Remarks by Peter Scher
“The Role of Business in Society”
Florida International University, Center for Leadership
I’m very pleased and honored to be here today.
We see so many challenges in our communities and around the world—I don’t think that an organization can have a more important and compelling mission than fostering greater leadership and nurturing great leaders.
Whether you’re a member of the faculty here at the Center for Leadership, a student working on honing your own skills or someone looking to gain new insight—leadership is relevant to all of us. And to each of us in this room, it likely means something different.
A public servant. A guide leading a group of climbers up Mt. Everest. An executive leading a business or a nonprofit organization.
In an increasingly interconnected world—a world filled with a growing number of fault lines—this is more important than ever.
Our world is changing at a pace few of us could have imagined even ten years ago when you first started this Center.
Let’s start with the good news.
As troubling as the news headlines are (“fake” or otherwise), the world is still a far better place than it was when most of us were born. We have overcome challenges that we once thought insurmountable:
- Global GDP has more than doubled over the past 15 years;
- More than 1 billion people have been lifted out of extreme poverty just in the last two decades;
- Food security is dramatically improving—a major driver of improving human health—and the number of undernourished people around the world is falling dramatically;
- Vaccines have almost entirely eliminated most infectious diseases in many parts of the world—polio, smallpox, measles, mumps, diphtheria, rubella. Malaria has been eradicated in many parts of the globe and deaths have declined significantly in Africa and Southeast Asia over the last decade;
- Technological advancements—from the internet to smart phones—have transformed our lives and the way we do business—the way we connect with each other. As the father of two teenage boys, I can say sometimes for the better, sometimes, not so much.
The gains of the last few decades are inspiring.
But despite that progress—despite all the advances—we are still failing on too many fronts. There are far too many parts of our society not benefitting from that progress. Far too many people being shut out of the rewards of a growing economy. The frustration and disillusionment that follow have had deep and far-reaching impacts for our society.
This was the clearest message from elections in the United States, the United Kingdom and Germany over the last year—this growing frustration that far too many people are being left behind. And this is something that risks undermining the stability of our democracy.
This isn’t a new problem—2,400 years ago Aristotle wrote that a strong, confident middle class is essential to political stability. Today, however, we have anything but that. So many of our fellow citizens are feeling left out, angry and betrayed by the institutions they thought were there to protect them.
Think about where this is coming from—we’re losing our middle class.
Middle class Americans now comprise less than half of the nation’s population—just below 50 percent, down from 61 percent in 1971. Middle class incomes have fallen by 4 percent since 2000—it’s 9 percent for low-income families. Our JPMorgan Chase Institute research found that households up and down the income ladder experience tremendous income volatility and that volatility is on the rise.
People are struggling with economic uncertainty under stagnating wages and soaring costs. They’re losing trust in institutions to do the right thing. In the United States alone, average confidence in 14 key institutions is at only 35 percent.
Too many young people entering the labor market are finding themselves stuck in low-skill, low-wage jobs, or worse, unemployed and out of school.
A recent study of young workers in New York City found that they are earning 20 percent less than the generation before them and are increasingly working in low-wage industries.
We do a lot of work around summer youth employment, including here in Miami, and see the difficulty that so many young people—particularly those in underserved and disadvantaged areas—have in just getting a job for the summer.
More than 5.5 million young adults in the United States are disconnected from work and school. Meanwhile, more than 6 million jobs go unfilled. Through our efforts to bridge this skills gap, we continue to hear from employers about how they’re struggling to find workers with the right set of skills—nearly 60 percent of American employers express concern about finding talent, even for entry-level jobs.
We’re seeing these challenges around the globe. One-third of the world’s 1.8 billion young people are not engaged in employment, education or training. We shouldn’t wonder why people are frustrated with the system.
And finally, they require us to think beyond our traditional roles. Government cannot solve these problems—certainly not on its own. And we can’t just leave the burden to the nonprofit sector. The business community has to play a much more active role.
Businesses have always been central and vital institutions in society. They generate prosperity and produce goods and services that meet people’s needs and improve their lives. They contribute to building the societies in which we want to live.
Of the 145 million people who work in the United States, 125 million of them work for private enterprise. It is the private sector that generates jobs and economic growth.
How a business operates—how it’s governed, its culture, the integrity of the products and services it offers, how it protects and advances value for its shareholders, the way it treats its employees and cares for its clients and communities—all of this says a lot about leadership. It says a lot about whether a company is going to be successful and be around for the long-term.
Those same attributes that drive business success also offer tremendous promise to help solve pressing societal challenges. And this is the fundamental shift we need to make. Societal challenges must be seen as business challenges and businesses need to leverage what makes them successful to help improve and grow their communities.
The notion that a company needs to strike a balance between its business objectives and the well-being of its communities is simply outdated. The future of business and communities is inextricably linked.
When we think about how to grow a business, we know we have to invest in technology, in workforce, in infrastructure—investments that may not pay dividends in the next quarter or the next year but are critically important in helping secure our companies’ long-term future. We need to think about investments in our communities the same way. They are long-term investments that drive the future prospects of our companies and position them to grow for decades to come.
Let me tell you how we think about this at JPMorgan Chase.
Starting earlier this year, as part of a three-year plan, we began to raise the minimum salary of our U.S. employees to between $12 and $16.50 an hour, up from $10.15 an hour, exclusive of benefits. This pay increase impacts 18,000 of our bank tellers, customer service representatives and other employees across the country.
We also invest more than $320 million a year in employee training and development opportunities so that our workers can continue to sharpen their skills and advance their careers. This type of training has helped more than 40 percent of our tellers get promoted into higher-paying roles within five years.
Second, we understand that the success of our company is directly linked to the success of our communities. So for us, corporate responsibility has become a strategic imperative.
Recognizing the growing economic challenges that so many of our communities face, and in an effort to strengthen the impact of our work, about five years ago, we undertook a thorough review of our philanthropic efforts. We learned that while we were dedicating significant resources, we weren’t really moving the needle on pressing issues facing our communities.
So, we made a strategic change. We narrowed and refined our approach to focus on areas where we could more fully draw on and leverage all of our firm’s resources — including our data, relationships and the talent and expertise of our top employees.
Over the past five years, we have developed and refined a model that is informed by data and based on evidence about some of the most effective ways to drive inclusive growth. Our efforts focus on areas where we believe we can have the greatest impact in helping people share in the rewards of the growing economy: jobs and skills; small business expansion; financial health; and neighborhood revitalization.
We view our work in Detroit as proof of concept of our firm’s model for driving inclusive growth.
Detroit, in a matter of decades, went from America’s most prosperous cities to one of its most distressed. Hundreds of thousands of properties were abandoned. Population fell 63 percent—dropping from 1.8 million to less than 700,000. The unemployment rate was at more than 16 percent.
Four years ago, however, after decades of neglect and mismanagement, we saw something different—we saw a community coming together. We saw leaders setting their differences aside and focusing on the things that would truly improve the lives of the people in the city. We saw the private sector, the nonprofit sector and community groups all coming together around very specific strategies and plans to create jobs and improve services. Seeing this, our Chairman and CEO Jamie Dimon told us to go to Detroit and see what we could do to help.
In 2014, we launched our most comprehensive effort to date—leveraging the full range of our firm’s resources and expertise together for the first time—to accelerate Detroit’s turnaround. Our initial $100 million investment to support the city’s recovery has since grown to $150 million. By working closely with deeply committed and knowledgeable partners, our coordinated investments across a range of elements are making a real impact.
We’re equipping Detroit residents with skills for in-demand jobs, we’re helping minority small business owners grow and we’re providing capital for housing and retail projects to create livable, inclusive and sustainable neighborhoods. We’ve utilized our data and have deployed more than 100 of our top employees from all over the world to Detroit to work with key nonprofits and agencies to design and strengthen programs. Just last month, I was in Detroit with our partners celebrating the opening of the Coe project—which is the first new construction of an apartment and retail building in West Village in decades.
You may have seen the Fortune Magazine article last month, which highlighted our work in Detroit and ranked JPMorgan Chase No.1 in its list of companies that are changing the world. It’s something we’re deeply proud of—but more importantly, it reinforces this idea that the interests of companies and its shareholders can be aligned with the interests of our communities. JPMorgan Chase has been doing business in Detroit for more than 80 years. If Detroit grows—if more people are working, small businesses are being created, larger businesses are expanding, the economy is growing—that’s a good thing for us as well.
Our work in Detroit has also provided us with a host of insights, which we’re now applying to other cities.
Last month, we announced a three-year, multi-million-dollar commitment to Chicago’s underserved neighborhoods on the South and West Sides where economic opportunity is increasingly out of reach and chronic poverty, crime and violence have become synonymous.
We made a similar commitment to Washington, D.C.’s most underserved areas.
Our nation’s capital is a perfect example of something we’re seeing in too many communities. Surrounded by five of the 10 wealthiest counties in the United States, yet almost one-fifth of the District’s population is living in poverty.
Here in Florida, we’ve been making significant investments focused on connecting youth to high quality education and training that leads to well-paying jobs and long-term careers. FIU has been an important partner to us in this effort.
I was here on campus a couple of years ago meeting with some of the leaders and participants in The Education Effect—the partnership between FIU and Miami Northwestern, which we have supported to create career pathways, internships and other programs to help equip young people with the skills and training they need for jobs in this region.
We’re also making investments to help create more opportunities for underserved entrepreneurs to access capital and boost small business growth. Recently, we announced a half-million-dollar commitment to Grameen America to support its expansion into Miami-Dade County—an area with one of the highest levels of poverty in the nation. Grameen’s microlending program will provide small loans to underserved women entrepreneurs to help them develop entrepreneurial skills and build businesses.
Whether we’re talking about Florida, Detroit, Chicago or Washington, D.C. or the work we’re undertaking in Europe and Asia, the challenges facing our communities are not all that unique. We’re seeing that we can make a real impact by focusing on these key drivers of opportunity.
When we announced our investment in Chicago, the Chicago Tribune published an editorial talking about the importance of the private sector playing this kind of role, but also pointing out that our investments are going to “test” the notion that a lack of opportunity is often the underlying cause of many other complex issues facing communities. Therefore, driving more inclusive growth has the potential to address other deeply rooted, interconnected issues of chronic poverty, crime and violence.
A lot of companies, a lot of institutions might say that we should not subject ourselves to that kind of test—what if it doesn’t work? At some point, leadership involves taking risk. Leadership involves a willingness to try things that might fail. When we see people coming together and collaborating around solutions, we need to support those efforts even knowing that in each of these cities, we will try things that may not work in the pursuit of finding solutions—finding ways to improve people’s lives.
We cannot afford to stay on the sidelines as problems mount and just get worse. Because underpinning all of this is the idea that a company like JPMorgan Chase can make a real difference—can leverage not only its resources, but its core business and expertise to drive the kind of change we need to improve our society. And we have a responsibility to do that.
Let me mention one other area that is very relevant these days, particularly to communities living in coastal areas—climate change and the protection of our environment—and how businesses can be more active in addressing these challenges.
While JPMorgan Chase has a long-standing commitment to protecting the environment and advancing sustainability for our clients and within our own operations, we realized that today’s challenges call for an even greater commitment.
So this past summer, JPMorgan Chase committed to source renewable power for 100 percent of our energy needs within the next three years.
Let me give you a sense of the scale and impact of this kind of commitment.
JPMorgan Chase has offices and operations in more than 60 countries across over 5,000 properties, covering nearly 75 million square feet. Think of it this way. You could fit our firm’s global operations into 27 Empire State Buildings.
So to reduce our environmental impact, we’re doing a number of things: we’re developing an on-site solar installation at our largest single-tenant office and are in the process of retrofitting 4,500 Chase branches with the world’s largest LED lighting installation. We’ve already installed nearly one-and-a-half-million new light bulbs, a move that will cut our lighting energy consumption in half—the equivalent of taking 27,000 cars off the road.
Here in the state of Florida, where we have over 400 retail and commercial properties, our annual energy consumption is equivalent to more than 158,000 barrels of oil. We will bring the carbon impact of this to ZERO by the end of 2020. We have already retrofitted more than 90 percent of our 346 branches in Florida with LED lighting.
We’re also working on developing a new product—small capacity fuel cells that run on natural gas. Essentially, these are mini-power plants about the size of a refrigerator that will power up critical systems within bank branches during environmental emergencies.
In other words, this product will not only ensure that our branches stay open but that we have 4,500 safe havens during natural disasters.
Finally, as one of the largest financiers of energy in the world, we committed to facilitate $200 billion in clean financing through 2025. Through this commitment, JPMorgan Chase will help scale the impact of sustainability efforts among more than 20,000 corporate and investor clients in the United States and across the world.
The size, scope and global reach of our firm allows us to take on big challenges and to drive progress that few others can.
It’s important to keep in mind, however, that nothing is static. Business must operate within the context of its communities. A fast, ever-changing world requires us to continually assess the needs of our communities and to identify the capabilities we can leverage to address complex issues.
So let me finish where we started by talking about leadership and several of the things that have influenced me during my career.
When I moved to Washington, D.C. in the late ‘70s to attend college, I never planned to work on Capitol Hill. But after college, law school and work on some political campaigns, I had the opportunity to become chief of staff to a U.S. Senator from Montana, Max Baucus—a guy from Montana and a Jewish lawyer from New York—not your typical Capitol Hill duo. When I was interviewing for the job, I reminded the Senator that I had never worked on Capitol Hill or knew much of anything about Montana. He told me that he knew Montana pretty well and had plenty of people with years of legislative and policy experience. “I want someone who has a different background and different experiences,” he told me.
This was a tremendously valuable lesson for me in understanding the importance of bringing people of different backgrounds, different experiences, beliefs and skill sets to create the strongest team possible.
Later, I had the honor of serving in President Clinton’s Administration as U.S. Special Trade Ambassador. I was one of the negotiators on China’s entry into the World Trade Organization. Being in that role, you see that no matter where you are around the world, all problems are local problems, and most people, no matter where they are from, have pretty similar aspirations, hopes and dreams. You learn quickly how interconnected the world truly is.
These two experiences were very much on my mind this summer when I read a book called Last Hope Island. It was about World War II, and more specifically, how Winston Churchill made England into a haven for people from countries overrun by Hitler and the Nazis—Poland, Czechoslovakia, Belgium, France—people and countries, with different languages and cultures, that many of the British thought had little to do with them and nothing to offer. But Churchill knew they were all connected. He knew that to win the war, they needed the skills and talent and passion of people from different cultures, backgrounds and experiences. You know the rest of that story.
This is something, however, that resonated with me as it holds so much meaning, particularly today. When our national dialogue is so divided—when people on both sides are so quick to denigrate and cast blame, to look for scapegoats—these are the kinds of examples of leadership we need to look toward.
You don’t have to read history books to be inspired. What I’ve seen through my work at JPMorgan Chase and throughout my career is that extraordinary things can happen when people set aside their differences, roll up their sleeves and ask “What can I do to help?”
This spirit of engagement, cooperation and commitment has been instrumental to the progress we’re seeing in Detroit and in so many other places around the country and around the world.
I’m grateful for your time today. It’s been an honor. Thank you.
About the Author:
Peter L. Scher is Chairman of the Mid-Atlantic region for JPMorgan Chase & Co. and the firm’s Global Head of Corporate Responsibility. Scher oversees a number of global functions for the firm, including Government Relations and Public Policy, Philanthropy, Sustainable Finance, Nonprofit Engagement and the JPMorgan Chase Institute. He is Chairman of the JPMorgan Chase Foundation, one of the largest corporate foundations in the United States and has led the development of many of the firm’s flagship programs, including the $150 million investment in Detroit’s revitalization. Fortune Magazine spotlighted the impact of the Detroit investment by ranking JPMorgan Chase No. 1 on its 2017 “Change the World” list.
Prior to joining JPMorgan Chase in 2008, Scher was the Managing Partner of the Washington, D.C. office of Mayer Brown LLP and earlier served as the Chairman of the firm's Government and Global Trade Practice. Having spent the previous decade in public service, Scher was nominated by President Clinton and confirmed by the United States Senate as U.S. Special Trade Ambassador, and served as one of the lead U.S. negotiators on China's entry into the World Trade Organization.
Before that, Scher served as Chief of Staff for the U.S. Trade Representative and the U.S. Department of Commerce under President Clinton, Staff Director for the Senate Committee on Environment and Public Works and Chief of Staff to former U.S. Senator Max Baucus. He also served as U.S. Representative to the Asia Pacific Economic Cooperation Forum (APEC) Business Advisory Council. In 2016 and 2017, Scher was named in Washington Life Magazine’s “100 Most Influential People in the U.S. Capitol” list. Scher received both his B.A. and J.D. from American University