Let’s Talk About the Issues

At Humankind, our research team is hard at work gathering information about a wide variety of human impact issues to incorporate into our portfolio building process. Below is a list of the issues, both positive and negative that we are currently incorporating into our human impact model. When you’re done reading through them you can learn more on our research page about how we translate these different issues into dollars and cents of human impact and add them up to come up with a value for humanity, what we call a Humankind Value[i] for each company.

Companies can impact people in a variety of ways, whether as investors, customers, employees, or members of society more broadly. At Humankind, we try to look at companies holistically from the perspective of all stakeholder groups. Value for investors is of course an important component of our model – investors are people too, and companies should provide them with a return on their investment. But we look beyond just investor value at other kinds of issues that relate to other stakeholder groups to see how else companies are creating, or destroying, value for humanity. We believe that companies that treat all their stakeholder groups well are more likely to succeed in the long term.

Since there are a lot of individual human impact issues in this article, we’ve grouped them into a few categories to make it more readable – Environmental Issues, Negative Consumer Impacts, Positive Consumer Impacts, Employee Issues, and Governmental & Societal Issues.

Environmental Issues

Air Pollution

Particulate matter, sulfur dioxide, nitrogen oxides, and other harmful air pollutants are generated by vehicles, manufacturing facilities, and other sources. Air pollution has a negative impact on humanity through increased pulmonary, cardiovascular, and other diseases which results in lower life expectancy and quality of life.

Greenhouse Gases

It is the consensus opinion in the climate science community that greenhouse gas emissions are linked to climate change. Through the greenhouse effect, heat from the sun that normally returns to space becomes trapped in Earth's atmosphere. This induces climate change, which brings increased risk of disease, temperature mortality, infrastructure damage due to extreme weather events, and reduced water resources, among other negative effects on humanity.

Energy Transition

Current investment into renewable energy technologies and additional R&D into those areas will mitigate the future impact of both Air Pollution and Greenhouse Gas emissions. Renewable technologies are assessed on the basis of feasibility, visibility, and scalability to determine their most likely contribution to the future energy economy. Solar panels, wind turbines, battery storage, electric vehicles, and other essential system components, along with their deployment and installation are currently covered under this issue. Companies that contribute to the energy transition are assigned a positive Humankind Value.

Non-Plastic Water Pollution

Water pollution from fertilizer use in agriculture leads to the development and growth of hypoxic zones in large water masses leading to the destruction of marine life. Companies involved in the production, distribution, sale, or use of fertilizer in agriculture are attributed negative Humankind Value.

Plastic Pollution

Plastic pollution has a negative impact on the environment affecting, among other things, marine life and animal and human health. Companies involved in the production, distribution, sale, and use of plastics are attributed negative Humankind Value.

Noise Pollution

Exposure to elevated noise levels can have negative mental and physical health effects such as anxiety, loss of sleep, and hypertension. It has also been shown that exposure to noise pollution can accelerate cognitive decline. Companies shown to produce noise pollution are attributed negative Humankind Value.

Nuclear Power Pollution

Nuclear power, while producing a negligible amount of greenhouse gases, can result in radiation pollution due to the mining of uranium, disposal of depleted uranium, and from other steps in the nuclear fuel cycle. There is also the risk of a nuclear meltdown at a nuclear power plant which has catastrophic consequences for people and the environment.

Negative Consumer Impacts

Tobacco

The negative impact of addiction to nicotine from smoking and other tobacco products as well as the negative impact of secondhand smoke is well researched. Companies involved with the production, distribution, and/or sale of tobacco products are attributed negative Humankind Value.

Alcohol

The negative impact of addiction to alcohol is well researched. In addition to physical effects on the addicted person, inebriation due to alcohol consumption can increase the propensity to engage in potentially harmful or deadly behavior like drunk driving. Companies involved with the production, distribution, and/or sale of alcoholic beverages are attributed negative Humankind Value.

Opioid Abuse

Opioid drugs produced by certain pharmaceutical companies can cause addiction, which has led to numerous deaths worldwide due to overdoses. Although the opioid epidemic has mostly shifted from prescription opioids to illicitly produced fentanyl and prescription rates have become far more restrictive, a residual portion of deaths are still attributable to the pharmaceutical industry. Companies involved in the production and/or sale of addictive opioid drugs are attributed negative Humankind Value.

Breastmilk Substitutes

While breastmilk substitutes are sometimes necessary, their usage has resulted in many childhood deaths due to increased transmission of early childhood infections through prepared formula. Our research has also shown positive impact for mothers that breastfeed in reduced incidence of certain cancers and diabetes. Companies involved in the production and sale of breastmilk substitutes are attributed negative Humankind Value.

Travel Injuries

Motor vehicle injuries on the road are one of the leading causes of death and injury around the world. Companies involved with the production, distribution, and sale of motor vehicles are attributed negative Humankind Value.

Civilian Firearms

Civilian possession of firearms has led to injuries and deaths, both accidental and otherwise. Companies involved in the production, distribution, or sale of firearms or ammunition are attributed negative Humankind Value.

War

Military interventions or internal conflicts result in deaths, displaced people, and lost income and livelihoods through production and destroyed infrastructure. Companies involved in the production and sale of weapons of war are attributed negative Humankind Value.

Data Harvesting

Some companies collect data on users of their services and provide it to other entities for ends such as advertising. Our research finds negative impact from companies engaging in data harvesting due to a lack of understanding by the users of how valuable their data is and how it is used. Companies that collect data from users of their services are attributed negative Humankind Value.

Adult Entertainment

Addiction to adult entertainment can result in harm to one’s social and professional life and physical and mental health. Specifically, it can rewire one’s brain such that it becomes very difficult to form intimate relationships, a basic human need.

Food Addiction

Food addiction is a behavioral pattern where one loses the ability to control what and how much they eat. This can lead to obesity, which lowers life expectancy and quality of life. Companies involved with production, distribution, and sale of highly addictive food are attributed negative Humankind Value.

Disordered Gambling

Gambling addiction is a behavioral pattern where one loses the ability to control the urge to gamble. Addiction can result in harm to one’s social and professional life and physical and mental health. Gambling addiction has the additional impact of causing financial ruin to the addicted.

Payday Lending

Payday loans are short term loans, usually around two weeks, that charge an exorbitant interest rate. These types of loans are typically used by low-income individuals that need cash for expenses they cannot afford at the time. Unfortunately, lenders of these types of loan do not always fully inform borrowers of the terms of these loans and the borrowers are not always fully aware of the ramifications of using these types of loans or potential alternatives. For those borrowers, the exorbitant interest rate paid on these loans represents an internal cost that is attributed as a social harm on the providers of these loans.

Food Loss

The food production pipeline spans from the ground where crops are grown, to harvest, to transport to grocery stores and food services, and eventually to the consumer. Food loss occurs during the early stages of the food production pipeline from harvesting until transport. Companies involved in the harvest, storage, transport, or other early stages of the food production pipeline are deducted Humankind Value for food loss.

Food Waste

The food production pipeline spans from the ground where crops are grown, to harvest, to transport to grocery stores and food services, and eventually to the consumer. Food waste occurs in later stages of the food production pipeline such as retail, food services, and by the consumer. Companies involved in food retail or food services are deducted Humankind Value for food waste.

Calorie Conversion

Crops harvested for food provide calories necessary for human life. While companies involved in growing and producing food yield a large amount of Humankind value, if crops are grown to produce other food items, like meat or dairy, calories are lost from the crops used for feed to the eventual food item. A negative Humankind value adjustment reflects this conversion of calories.

Fermentation

The efficiency of food processing methods and the resulting impact on calories available for human consumption varies across the spectrum of human foods and beverages. The fermentation reaction, which converts sugars into alcohol by means of yeast, has a relatively small caloric loss ratio when compared to the inefficiencies of meat or dairy products. By applying this loss factor, the benefit from the caloric intake associated with the consumption of alcoholic beverages is appropriately reduced.

Biofuel Production

Biofuel is a fuel derived from biomass, such as crops. Biomass used to produce food sustains human life and, as a result, yields a high amount of Humankind Value. Some companies produce or use inputs that could contribute to the food supply, like crops, for biofuel production. For these companies we deduct Humankind Value to offset some or all credit given for food production.

For Profit Healthcare

Our research finds that for-profit healthcare providers deliver a lower quality of healthcare, resulting in an increased risk of death for patients. Companies involved in for-profit healthcare are attributed negative Humankind Value.

Positive Consumer Impacts

Consumers generally benefit from the goods and services that they choose to purchase. Companies that sell a product or service to a client in exchange for money are typically creating some amount of consumer surplus, and we give companies credit for creating things that people are willing to pay for in our model in the form of positive Humankind Value. What follows are specific consumer themes that we’ve identified as especially impactful.

Free Digital Services

People have access to free or nearly free internet services. Our research finds that such necessary and/or enjoyable services, such as internet search, email, and maps, provide a large amount of value to those who use them. Companies that provide these free internet services are attributed positive Humankind Value.

Healthcare Research and Development

Pharmacology research and development (R&D) by pharmaceutical companies has greatly contributed to advancing the effectiveness of healthcare, specifically therapeutics. This has resulted in a large increase in life expectancy and quality of life.

Medical Services, Medical Devices, Pharmaceuticals

Companies involved in the production and distribution of medical devices and pharmaceuticals and the delivery of medical services contribute to the beneficial impact of healthcare on life expectancy and quality of life.

Soap and Sanitation

Sanitation is a basic human need which improves disease prevention. Companies supporting the availability of sanitation facilities and/or cleaning agents, such as soap, are contributing to the large increase in life expectancy and quality of life that sanitation delivers.

Clean Water

Water is necessary for human life. Unsafe drinking water results in many avoidable deaths around the world due to diseases like dysentery and cholera. Companies supporting the availability of safe drinking water to people help prevent diseases and support life.

Crop Production

Food is necessary for human life, and most food is grown. Food derived from meat or dairy also requires feed that is grown. Companies involved in the production, harvesting, storage, transportation, or sale of food or any other activity that brings food to consumers are attributed a large amount of Humankind Value for supporting human life.

Shelter

Shelter is a basic human need. Shelter provides security from the elements, enables the human need to rest, and brings other benefits. Companies involved in the construction, maintenance, and access to shelter are attributed positive Humankind Value.

Employee Issues

Employees in free markets generally benefit from their employment in the form of employee surplus from their salaries and benefits, which we aim to estimate for each company. On the flip side, there are several areas where they can be taken advantage of unfairly. What follows are some Employee issues that our research has found to be especially impactful.

Workplace Injuries

The workplace can expose employees to dangers that can lead to fatal and non-fatal injuries and diseases. Companies are attributed negative Humankind Value based on workplace injuries and disease that occur in their sector of the economy and regions where employees work.

Wage Theft

Failure to pay wages or other remuneration employees are legally entitled to is wage theft. Wage theft can take several forms, including minimum wage violations and confiscating tips. Companies that are linked to wage theft are attributed negative Humankind Value.

Discrimination

Discrimination in the workplace is harassment or other negative actions based on an immutable characteristic of an employee. Discrimination in the workplace can cause mental and physical harm to the victim and harm their career. In addition, perpetual workplace discrimination can result in decreased productivity, increased employee turnover, and other consequences that negatively impact the economy. Companies that are linked to workplace discrimination are attributed negative Humankind Value.

Uyghur Slave Labor

Over one million Chinese citizens from the Turkic Muslim ethnic populations in Xinjiang have been deported from their homes to forced labor re-education camps run by the Chinese government. This results in obvious physical and mental harm to the victims of slavery but also the families of the victims. Companies whose supply chains are linked to these forced labor camps are attributed negative Humankind Value.

Child Labor in Mining in DRC

Child labor is a systemic problem in developing economies and imposes a broad range of region specific and culture specific externalities. Patterns of exploitative child labor in the Democratic Republic of the Congo have been analyzed to the extent that they contribute to global supply chains.

Governmental & Societal Issues

Companies interact with governments in many ways. They can pay taxes to their government, which provides support for government activity. They can also serve as government contractors, which does the same. Our researchers have therefore dedicated a large part of their time to developing our understanding of the human impact of governments, so that companies can be given credit for (or demerits for) their actions that materially support those governments and their activities.

Democracies vs Autocracies

Research has shown that liberal democracies are less likely to kill their own citizens, start wars with other democracies, and generally provide a higher standard of living to their citizens as compared with autocracies. For those reasons, governments that are more democratic and freer are ascribed positive Humankind Value in our model, as compared with those that are more autocratic. Companies doing business with or paying taxes to democracies benefit from this exposure in our model.

Education

Modern economies require an educated labor force and the government institution of compulsory public education has spread throughout the world as individual economies have transitioned into the modern age. Educational attainment in a country is a significant contributor to levels of per capita GDP. Companies doing business with or paying taxes to governments providing positive educational outcomes benefit from this exposure in our model.

Taxation

Governments generally provide a wide range of services that have positive Humankind Value, such as education, health care, redistribution, clean water, and sanitation. However, they must tax their population to pay for these services. High tax levels are considered a negative for governments in our model, although generally, governments with high tax levels more than make up for this by providing strongly positive social services. The inclusion of taxation as a negative allows us to consider the efficiency of government spending. Companies doing business with or paying taxes to governments with onerous tax regimes are hurt by this exposure in our model.

Redistribution

Governments collect taxes and other forms of revenue in order to provide services and protection for society. Government service, such as education and health care, that is provided for free or at a reduced rate is called active redistribution since members of society that would otherwise not be able to afford such services can attain them and improve their earning ability, health, and overall utility. However, governments can also adopt policies that directly redistribute income by sending cash to members of society from collected revenue. This is called passive redistribution. Research shows that this kind of passive redistribution lowers income inequality, resulting in a positive effect on economic growth and life expectancy. Companies doing business with or paying taxes to governments providing positive redistribution benefit from this exposure in our model.

Healthcare

The boundary between public and private healthcare varies throughout the world. Even in the United States, which has the largest private healthcare system, government programs such as Medicaid and Medicare provide a substantial portion of reimbursement for the overall costs of healthcare delivery. Governments are assigned a positive Humankind Value for the delivery of healthcare services to the same extent as private companies. This benefit is adjusted for efficiency based on the ratio between achieved life expectancy and per capita healthcare spending.

Overincarceration

The United States has the highest rate of incarceration in the world. The is due to overly harsh, potentially racially motivated tough-on-crime laws passed during the 1960s and 1970s. It is estimated that some of those incarcerated provide no public safety benefit. In general, incarceration bears a total social cost on society per person incarcerated. This total social cost represents an external cost to society for those incarcerated for arguably no public safety benefit. This external cost is distributed to the United States government and privately run prisons based on the proportion of those incarcerated that they house.

See how it all fits together

Check out this fun illustrative example to learn more about how we combine these different factors to come up with a single holistic evaluation of a company’s impact on humanity.

Do you think we’re missing something?

We’re always on the lookout for information about new issues or themes that we should have our research team investigate. Please reach out to us at info@humankind.co if there is a new human impact issue that you think we should explore.

[i] Humankind Investments calculates a single dollar value of a company’s Humankind Value, which is intended to capture the aggregate worth of a company based upon its economic impact on humanity, defined as investors, customers, employees, and society at large. It’s important to understand that this single dollar value of Humankind Value for a company is not a precise measurement of the economic impact that companies have on humanity – rather, it represents a good faith estimate based on our internal model of how these companies behave and what the estimated impact on humanity of their behavior is. In other words, we’ve created a simplified mathematical representation of the real world, and are using that to derive this single dollar value for a company.