Just Capital’s released a report on how “non-financial” stakeholder metrics are detrimental to a company’s profitability and financial performance.
They found that key themes such as workers, customers, communities, environment, shareholders and governance showed a positive correlation with four financial metrics: economic profit margin, excess return, gross margin, and revenue growth.
I was keen to understand more about their research on the fair wages element and spoke to their CEO Martin Whittaker.
He said that companies investing in their workers through fair wages, better benefits, advancement and training opportunities, can lead to greater productivity, improvements in retention, lower absenteeism, better customer service, and ultimately greater profitability and competitiveness in the marketplace.
“For a long time, business leaders have believed that investing in their stakeholders will yield quantitative business outcomes. They just haven’t had the data they need to fully integrate this belief into their decision making,” said Whittaker.
“Not only does our research move the entire debate around stakeholder and financial performance forward, it offers a practical playbook to any business leader seeking to make real decisions about what to prioritize every day.”
Tell that to the European Central Bank who breathed a sigh of relief as fresh Eurozone wage growth stats show that the Iran-war-induced inflation surge has not set off a fresh round of pay demands.
The ECB fears workers will demand compensation for rapid inflation, much like in 2022, triggering a self-reinforcing cycle that can only be tamed through higher borrowing costs. Click here for more on the ECB story.
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