Guru watch

“The problem with what Milton Friedman said, that the only business purpose for a company is to generate a profit, is that if that’s your only motive, it creates the ability to be amoral in your decisions,” billionaire investor Paul Tudor Jones tells Andrew Ross Sorkin on CNBC’s Squawk Box. Take Purdue Pharma, says Jones. The drug maker was responsible for the infamous pain medication OxyContin, which resulted in an opioid addiction epidemic in the US. Its “only business purpose was to make a profit and then the consequence of that was an opioid crisis that killed 400,000 Americans.” Purdue has since sunk under trillions of dollars of lawsuits.

The companies that do best today, says Jones, focus instead on “the most important metrics, which are generally pocketbook issues and work-related”. Jones highlights data from Just Capital, a research firm he co-founded, which evaluates US companies according to environmental, social and government (ESG) concerns.

Just Capital’s 2022 US stock rankings are weighted heavily towards issues affecting staff, such as pay and conditions. “The [top] issue for Americans with regard to companies is [to] pay a fair and living wage,” he notes. “Last year you saw an explosion in wage growth, which is a good thing, particularly since profit margins over that same timeframe went from 6% to 12%.” And this approach pays for investors too, he argues – firms on the Just 100 list pay out an average of 20% more in dividends than rival firms, and have average earnings 4.5% above the rest of corporate America.