaders are women compared with a 1 percent annual decline for MSCI ACWI index over the same period.

McKinsey has been examining diversity in the workplace for a number of years. Upon examination of proprietary data sets for 366 public companies across a range of industries in Canada, Latin America, the United Kingdom, and the United States, McKinsey published its key findings in the 2015 publication Diversity Matters. The global consulting firm looked at metrics such as financial results and the composition of top management and boards. The findings were clear and the implications are profound.

Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians. In the United States, there is a linear relationship between racial and ethnic diversity and better financial performance. Specifically, for every 10 percent increase in racial and ethnic diversity on the senior leadership team, earnings before interest and taxes (EBIT) rise 0.8 percent.

In McKinsey’s view, more diverse companies are better able to win top talent and improve their stakeholder orientation, employee engagement and retention, decision-making, product innovation and customer satisfaction. Optimized operational and human resource practices lead to a virtuous cycle of increasing returns. This, in turn, suggests that other kinds of diversity—for example, in age, sexual orientation, global mindset, cultural fluency, national origin, educational attainment, economic status—are also likely to bring some level of competitive advantage for companies that can attract and retain such diverse talent.

Looking Ahead

In January 2015, Intel announced the Diversity in Technology initiative, setting a bold hiring and retention goal to achieve full representation of women and underrepresented minorities in Intel’s U.S. workforce by 2020. The company also committed $300M to support this goal and accelerate diversity and inclusion—not just at Intel, but across the technology industry at large.

Intel’s plan is to use the $300M fund to help build a pipeline of female and underrepresented engineers and computer scientists. That includes funding programs that teach STEM to young people in underserved areas, collaborating with higher education institutions, investing in women and minority-owned companies and creating bolder hiring and retention incentives and programs to encourage diversity within Intel.

For the U.S. Technology Industry as a whole, the implications of achieving racial and ethnic diversity throughout the workforce in combination with full representation of gender diversity among leadership is compelling. According to Intel’s estimates, the power of full representation in the tech sector has the potential of yielding an additional $500B in new value, based on a combination of higher revenues and increased market values.

Barbara Whye, Intel Chief Diversity and Inclusion Officer, notes, “Our future success depends on full representation of perspectives and creative influences. Intel is committed to fostering a culture where our employees can bring their full experiences to their work—this is how we achieve innovation and how we drive our business forward.”

Brian Krzanich, Intel CEO, asserts, “Technology companies have talked about diversity for years, but the data show that progress has been slow. It is not enough to say that we value diversity; we must make actual, real progress. We set out to achieve by 2020 an inclusive workforce that reflects the diversity we see every day in the world around us. We expect to achieve full representation in Intel’s workforce by 2018, two years earlier than our original goal. We call on other companies to join us in this pledge, with a focus on real actions and results.”

When powerhouse technology leaders such as Intel make bold investments, it would suggest strongly that they are doing this to make their business more adaptive, more innovative, more efficient, and ultimately more profitable.

Social justice and equity in the workplace are high on the agenda in an array of important platforms, ranging from the media, political landscapes, to both non- and for profit boardrooms. President Obama has been a strong advocate for gender pay equity and for an increase in the federal minimum wage. Pope Francis has made the issue of income and wealth inequality one of his central concerns.

While the U.S. economy continues to see steady economic growth and expansion, wages have been flat or falling for much of the labor force. This dynamic has spurred the most significant wave of action to raise the minimum wage in fifty years, with momentum for considerable increases at the federal, state and local levels. The growing momentum for raising the minimum wage has been fuelled by social movements such as Occupy Wall Street, social justice advocates, union organizations and front line employees.

In the United States, the minimum wage was established in 1938 as part of the Fair Labor Standards Act (FLSA). In addition to mandating the 40-hour workweek, the FLSA established the federal minimum wage to help ensure that all work would be fairly rewarded and that regular employment would provide a decent quality of life. Moreover, regular increases in the minimum wage were meant to ensure that even the lowest-paid workers benefited from broader improvements in wages and living standards.

Due to decades of infrequent and inadequate adjustments, the federal minimum wage no longer serves as an adequate wage floor. Every year that the minimum wage is left unchanged, rising prices slowly erode its buying power. In 2015, the federal minimum wage of $7.25 per hour is worth 10% less than when it was last raised in 2009, after adjusting for inflation. In fact, the real inflation adjusted value of the federal minimum wage in 2015 was 25% below its peak value in 1968. In practice, this means that lifting the current federal minimum wage of $7.25 per hour to $10.10 per hour, as championed by some elected officials throughout the United States, would only give low-wage workers the same purchasing power available to them some 50 years ago.

Over that time, the United States has achieved tremendous improvements in labor productivity that could have allowed workers at all pay levels to enjoy a significantly improved quality of life. Instead, because of policymakers’ failure to improve and enhance the Fair Labor Standards Act, a worker earning the current minimum wage does not earn enough through full-time work to be above the federal poverty line.

In the past few years, thousands of workers have taken to the streets to protest low wages, with fast food workers now being joined by retail, home health care and other professionals in their fight for a liveable minimum wage.  Spurred by this growing and vocal movement, more than 40 states, cities and counties have passed minimum wage increases via legislation or ballot.

As a result, 29 states plus the District of Columbia now have a minimum wage above the current federal minimum of $7.25. By 2017, 13 states and the District of Columbia—representing nearly one-third of the U.S. workforce—will have a minimum wage of $9 or more, and seven states will be above the $10 mark. At the local level, Seattle, Los Angeles, Emeryville and San Francisco have passed laws that will phase in a $15 minimum wage. Cities such as Chicago, Kansas City and Richmond will phase in a $13 minimum wage by 2020.

Professor Zeynep Ton, at MIT’s Sloan School of Business, notes that “Highly successful retail chains—such as QuikTrip convenience stores, Trader Joe’s supermarkets and Costco wholesale clubs—not only invest heavily in employees with higher wages but also have the lowest prices in their industries, solid financial performance and better customer service than their competitors. These companies have demonstrated that, even in the lowest-price segment of the retail sector, minimum wage jobs are not a cost driven necessity but a choice.”

When looking at the overall issue of equity in the workplace, it remains important to spotlight the issue of gender pay equity. In 1963, Congress passed the Equal Pay Act, which requires employers to give men and women employees “equal pay for equal work.” A year later, in 1964, the Civil Rights Act was passed. Title VII of that act bars all discrimination in employment, including discrimination in hiring, firing, promotion and wages on the basis of race, color, religion, sex, or national origin. Yet these legal protections have not ensured equal pay for women and men.

In 2014, women working full time in the United States were paid just 79 percent of what men were paid, a gap of 21%. The gap has narrowed since the 1960s, due largely to women’s progress in education and workforce participation and to men’s wages rising at a slower rate. Based on the progress in reducing the pay gap over the past 50 years, researchers were projecting that we would see pay equity in the year 2058. But progress has stalled in the last decade and the pay gap is not projected to close until the year 2139 based on extrapolation of the data from 2003-2013.

The pay gap affects women from all backgrounds, at all ages, and of all levels of educational achievement, although earnings and the size of the gap vary depending on a woman’s individual situation. Using a single benchmark provides a more informative picture of income disparities when it comes to women from various racial and ethnic groups. Because non-Hispanic white men are the largest demographic group in the labor force, they are often used for this benchmarking purpose.

Compared with salary information for white male workers, Asian American women’s salaries show the smallest gender pay gap, at 90 percent of white men’s earnings. The median earnings of African American women were at 63% of white men’s earnings. The gap was largest for Hispanic and Latina women, who were paid only 54% of what white men were paid in 2014.

When we explore other significant issues related to equity in the workplace, the availability of paid family leave is high on the list. The United States is one of only three countries left in the world that does not guarantee paid maternity leave. The others are Papua New Guinea and Suriname.

In 1993, Congress authorized the Family and Medical Leave Act (FMLA), which allows covered employees to take 12 weeks of unpaid, job-protected leave for specific family and medical reasons. Taking time off from work to care for a newborn child or caring for an adopted child falls under this category. FMLA only covers 59% of US workers. The 12 weeks of unpaid family leave offered by this program is for women who have worked 1,250 hours during a year for a company that employs 50 or more people. Two in five women do not qualify for leave under FMLA, according to the Center for Economic and Policy Research. That’s at any level of job—low-wage or high.

According to the Bureau of Labor Statistics, only 12% of Americans have access to paid parental leave, which is considered a benefit by employers. Only 5% of low-wage earners receive paid maternity leave. Unless employees happen to live in five states that offer some form of paid family leave, paid parental leave policies remain up to individual employers.

According to a 2011 study by California’s Center for Economic and Policy Research after the state implemented paid leave, 91% of businesses said it had either a positive effect on profitability or no effect at all—that is, it didn’t show any disadvantages whatsoever. Research also shows that women who have access to paid maternity leave have a higher chance of returning to work. This, in turn, reduces employer’s overall cost to recruit and train new employees.

Companies that are showcasing their leadership in this realm are finding positive results in their progressive policies. Google’s evolving policy on paid parental leave provides compelling evidence that this practice is both good for the employer and the employee. In 2007, Google increased paid maternity leave from 12 weeks to 18 weeks, and as a result, the rate at which new moms left Google fell by 50%. Google also increased paternity leave to 12 weeks.

Over the past year, a number of prominent businesses have improved or enhanced their paid family leave programs. Microsoft expanded their paid maternity leave program from 12 weeks to 20 weeks. New parents at Facebook can take up to 16 paid weeks. New moms at Apple can take 14 weeks of paid maternity leave, and their partners can take 6 weeks of paid leave. Amazon is the latest prominent business to expand family leave benefits by offering 20 weeks of paid leave to new moms, and new dads can take 6 weeks of paid leave.

No conversation about equity in the workplace would be complete without a closer look at the huge discrepancies in employee compensation that relate to the traditional overvaluation of work performed by senior executives and the undervaluation of work performed by employees in the lowest job classifications.

CEO compensation grew strongly throughout the 1980s but exploded in the 1990s and peaked in 2000 at around $20 million, an increase of more than 200% just from 1995 and 1,271% from 1978. This latter increase even exceeded the rapid growth of the stock market—513% for the S&P 500 and 439% for the Dow. In stark contrast to both the stock market and CEO compensation, average private-sector worker compensation increased just 1.4% over the same period.

Using a comprehensive measure of pay that includes base salary, bonuses and the value of stock options exercised in a given year, average CEO compensation for the top 350 U.S. firms ranked by revenue was $16.3 million in 2014. Based on research developed by the Economic Policy Institute, the CEO-to-average-worker compensation ratio, which was 20-to-1 in 1965, peaked at 376-to-1 in 2000 and was 303-to-1 in 2014.

Creating an equitable workplace that fosters fairness, diversity and safety is an important endeavour and a key responsibility for companies to undertake. Extensive research suggests that organizations who excel in creating an equitable and inclusive workplace are able to attract top talent and retain high-performing, long-term employees. In an increasingly competitive global business landscape, the ability to recruit and retain engaged, happy and productive employees will serve as a significant competitive differentiator.