Just Index: a market solution to inequality?

Paul Tudor Jones founded the Tudor Investment Corporation hedge fund in 1980, now worth $13.5 billion (£9bn). In 1988 he used his accumulated wealth to found the Robin Hood Foundation alleviating poverty in New York. Today he is focused on the Just Capital, to create an index that rates companies according to the social justice of their actions.

The principle is simple. Poll 20,000 Americans on their attitudes and beliefs on what really matters to them regarding corporate behaviour and then rank 1,000 companies against this ‘wish list’. This will create a ‘Just Index’ that investors can track or follow.

Paul Tudor Jones set out his thoughts in a recent TED Talk, where he argued, “The gap between the wealthiest and the poorest will get closed.” He went on to say, “History always does it . . . either through revolution, higher taxes or wars — and none of those is on my bucket list.”

Just Capital is an attempt to avoid revolution, higher taxes or war.

Bloomberg reported the story as, “Jones Starts Nonprofit to Save Companies From Themselves”. They reported him saying at the TED Talk, “Its mission is very simple: help companies learn how to operate in a more just fashion by using the public’s input to define exactly what the criteria are for just corporate behaviour.”

Jones, said in his presentation, “We put so much emphasis on profits, in exclusion of all else. It’s like we’ve ripped the humanity out of our companies.”

The Financial Times described the approach as “less radical” than other ESG (environment, social and governance) indices, such as the S&P Dow Jones or MSCI indices. They go on to say that the E and G of ESG have largely enter mainstream investing, “because activists have won the argument that good practice in these areas is good for shareholder returns in the long run. On the environment, cutting a corporate carbon footprint often saves costs; on governance, improved shareholder democracy reduces the risk of management becoming complacent or corrupt.”

We wait to see the results of the survey that will be interesting in their own right.

Photo: Rakkhi Samarasekera via Flickr

Further reading:

McKinsey: company leaders rallying behind sustainability