Updated: May 25, 2021
By Matt Miller
Part 2: The Economic & Work Impact: We assert that the private sector creates or reinforces the conditions that lead to health disparities through the impact of the way they operate.
To paraphrase Lincoln’s famous address at Gettysburg, corporations are made of people, they are formed by people, and they exist to serve people. While these points may be irrefutable, things may get a bit more tense when we question which people they exist to serve. Clearly, the products or services of a corporation exist to benefit its consumers. Perhaps even more obvious is the fact that corporate profits are generated to enrich the lives of the company’s shareholders. Now, let us consider the costs and benefits of expanding that final sphere from that of shareholders to the larger classification of stakeholders.
If we define a stakeholder as anyone that has an interest in the operations of an organization, then we can quickly see that this category includes consumers, suppliers, employees, and their families, as well as the communities surrounding a corporation’s physical locations. One could argue that a non-shareholder employee has a substantially larger stake in the success of a corporation than a non-employee shareholder. The shareholder likely owns their stock as part of a larger diversified investment portfolio, while the employee’s entire livelihood may rely exclusively on the company for which they work.
Historically, it is common for enterprises to sacrifice the well-being of their stakeholders for the wealth of shareholders. By doing so, they have failed to use the power they have to positively impact the economic and work environments of the communities in which they operate. For employees, this impacts wages, benefits, and workplace safety - all key determinants of their current and future health. Making a living wage impacts one’s ability to purchase basic needs like food, housing, transportation, and health care. Parity in wages is required for eliminating health disparities. Despite some progress, Black men, on average, make only $0.80 to every $1.00 a white man makes. Even when gainfully employed, employees who are not offered health insurance benefits are less likely to receive preventative care and suffer poorer care outcomes for cancer and chronic disease, largely due to delayed diagnosis. Working conditions are essential contributors to social inequality in health. While obvious risks such as noise, chemicals, and unsafe machinery may be the first to come to mind, other risks plague modern working conditions. The rise in nonstandard work hours and the shift to a 24/7 economy are linked to sleep disorders and other physical health problems including coronary heart disease and peptic ulcer disease. Additionally, people working under significant stress (insecure or precarious employment), even in office environments, are likely to smoke more, exercise less, and have an unhealthy diet.
Stakeholders may also include local small businesses seeking to partner. In addition to employment practices, businesses can use their buying power to generate economic opportunities for underserved communities through their supply chain decisions and practices. Minority-owned businesses are under-represented although there are no differences in lack of will or talent. Black-owned businesses comprise only 2.2% of the nation’s 5.7 million employer businesses, despite Black Americans constituting more than 14% of the total population. By more deliberately partnering with minority-owned businesses, the private sector can work to change this. Instead, an enterprise may opt for the cheapest supply chain options, but doing so is a missed opportunity to invest in health equity and may put the business at risk. If we are to examine cases where outsourced labor or international suppliers are used in regions with little regulatory oversight, issues may elevate to levels that include child labor, forced labor, or inhumane working conditions. Potential effects on consumers may stem from issues in product design and packaging.
The United States Department of Labor issues a report annually to draw attention to goods produced through child or forced labor. The 2020 list of products from over 70 countries includes items from fish and rice to construction bricks and gold. Twenty-four new products were added to the list in the year 2020 alone. The 2019 Toxic Textiles Report by Green America points out some issues a bit closer to home. Popular apparel companies like Forever 21 and J. Crew occupy the worst spots in the report, for reasons including an absence of, or unwillingness to, disclose company policies on factory safety.
In recent years, billions of dollars have been awarded in product liability claims against American corporations. For example, links between RoundUp weed killer and cancer cases led to an $11 billion settlement with consumers. In 2020, Pacific Gas and Electric pled guilty to 84 counts of involuntary manslaughter, after their failure to maintain their power transmission equipment caused a fire that destroyed the town of Paradise, California. How many lives could be saved, and how much property loss avoided if companies exercised consistent quality control over their products?
Of course, positive activity is not simply the absence of the negative. It is not enough for regulators, watchdog groups, and consumer behaviors to discourage cruelty, pollution, and irresponsibility. Once the misdeeds of bad actors have been eliminated, it will take good deeds to create the necessary change. Thankfully, there are already several examples of for-profit entities that are leading this charge.
To provide better outcomes for workers, many forward-thinking companies are writing solutions into their employee benefits packages. Beyond meeting the requirements of OSHA, several businesses have moved beyond traditional medical and dental insurance. Progressive benefits programs today can include mental health benefits, disability insurance, and generous amounts of paid leave for new mothers and fathers. Going one step further are the companies with robust wellness programs. Exploring the efforts of over 40 sample programs included such features as healthy snacks, personal training, massage services, and nutritional cooking classes. A look at the policies of Google shows that they have an expanded view of healthcare. Onsight canteens serve healthy and nutritious meals. Plantlife and natural light are omnipresent in work areas. Some Google locations feature their own chiropractic, physical therapy, and massage services as well as onsite gyms. Some might argue that one additional mental health benefit at Google is the ability to bring your dog to work! Is it any wonder that Google enjoyed a 6-year run at the top of Fortune’s List of 100 Best Places to Work?
Global footwear giant Nike has not always been a model citizen in the area of corporate responsibility. Over several years, however, Nike has made tremendous efforts to improve the lives of all stakeholders including employees, supply chain partners, and even the environment. They started with a robust disclosure about their supply chain and production practices and followed through by committing to publishing annual improvement goals and impact reports. In the areas of product and packaging, they use post-consumer recycled materials in some products, and redesigned Nike boxes to reduce packaging and eliminate chemical discharges. Lastly, their “Move to Zero” initiative set forth long-term goals for a greatly reduced carbon footprint. Their commitment to shifting to 100% renewable energy in all of their operations by 2025 is evident in the fact that they have already done so in all Nike-owned or operated facilities in North America.
One can find many examples of corporations that are making great efforts to improve the lives of all stakeholders, including consumers, suppliers, employees, and all those with whom they share an ecosystem. While we encourage an expanded view of the term “stakeholder” we do not believe that benefitting all stakeholders needs to exclude what is best for those who are also shareholders. “Doing good” is good for business. A 2018 Accenture Study showed that 64% of consumers say their purchasing consideration is driven by a company's ethical values and authenticity. Furthermore, 42% of consumers have stopped doing business with a company because of its words or actions about a social issue. This clear connection between corporate behavior and sales figures will only be more prevalent over time, as the percentages above only increased as the ages of the study participants decreased. Investments in the health and wellness of employees can lead to decreased corporate hiring and training costs, thanks to improved employee retention. Increased productivity and reduced time lost to injury and illness may also result. The last clear benefit to shareholders is reflected in the market price of their shares. A recent Morningstar study examined the performance of investment funds where the component companies demonstrated a focus on sound environmental and social governance. Eleven out of these twelve funds outperformed the S&P 500 in the most recent calendar year. Business leaders can clearly do the right thing for their shareholders (and their bonus compensation) by paying attention to what is best for all stakeholders.