The Corporate COVID-19 Crisis Response
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Video Transcript
00;00;02;29 [Jason Grumet]: Well, good morning, everyone. Welcome to the Bipartisan Policy Center's event on the corporate COVID-19 crisis response. We have to really, um, I think, uh, interesting panels over the next hour and 15 minutes, I have the pleasure of leading off the discussion with Oscar Muñoz, who is the executive chairman of United airlines, as I think everyone knows United airlines and the airline industry has been at the very kind of crucible of every aspect of the recent health crisis and resulting economic crisis. And so I think it's going to be a very
00;00;36;06 interesting conversation, uh, with Oscar following, uh, that first 30 minutes, my colleague Michelle Nellenbach is going to lead a bit of a broader conversation about the evolving role of corporations in society with two leading thinkers and partners of the BPC, Tom Quaadman. who's the executive vice president of the U S chamber center for capital markets and competitiveness and Martin Whittaker, who is the founding CEO of JUST capital. So let me, uh, welcome Oscar, uh, to the virtual stage. I think as just
00;01;06;29 about everyone knows Oscar is the executive chairman of United airlines. He assumed that role recently in may of 2020, uh, for the prior five years, since 2015, he led the company. And I think the industry it's fair to say as the CEO of United. Um, and, um, well, we're going to try to do talk a little bit about the industry and the very specific challenges that you are grappling with on health and economics. And then think a little bit about
00;01;35;12 the, the recovery and the role both United, but also the role that corporations are going to play as we dig out of what I'm, I at least fear is not going to be a V-shaped recovery. Um, and just to get started, I'm thinking about the last time we were together, Oscar, and I think it was at a holiday event, which feels like a more than a six months ago.
00;01;57;14 [Jason Grumet]: The topic of the day was that you had just announced your transition from CEO to executive chairman. I mean the economy and the industry, we were both flying high and the conversation was, you know, this just is going to be an interesting, graceful transition for you. You're going to learn how to fish and maybe pick up golf and not so much. So, you know, recognizing that there's a tremendous amount of depth suffering in the world and not trying to make this about you and I, the last several months have just been a profound challenge. I wonder if you just would open up just with a little bit of your personal reflection though, what has it
00;02;29;25 been like to be helping to lead the company through this incredibly tumultuous time?
00;02;35;13 [Oscar Muñoz]: Well, you know, you're right, certainly no one expected, um, magnitude of this event and the impact, as you said on this, on the aviation students, but just absolutely staggering. And as you mentioned, we had a very deliberate, transparent plan of transition, uh, Don in the best of times with the best of a forecast for the future and all was great. And I was looking forward to not so much the fishing and golf. I, I think, uh, I subscribe to the old Teddy Roosevelt. Those of us that are, have been in
00;03;08;00 action for a long time. Um, it's difficult for us to step away from it. I think that the term was, uh, we're never gonna wear out and certainly never want to rust out. And I think both my personality and, and the times that we're in, I think require all of us a call of action, so to speak, but, you know, let me be clear this, this all thing is not about me or you, as you mentioned, uh, the impact on the people that work in this airline industry, it's just been a tragic for lack of a better job. And so my focus primarily
00;03;40;12 has been on assisting and trying to ensure now through the cares act early on as the government passed through the potential for a second round, but more importantly, just on ensuring that we do everything possible in our company to save jobs going forward or keep people at Bay enough so that when demand recovers and it will at some point that we can get people back to work.
00;04;02;19 [Oscar Muñoz]: So it, it, uh, it has been a very different push for all of us and all these different ways that I think right now about this time, we would be all at the Olympics or watching them. And so it's good to reflect on those times and we'll have again in the future for now. It has certainly been an impact of a, of a level that no one expected.
00;04;22;09 [Jason Grumet]: So let's, let's digging a little bit to the specific questions around airlines. I think we all recognize that our economic recovery is going to have to Follow a recovery from the public health crisis. Um, yeah, The airline industry takes every aspect of society and crowds it into these small aluminum tubes, hurdling through space, um, not an easy, uh, social distance Exercise. So let me just start, you know, question everyone wants to know, is it safe to fly? You know, do you believe that you can, you know, say to your
00;04;55;01 friends and family, come on board, plenty of seats. Um, let's get back in the air. What are you doing to make sure that that's the case?
00;05;04;12 [Oscar Muñoz]: No, um, I think first, in a crisis, there's no confidence booster like communication. And I, I think one of the critical points that I'll start the answer to that question in general is that, uh, I, we, we're not trying to induce people to travel. This isn't a marketing issue. This isn't a brand issue. This is an education, uh, a communication on an education on what you can expect that the airport, what are the steps people have taken. And then have you made the decision based
00;05;36;19 on your risk tolerance? Because what we see is a lot of people flying and because they need to, uh, they have small businesses, uh, crisis in their family that requires them to move. And it's important for us and the service that we provide that we're there. Um, and importantly, safety has always been our top most priority in our business.
00;05;55;21 [Oscar Muñoz]: Uh, you know, with regards to air safety, this is just put an initial and additional angle of it. And if you look hard enough, you will read throughout the entire industry because we really try not to compete on issues of safety. And in fact, our team led by our new CEO has been very clear on the fact that any new developments, ideas that we have with regards to safety, we immediately share them with the entire world so that indeed they can adopt them if they find that worthwhile. Um, so you'll hear about air circulation and planes. So your question is, is it safe to fly inside an aircraft? I would contend in our humble opinion, it
00;06;31;01 is one of the safest places, our air circulation system, the hospital, great filters that filter the air, the outside air that circulates through removing nearly a hundred percent of the particulates along with a mask. There's no safer place. The shop, the shopping malls, the supermarkets, and even some hospitals, um, an airplane itself is even, uh, even more safe. And one of the things that we just announced is that we're going to, in
00;06;55;29 essence, run the engines while the plane is on the ground, so that when you're boarding that same air circulation process is still working. So that's a big initiative and that's in addition to partnering with companies like Clorox for their cleaning products and the hydrostatic rents that we do, uh, it's partnering with com uh, hog medical units, like the Cleveland clinic, which advise us on any of these things. Because as you mentioned, Jason, it is a cylindrical object. It is in essence at 11 feet across the concept of six feet of social distancing is just a physical impossibility
00;07;28;10 whereby then we announce and do all of these other things that make sure that you feel as safe as possible.
00;07;35;13 [Oscar Muñoz]: But again, it's important that you make that decision. You read the facts and data that we're providing, and then you make that sort of a decision because we're not trying to, we fly 170, 80 million people a year, um, you know, worth line, maybe a hundred thousand a day. Normally it's 600,000 a day. Um, so we're not looking to do anything other than ensure your safety. We're expanding that to our, our airports and all these different places. So, um, there's a lot of work being done again, to make sure that it's healthy as possible, but again, at
00;08;06;06 the end of the day, you have to make that decision and we help you do. Um, I am immune suppressed. I fly fairly regularly and have been for the last, uh, two or three months. Um, that's my choice. And based on my knowledge of this and I, and I so far, I've turned out fine and I'm sure that'll continue, but now lots of work in this space.
00;08;25;03 [Jason Grumet]: So, you know, like, uh, like you, the Bipartisan Policy Center has this kind of quaint affinity for science and evidence. Um, say a little more about the relationship with the Cleveland clinic and in particular the airport, right? I think a lot of people focus on the planes. And I think my understanding is it's actually the movement, you know, getting to the plane where there's probably more issues that need to be addressed. You only have partial control over the airport space. My understanding is that you have announced essentially that people need to
00;08;52;13 have masks on anywhere in the kind of United, you know, Rome of control.
00;09;02;13 [Oscar Muñoz]: At some point in time, you, you find yourself in a world where you have to take an action. That seems abrupt. That seems contrarian to the warm hospitality that we've always tried to provide for you. Um, this is a time of crisis. This is a time of danger to others, and we're just not going to stand by and let everyone, you know, sort of suggest or propose or decide what they want to do. No, darn it. You're going to wear a mask. You're not, our folks are wearing a mask. We are the
00;09;33;09 first, uh, uh, airline to do that. And everyone quickly followed, uh, all of us as an industry, determined that everyone would wear a mask on the aircraft or be banned from flying. And as the sort of politicized view of mass warnings kind of continues, and it doesn't dissipate. And we have issues let's say in the airport, um, we are making sure our holding rooms, when you're waiting to board, you're going to wear a mask, all our employees in the airport and wear a mask. And we're urging our partners at airports, which again, we do not control to do the same. And it's just, it's just common sense. It's seatbelts all
00;10;07;05 over again for however many years ago. I mean, why we just not going to abdicate the concept of safety. You're going to wear a mask or you're not going to fly and not on us and mostly not on many other airlines. And so I'm at the airport, everybody's working on the spacing and the dots between some people understand physical space limitations. Uh, there's been that shields that even the plastic glass shields that everyone sees. Um, interestingly enough, a lot of you, a lot of you listening will say, well,
00;10;33;12 Oh, it was just better airport. It didn't have all that. And you know what, you'll be wrong. Getting to as many airports as we have in this country, uh, with all the different partners to do all the things we're trying to do, it's just gonna take time.
00;10;45;05 [Oscar Muñoz]: And it's something that I think you're going to expect for awhile and over time, I think everyone at here, but what we can do, what we can control and Cleveland clinic is it to your question is an example. They advice us on all these things. They say, that's the right thing. That's the right disinfectant. That's the protocol, that's the right distancing, all of those things. Cause we're not medical experts. And it's important for, I think for our customers to understand that, you know, you don't take my word for it. Um, here are folks that are advising us in that regard. So it's, it's, it's part of the communication sort of protocol to make sure people understand that we're not just doing it, it's on our own.
00;11;17;19 We're not doing this to promote you, you know, getting on an aircraft it's to ensure that if you do, when you do, if you wish to do, we're going to make you as safe as possible and increasingly the environment around you as safe as possible.
00;11;31;14 [Jason Grumet]: So I think, you know, the you've, you've anchored the understanding of safety first. And I now want to see if we can turn to the other incredible set of challenges we are sharing, uh, around economics, Um, both the future recovery, but also It was just a little bit of what's gone on in the last few months. I think the cliche has been, the Congress could only govern in crisis. I think we feel quite, um, relieved that can in fact governing crisis. I think the cares act particularly the initial two showed a tremendous amount of bipartisan collaboration and courage under tremendous pressure. And one of
00;12;04;17 the major achievements was significant resources to the airline industry, which I think by most accounts just allowed the industry to stay in business. Um, and I want to understand a little bit of your thoughts about, you know, what happened with that first cares act not only in terms of the resources, but also the, the time essentially that it provided you and other companies to figure out how to calibrate to this new reality of having roughly 15% of the volume that you were planning for in 2020. Um,
00;12;32;19 talk a little bit about the cares act. And then I want to talk about what that means going forward, because I know you, and many of your peer companies have announced that when those resources run out in the fall, you will have no choice, but to tolerate very significant staff reductions, but give me a little history and then we'll talk about the next steps.
00;12;50;29 [Oscar Muñoz]: I could probably write a book on the concept and the journey on the cares act and the education, the communication, the conversation with the political leaders and you're right in a crisis, uh, government, uh, at least in my humble opinion and my long history of working with folks, uh, it was a bipartisan effort. We are forever grateful for the work that they've done. Um, this is not a political statement. This was a concept of helping them understand the magnitude of the impact on our business, the facts, the data, the science that we're projecting even
00;13;23;00 further and longer decline and importantly the impact on the economy and the economy's ability to recover quickly. If we don't have the conductivity that comes along with the airline industry. And I think that those points were made by many of us specifically and directly to a lot of the leaders. And again, on both sides of the aisle, there were many supporters, uh, constantly there was of course, questions, the vehicle and all of the hooks around it became sticking points as they always tend to do. But
00;13;51;29 fundamentally at the end of the day, it has saved the airline industry because without it, we would be in a much different place out today, uh, going forward. Um, that's the debate that's happening right now? Um, I think, uh, what we've done in the interim, when I say it's saved us, uh, it bought us time to get our own cash. Um, nine 11, if all of us remember that was probably the most significant black Swan moment, if you will, on this industry, uh, and all our risk assessments, risk management profiles and
00;14;21;23 protocols were built upon that level of magnitude of an event. This one, this one is going to be five to possibly 10 times worse duration impact.
00;14;31;02 [Oscar Muñoz]: Our business went almost to zero for a period of few weeks and it continues to be very low. And so the impact of this is so bad that, you know, in essence, um, over the course of these last few months, what we've learned to do is manage by this interesting financial metric it's called cash burn. How much cash are you burning per day? And anytime you have anybody in business that they tell you, that's the, that's the metric that they're using. They're in a lot of trouble. So our cash burn per day, versus the amount of liquidity that we're able to have, how much
00;15;02;08 money we have in the bank and what we've been able to do. And our team's done an amazing job in the last few a month. Again, the cares act alone to have this freedom of time. They've raised over $16 billion. That's one six, and be with, you know, going with a B dollars on our balance sheet to ensure that our daily cash burn and the cash in the bank have enough sort of time that we allow demand the algebra. And so that's, that's the aspect of what we are, I'll stop there so that we don't get too far into the future, but it's a significant event. And that's how important
00;15;34;13 the cares that was to us, uh, in the course of the last few months.
00;15;39;15 [Jason Grumet]: So let me just remind our viewers that at about 10 minutes, we're going to open it up to some questions and you can submit questions using the live chat function on YouTube or Facebook. Um, so please, uh, take this opportunity to join the,
00;15;54;29 [Jason Grumet]: Um, so the Resources run out in the fall. Uh, you have an obligation under federal law, if you anticipate very significant layoffs under the Warren act to tell people that that is possible, you've made that announcement as have many other companies, um, Senator McConnell rolled out at least the sketch of the Republican Senate version of the next round of, uh, potential public support. And there was no specific industry, um, resources for airlines or anybody else. I think, you know, one of the questions we have is Congress
00;16;27;23 did rush to this moment, but I'm sustaining investment in crisis. And the same way that the public is getting exhausted by the crisis, the Congress is getting exhausted. I think there's no reason to believe there's not going to be significant additional infusions of capital. So what happens in October?
00;16;47;18 [Oscar Muñoz]: Yeah, listen, we've worked all of these months in addition to building up our, our liquidity levels, um, to provide options for our employees to take voluntary separations. So indeed that our numbers, the fact of the matter is the airline industry is going to be infinitely smaller than it was when we started and our resources have to be adjusted to that. Uh, you know, I oversaw a hundred thousand people. Uh, we think our business is going to be at least 70% or 30% a smaller if not even more so, so we're trying to adjust to those
00;17;19;18 numbers. So that's the map. What we're trying to do through these voluntary programs is get people to in essence, make a decision to leave voluntarily. So to save us from having to make those furloughs later on. So that's been the big impact at this point in time, Tom, um, end of September, early October, nothing we see in our forecast, nothing we see in our modeling, nothing we see in the facts and datas, and we all read about, about increased travel.
00;17;43;21 [Oscar Muñoz]: It is nowhere near the amount that's going to it. It would not require us as an industry to significant actions. So we're trying to avoid that as much as possible through these other programs, if indeed an additional program were to come and it didn't come with a lot of grappling hooks that really restricted us going forward, of course it would be a great benefit. But I think that the call for us as an industry, us as business leaders, is to prepare for the worst, which is why we raised that $16 billion to ensure that our, our cash burn allows us time for when
00;18;14;11 demand actually returns while investing in all the things in safety that we've talked about before.
00;18;21;08 [Jason Grumet]: So in the last part of our conversation, I want to start maybe to kind of prepare for this second panel and just think a little more expansively about the evolving role of corporations. When we last sat down for a discussion, it was right after the business round table had released its new principles and the conversation about the shifts from shareholder to stakeholder capitalism and role of corporations and communities was, um, I think really churning along. Um, some people would argue that this crisis is accelerating that moment, that the focus on the
00;18;52;05 role of corporations as just pillars of community and kind of amplified by the fact that the public is making investments in corporations. So there should be some reciprocity of corporations reinvesting in the public. You know, that this is a moment to kind of amplify that moment. Others are saying, look, bottom line, day one, get the economy back together. We don't have time for this kind of, you know, external questions about community involvement. We just need jobs, jobs, jobs. How do you enter that discussion? Does the pandemic kind of accelerate or decelerate that shift
00;19;24;10 towards shareholder capitalism? I'm sorry. Short towards stakeholder capitalism.
00;19;29;05 [Oscar Muñoz]: Yeah. Well, listen, this, this disease, this virus has not only had a, an impact on physical health of the planet. Uh, and it's also had an impact to a degree with regards to divides and racial inequality and all the things that we've learned about it's just perpetuated and exacerbated. It really brought to light all these things. If this were to also alter the humane, that just the right thing to do that corporations corporate America, what we can do to accelerate social, uh,
00;20;04;25 sort of social equality, um, with regards to sustainability, with regards to jobs and training all the, during the, if it has an impact of that, then we'll have really been hampered for a long period of time. I am fully 1000% in the camp. It cannot, it cannot, of course, we have to get back to work. Of course, we have to build a map. Of course we have to get the economy with copper, but you know, our values that we've been developing over the last few years as corporate America,
00;20;32;05 um, have to continue. And I'll tell you, I work with the business round table and the business council and the conversations we've had in the last few months have all been this wonderful balance of both things clearly about the economy, clearly about bringing things back in the right and wet, but also increasingly on racial equality, education, you know, all the things that we're working on before that are so critically important. And I would hate to see this virus take us even further into the depths of
00;20;59;13 concern because we can't let that happen. I mean, it's already, you know, we've already, we've already adjusted our approach to this both politically and then from a business perspective is the virus.
00;21;12;01 [Oscar Muñoz]: And we've learned a lot. Um, it is insidious and it's global. Um, we cannot let it alter the culture. And the course of what I think is so important in America is again, you know, mean, can you say rising tides should lift all ships and we've not done well at that. We have, we have, we have a good momentum towards that. And again, at least from what I see here and interact with, with the other corporate leaders in America, I would, at this point in front of you say, I think there's a great deal of support and, uh, and emotion and importantly, action. I
00;21;46;14 always say proof, not promise. And there's many things that are coming out, certainly in our company and others that I think support that. So I really hope Jason doesn't take us down that path.
00;21;57;13 [Jason Grumet]: So let me turn to some of the questions that are coming in via YouTube one. I think I'm just build on something you just alluded to, and I'll ask you both on behalf of United airlines, but even more broadly on behalf of the business leaders, you work with the question about racial injustice. Um, obviously the nation has now in a very significant way, in a very appropriate way, kind of drawn its attention towards these questions of how one responds to the increased awareness of racial and social
00;22;25;27 Equity what's Company like United's role in addressing that very deep societal challenge. Do you see that United has a distinct role? Do corporations have a distinct role and what could you be doing or what are you doing?
00;22;41;13 [Oscar Muñoz]: Um, we do, um, and it's profound, uh, and I'll, I'll answer it, I guess in a couple ways I could go through all the things that we're doing at United, and I've always done it United and are accelerating and amping with regards to the councils that we provide that report directly into the most senior management and the work that we've done. But beyond that, all of us writ large, I think what I've been proposing and again, as someone of color, I guess, is how I might be described in certain camps. Um, there is no stronger drive an action than having a person who's
00;23;19;20 not of color, be an ally to people that are, I think we've experienced this in the women's movement to some degree of success. Um, but the most important part is, um, you know, it's hard to describe what we go through. And so what I always suggest to folks that are puzzled or they don't understand a lot of the things that are doing, whether it's the anger. I mean the righteous anger that's out there exists because a lot of people
00;23;44;13 feel this time. Once again, the deep suspicion that it won't be different, it'll just be, I will make all this noise and that I'll revert back and we've lived through all of that. So the two things I suggest, one is allies, white America, white CEOs, and becoming really to the surface, um, getting a deeper understanding of what the emotion, what, what it's like to walk in our steps over the course of our history. And, you know, you've heard all the stories come out. They're real, they're impactful. Gosh,
00;24;12;08 they're hurtful. And what gets tiring for some of us is always talking about this. You see a lot of people in the audience, just not their head.
00;24;19;06 [Oscar Muñoz]: It's like, of course he would say that. Or she would say that because of their background, I was like, it has to come from other people who have taken the time to generate and create some dialogue with folks, deep understanding, listening on both parts because it's, and it's really key and important when you, when you ask a question and you get the answer, I think a lot of people understand that there's such a deeper, long standing hurt and resentment that is driving this. It's not the latest event as horror, but gosh, it took the public murder of a human being for
00;24;53;01 us to take this action. I can't happen anymore. It has to change. So we all have to get involved. I think one of the things I always suggest to people like us in these calls, you know, you mentioned the pillars of a community, have you think about what we've stripped the inner city of, right. When we built our roads, we build our infrastructure. We both, all those things. We tore out churches and parks and swim places and, you know, YMCAs and the things that, you know, we, as kids got a chance to go to, uh, the
00;25;23;13 people in those communities, don't have a safe Haven with humans there to sort of interact with them. And how do we, how can we, can you on this call support some of that, it there's a lot of things that we can do. It doesn't require the CEO of a chairman of a huge corporation, um, dialogue, white allies, and think about the things you can fundamentally tactically do. And in the communities that we all live in, we know the sections of our town that have been affected by this there's a lot you can do in those spaces.
00;25;51;28 So things like that,
00;25;55;14 [Jason Grumet]: The passion of yours. And I wanted to, uh, Get your perspective. Um, let me, uh, I suppose a final question and that is that, you know, the next few months there's gonna be a tremendous amount of focus on the horse race and the election. And we all know that that's a, an impossible outcome to predict. Um, yet we can know with some certainty that no matter what happens in November, we are going to have a closely divided government. As you think about the future of this country, What would you hope That are closely to gotten divided government focuses on at the beginning
00;26;29;17 of the next administration? What are a couple of the ideas that Give you some optimism that you think would be this notion of building back stronger? What would you hope Congress is, um, leading with as they get back together in 2021?
00;26;44;28 [Oscar Muñoz]: Wow. So that's, um, I think certainly the economy, right. Um, whoever takes over is going to be saddled with a very significant, uh, uh, in, get it in a greater and indebtedness, um, the recovery from, uh, this, uh, the economic hit of this crisis is going to be significant. And so how we create a more balanced approach towards providing, uh, things that actually make sense to the economy, uh, retraining gaps, skills training that, you know, the GI bill of 100 years
00;27;17;13 ago, what's, today's version of it, I think is important. Infrastructure is a way to get jobs in the market. It's been something that's been, you know, that's just been forgotten for such a long period time. So there's methods and means towards getting to that point. Um, then there's just the issue around, um, you know, the racial equality issue. I think the investing, creating jobs, all of that will help.
00;27;39;03 [Oscar Muñoz]: Uh, but the hope that I have, uh, and I've seen it over the past few months as I've been quarantined with my children, um, you know, it seems trite to say that, you know, our children are our future, but the next generation, I mean, it's awesome when I've watched what has transpired within them, within their actions, with their friends, there's this spirit of, uh, of tolerance, um, of generosity. It just didn't exist before we had all these social movements and social media, and we decry
00;28;09;05 social media for all. Its, you know, all of, all of its sort of bad aspects of it that we've seen, but it's also a lot of people to really weigh in, really understand, really learn. Um, and you know, I grew up in the eighties and I guess we call it the me generation. I really think of this new generation as the, we, I there's just, you know, they're just a lot more tolerant of these things and you know, these folks share rides with stranger, share other people's homes, um, and in conserve gas and you know,
00;28;38;10 the elements of sustainability are all meaningful. They're looking for corporations to do the right thing and these areas and they choose where they go to work based upon those things. They buy products with regards to that, there's a lot of optimism. We cannot let them down. And this next administration has got to get our, our, our, our economic balance. Right. And I'm with that approach, I think we can get some of the social issues down as well. So I just hope we don't go from an extreme right to an extreme lap. I think there's gotta be a balance and I
00;29;05;20 won't make any political statements about that, but we have lost the trust.
00;29;11;10 [Jason Grumet]: Our country's history is both parties overstating their mandates and closely divided government. So I can assure you, the BPC will be doing what we can to, uh, to provide that anchor Oscar you, I think there is a concept of servant leader, which speaks to someone with passion and confidence and humility. And I've always felt that you are really one of the exemplars of that, um, idea. I know how hard it is. This has been for you to watch the company that you created into a, such a
00;29;36;24 powerhouse struggle like it has, but I'm really appreciate coming and Sharing your thoughts with us. And, uh, I look forward, I, I can tell you and this show is I miss flying and I would have never, I could not imagine having said that sentence, uh, six months ago. So I hope to see you back there and coach, uh, someday soon. And we really appreciate it.
00;30;00;05 [Oscar Muñoz]: Can't wait to see you guys. Thanks everybody for joining us and appreciate it. And that stay tuned for the next chapter. I think there's a great conversation following this as well.
00;30;08;20 [Jason Grumet]: Thank you my friend. So now let me, uh, ask my colleague Michelle Nellenbach to, uh, take over the two dimensional screen here and introduce our second panel. Oscar, Have a good morning.
00;30;22;26 [Michele Nellenbach]: Well, uh, that, that was a tremendous conversation. Thank you both to Jason and Oscar. Uh, uh, looking forward to continuing that with, uh, both Martin and Tom Martin, of course, being the CEO of just capital and Tom Quaadman, uh, with, as Jason mentioned, the executive vice president of the us chamber center for capital markets and competitiveness. So why don't we bring them up on the screen and we can just dive right into the conversation. Hi Tom Martin, thanks so much for joining us today. So that, that was a great conversation. And I think Oscar really laid out the
00;30;55;15 struggle. I mean, airlines, the hospitality suite industry, the travel industries have obviously been decimated by the current crisis. Um, a lot of other businesses as well. So Tom let's, let's start with you. Uh, a lot of businesses are mostly reopened. I'll be it as Oscar had alluded to it a much smaller scale than before. What are you hearing from your members about how they navigate reopening and how they're staying open and, and
00;31;21;03 what are some of the challenges that they're talking to you about?
00;31;24;13 [Tom Quaadman]: That's been, that's been a, that's a great question. In fact, I'm want to thank Oscar for that conversation. I could, it wasn't to that a lot longer. We've been involved in a continuous dialogue with the business community throughout the country since the start of this pandemic. And obviously first was survival. Lot of challenges with reopening, um, where, you know, businesses are trying to determine how they can reopen in such a way, um, and operate in such way that their employees are safe, that they can interact with their customers in a safe way. Um, but there are
00;31;56;14 also some challenges that arise and masks is a great example where some jurisdictions were relying on the business community to actually enforce a mass policy, which should have been, uh, that, that is the role of government. So, you know, but, but a big challenge, uh, masks is another example of this as well is the lack of uniformity. Um, you know, we are in a Federalist system States obviously play a very big role, but companies were struggling with different mandates that could stretch not only among
00;32;29;11 States, but even within, uh, uh, within States with municipality. So it was not a surprise to see Walmart or Kroger's as an example, put nationwide policy For their stores in place. And that is just an example of some of the issues that businesses are struggling with right now.
00;32;47;22 [Michele Nellenbach]: Great. Thank you. So Martin, I want to get you in here. Why don't first of all, suggest capital and why don't you go ahead and, and first tell us a little bit more about just capital, but also you survey the public about their expectations on companies. And I'm curious what you are hearing from the public now about how they're viewing the corporate response to the COVID crisis. But first start with telling our audience a little bit more about just capital.
00;33;16;04 [Martin Whittaker]: Thanks, Michelle. Good morning. And thanks. It's great to be here and really appreciate the chance to work with you with Jason, Tom, um, on these really important issues. Um, so just is a nonprofit. We, um, have built a platform that allows, uh, uses to really track measure rank, um, large companies on how they perform on the public's priorities. And we do that because we know that really building, um, a more
00;33;52;03 just marketplace, um, more, just an inclusive economy, if you will, um, must be done with the private sector. And so we feel as though if we can send, advise companies to do more of the heavy lifting on societal issues, uh, that creates a win-win it's, it builds faith in, in business as a force for good. It's also better for shareholders, better for investors, better
00;34;17;04 for business performance and competitiveness. So we're very data driven. Um, we're a unbiased in our analysis and, uh, you're right, Michelle we've this year tracked very closely how the public, um, a, how the public cares about what's happening today, especially around of course, stakeholder capitalism overall, what does that look like? What does that mean to the public? I can talk about that in more detail. Um, and obviously in
00;34;47;09 particular this year, the company response on COVID-19, you know, this belief that, um, companies that are truly committed to the stakeholder performance had a great opportunity to show that, uh, to put words into deeds and to showcase how they're actually doing this year to protect their workers, their customers, and their other stakeholders during the coronavirus. And now of course, during the economic recovery and most recently, of course, on racial equity and the, um, need for a strong
00;35;21;09 corporate response to systemic racism in the country.
00;35;24;20 [Martin Whittaker]: So we're beginning to and have been tracking that and working with many others on that. So I can talk a little bit about how the public thinks about all of those things, but the bottom line is really, I would say I would, this way public would, um, believes overall, this is a moment for a great reset that, um, rethinking how we prioritize different stakeholders. Um, and that's been just laid bare through the crisis, the
00;35;55;28 disproportionate impact of the crisis on frontline, essential workers, people of color, uh, et cetera. And so a reprioritization of how we think about value and purpose. Um, and then lastly, a great opportunity to rebuild, you know, rebuild an economy as, as Oscar very eloquently said that does more, you know, that serves, um, Americans better and bills of prosperity that everyone can participate in. So that's sort of, there's a
00;36;25;28 sense of a, of an expectation. I think that the public now has of business leadership and putting those promises words into actions and deeds.
00;36;38;06 [Michele Nellenbach]: So I want to dive into that a little bit because this conversation around stakeholder versus shareholder, um, what we're seeing now, particularly around this masks conversation is the share the stakeholder community is not, um, of one mind on a lot of issues. So for instance, around mass, you have what United is doing. We have a Walmart and target to the biggest retailers in the country say you had to wear masks in their store yesterday though, there were several companies that I think are in more conservative parts of the state rescind mask orders. And so you're
00;37;13;06 seeing this tension, um, between, within the American public, within the stakeholder community. It's unfortunate that we're not United on this one thing, but we are not. Um, so how are, how are, first of all, let's talk about Walmart and target, how are they going to enforce those requirements? Cause to your point about the workers and the frontline workers, Martin retail workers were the frontline workers in a lot of, in a lot of cases, those stores stayed open. And now they're going to be asked to enforce mask
00;37;42;06 mandates that may not be consistent with what that state has mandated. So I'm just curious if either one of you want to take that on,
00;37;51;00 [Michele Nellenbach]: Well, I'll just give you, sorry, Martin, go ahead.
00;38;00;01 [Martin Whittaker]: I would just quickly say that the polling is in fascinating. You know, we, we poll all around America, all across political affiliation, uh, economic status race, uh, you know, and in the high eighties, across all of the respondents, um, people expect companies to prioritize the health and safety of their workers. And that means not just masks. It means paid sick leave. It means hazard pay. It means many other
00;38;31;05 things that really say, okay, we value workers and we're going to invest in them. I'm going to make sure that they're healthy and that they're stay safe. So that to us is, is, is, was we heard that loud and clear wherever we rent wherever we went, regardless of the industry. So I don't want to get into a political debate about what companies should or shouldn't do, but I could tell you when you poll across the nation on what the public expects companies to do right now, um, safety and health is a, is a number
00;39;04;21 one priority. And that obviously involves wearing a mask.
00;39;11;03 [Tom Quaadman]: You know, Michele, um, first off, if you're going to go into Walmart, there's going to be a greeter at the front door is going to tell you whether you can come in or not, right if you're wearing your mask, but also to control the number of people coming in. So there's a way to do that. But look, I think to the larger point, um, with stakeholder capitalism or ESG, whatever you want to call it, it's, it's basically comes down to one, is, is a company being a good corporate citizen and number two, are they making their portion of the world a better place? Right. And what we did, um, in 2018, because we've been involved in, uh, ESG issues
00;39;43;24 for the last 10 years. And if we had talked about this in 2015, I would have talked to you about our multinational members being involved in it.
00;39;51;29 [Tom Quaadman]: And then, but within the course of 18 to 24 months, you know, now suddenly even domestic companies are involved in the same rate. So in 2018, we went out and we met with companies, investors in lichen in 2019, we actually went around the country talking to actually individuals about their perceptions of the companies and, and, and what they think companies should be doing. And basically it comes down to, are they treating their employees well, are they treating their consumers well, are they communicating appropriately through their supply chains? Um, so as
00;40;26;22 an example, one of the issues that kept popping up when we were talking to people in 2019 about these issues about the company, um, actually the issue that kept coming up with student debt. And it was very interesting there because you have some companies doing some very unique things in terms of helping their employees with student debt. And that is an example of how companies can, can take care of their portion
00;40;54;16 of the world and maybe make that better while there are, there are global issues that need to be solved by Congress or the government or et cetera. But I think at the very core of it is this and people records as well, businesses are there for value creation, right? They're there to sell goods, they're there to create jobs. They're there also to create a return for their investors. So what they are doing in terms of stakeholder
00;41;21;07 capitalism has to directly tie back to long term value creation as well.
00;41;28;23 [Michele Nellenbach]: Great, thank you. Um, and that does seem to be the crux of the issue between the stakeholder And the shareholder discussions, but I want to talk a little bit about, uh, small businesses. Um, they are in particular struggled during this crisis. Many large companies, um, appear to be navigating it fairly well. Uh, many people raised concerns about consolidation and concentration growing as a result of the crisis. Nearly every large company relies on small firms as part of their supply chain, et cetera. And so, but they're struggling right
00;42;01;05 now. So what actions might some of these larger companies take to help strengthen the resilience of those small firms, where we're going to see a number of them close, unfortunately, but what can the big companies do right now to kind of help those smaller firms? Um, hopefully keep their doors open.
00;42;19;04 [Tom Quaadman]: Well, first off sure. That, that the cares act itself was probably the most massive, uh, intervention of, of the U S government in the last 50, 60 years. Um, if you, if you look at the dollar numbers of the cares act, it, it, uh, it's a four or five multiple of tarp. Um, so, but what we've done there is we've created a mosaic with a number of different facilities through the federal reserve, uh, to help the larger companies get the liquidity that they need. Uh, we have, uh, main street
00;42;50;28 lending facilities to help middle market companies. And obviously we have the PPP loans, um, uh, that, uh, that were given out as well. Matter of fact, I, I thought I saw something coming through, um, as we were getting on, on the, on the, uh, the event here where Congress is now looking at possibly additional small business loans, what the cares act was designed to do was to try and get us to the other side of this, right.
00;43;18;21 [Tom Quaadman]: And that we would have a V-shape recovery. I think what we have clearly seen in States that had closures as well as States, it didn't, we're seeing a resurgence, uh, of the virus, and this is obviously impacting, um, the economy and it's, it's having a severe impact on small businesses. So, um, I know there are companies that are looking to see how they can help their supply chains, um, because as they want to get back up and running, they need to have a very resilient supply chain to do so. I do think we're going to see further government action, uh, within the next
00;43;50;25 several weeks, uh, to provide some additional aid. Um, because unfortunately we're probably going to go through some of this push and pull up until the time we, we have, um, effective vaccines that are developed and then deployed on a, on a large, massive scale.
00;44;11;02 [Michele Nellenbach]: So, um, clearly a lot of uncertainty right now, and the conversation continues to change. Like I think a month ago we thought we were on our way out of this. And now, as you just mentioned, Tom, we've, we're seeing a huge resurgence in parts of the country in part driven because things too soon. Um, so there's just so much uncertainty about what, what we're supposed to do, and that makes it really hard for businesses to plan. Um, you know, they're used to forecasting out a year
00;44;41;29 and this is how things are going. As Oscar had mentioned, he's looking at a 30% reduction in his workforce. So how are you seeing companies balancing the task of meeting this moment, um, and planning for their future when there's so much uncertainty going on, um, Martin, do you want to dive in there?
00;45;01;09 [Martin Whittaker]: Yeah. And I, I do. And it touches on a point you made earlier about the stakeholder shareholder, uh, trade off, which I think is sort of, um, the idea that I'm either looking after all of my stakeholders, all my shareholders, I think, is a vision that we're consigning to history. Um, you know, this idea that either I'm investing in my workers or my customers, or I'm buying back my shares and looking after my shareholders, um, I think that's a myth and, you know, data that just as
00;45;35;29 prepared the many others have shown supports the idea that stakeholder led businesses are in fact better for shareholders. And that's obviously one of the reasons why we think the business round table embrace the new statement of a corporate, um, company's purpose. Um, but it answers this question too, because the idea of balance in a time of great uncertainty is answered by the stakeholder model. If you see yourself as serving, creating value to Tom's earlier point for
00;46;05;20 your workers, for your shareholders, for the communities where you operate for your customers and for the planet, um, provides a very clear blueprint for how you might think about the allocation of resources. All we really looking after, um, in this case, you know, your earlier question on small businesses, our suppliers, you know, how many of our suppliers are in a state of financial distress? How many of our suppliers are small businesses owned or run by people of color or by veterans, or, you know, other
00;46;35;28 minorities where we can see companies, um, you know, really could provide financial assistance, provide some way to help dive supplies and I'm trusted relationships get through the crisis and the economic reopening. That's really what we, what we mean by sort of systems resilience. You know, the most resilient companies coming into this crisis will be the ones who do better and they will have had a stakeholder point of view to
00;47;04;21 understand the full sort of sense of, of what, what value creation for that business looks like over the long term and what a company explicitly can do to invest in value creation across all of its stakeholder base.
00;47;21;22 [Tom Quaadman]: And I would say, you know, you need to look at this, that an industry by industry basis. And I would say that both of the crisis and even, uh, of, Uh, of stakeholder capitalism, because one is with the crisis itself, you're going to have some industries it's going to take a long time for them to come back to where they were. So if you think of tourism or event businesses, right? Um, it's going to take a long time other businesses at Garland to, uh, bounce back more quickly. But even those businesses that
00;47;52;15 are going to bounce back more quickly are even looking at how they may have to change some operations. So, as an example, there are some retailers that are actually thinking about back to school sales. They may run their back to school sales outlined, but not necessarily in the physical stores, right. In order to see if there's some way, um, you know, that you can have some of that social distancing that you may need. So I think there's some planning that's going through there. I think some, you know, sometimes we tend to look at the economy where we
00;48;23;03 tend to look at some of these issues from a macro point of view, but you almost have to look at them from an industry by industry segment, or sometimes even within the unique circumstances of a company. Because the example I used with Walmart with the masks, Walmart has the market share and the footprint, they can do that. Right. And, and they could do that quite easily, much more difficult for a small business that is state is telling, well, you know, what, if somebody comes in, you have to tell them
00;48;52;08 to wear mask and then they have their customers fighting amongst each other. Um, so I think those, you know, unfortunately we have to look at things I think in a very nuanced way,
00;49;04;11 [Michele Nellenbach]: You mentioned the back to school sale. My dad was in retail and I know how much those, they rely on that, that period of time to bring in revenue and schools aren't going back. So it would be, it'll be interesting to see how that plays out. Sorry, Martin, you want to jump in?
00;49;19;21 [Martin Whittaker]: I would just agree with Tom. We've seen companies in same industries take different approaches. You know, we were tracking earlier on and we've done a, I think no full upgrades on our tracker. If you had just capital.com and you want to see how companies are actually responding on crucial elements of sort of COVID-19 and now the economic recovery, you can see changes over time and how companies have responded. And I think it comes down to the individual circumstances of businesses. One thing we've learned here in our own engagement work with companies is,
00;49;52;05 you know, every company is in their own unique situation. And, um, but that said the stakeholder model, you know, how I invest in my workers, customers, communities, environment, my shareholders that's applicable across the board. So you it's, it's a framework. It's, it's just a way to think about how I might prioritize in an overall sense. And we see companies in retail take very different approaches, for example, to, to pay
00;50;19;29 sick leave, and many companies now making permanent, you know, the temporary extensions to paid sick that they implemented back in March and April. And the same thing with hazard pay, being extended and some pay pay increases actually being made permanent. So of course all that depends on the specific circumstances of the company, but, but nonetheless, I think there's an overall, uh, playbook here that is taking shape
00;50;47;13 [Michele Nellenbach]: Well. And I think that's, that's kind of a note of optimism for how we come out of this. Cause I do think that, you know, companies are having to think outside the box and the benefit structures, or, you know, we, we've done a couple events with other companies who talked a lot more about, um, delivery service and curbside and, and innovating as a way of providing better services and better meeting the needs of their, their, their workers. And so hopefully we come out of this and some of those really good practices stick for the long run, um, to your
00;51;17;20 point Martin earlier about there, there was a moment here where we can, we can redefine some of this now, and I think it'll be interesting to see what some of these innovations stick and what don't. Um, but I, you know, you have both mentioned the BRT letter. I think we it's, we, we should talk a little bit about that. So as Jason and I think probably all of our viewers know the BRT about a year ago, came out with a letter, um, or statement, uh, around, um, some argued. It was a new concept, embracing stakeholder primacy, others argued as you all have
00;51;51;18 both talked about it. Companies were already, a lot of the companies were already doing a lot of what was in the BRT letter. So it was just kind of a restatement of what they current practices are. Um, that was obviously before coven. So what is your assessment now, Tom, of, um, the BRT statement is COVID changed your percent, like your take on all of it and,
00;52;13;20 and, um, and whether or not it is a change in practice or not.
00;52;20;01 [Tom Quaadman]: No, I, I think, you know, as you said, many companies were, you know, viewing that they were doing a lot of these things already. And as I said, you know, with the chamber, you know, we went out for a couple of years to talk to a number of different, uh, people around the country about these issues. And we want to take it, you know, we want to take a little bit more of a granular approach and, and, uh, we launched launch pro project growth and opportunity back in October to talk about some of these societal challenges and how businesses were dealing
00;52;50;12 with them. And one of the first issues that we raised with this, um, and actually it was an issue we've been working on for four or five years now is corporate board diversity. Um, and you know, it is very important. Obviously board of directors play a very key role for businesses in terms of developing the strategy and, uh, trying to help the company deal with identifying deal at risk is very important that that board reflects, uh, diversity in such a way that, uh, the board can better understand what the
00;53;22;09 needs are of their employee base and what the needs are of their consumer base. And you, and you can't do that without having women and blacks and Hispanics on the board. Um, so that is something where again, the business community, I think, has been slowly moving towards a solution. Um, we think that's something that can be, um, that can be driven much more quickly. Um, and, uh, uh, you know, Oscar raised it earlier. We've had
00;53;52;22 discussions with a number of different, uh, CEOs, uh, regarding, uh, the issues around race. In fact, we had a, a national, uh, town hall on it in June and we've, we've set up a number of different work streams and, and businesses are very engaged with us because we have to remember, we're not only dealing with the pandemic, but if you look at everything that has happened during the course of this year, it started with impeachment. We had a pandemic, we had a financial crisis, we had the CARES Act
00;54;22;17 we've had social unrest. And I think the business community is really stepping up, not only to, as I said, to deal with their small, you know, their, their corner of the world. Um, but also, uh, to articulate, um, what it is that needs to change and how, you know, and, and if, if their voice can help lead to some of that change as well.
00;54;49;27 [Martin Whittaker]: Yeah. I I'd love to build on some of those comments, Michelle. Yeah. I, I think it'll be interesting when the one year anniversary comes around. I think the, the initial restatement let's call it the corporate per co corporation's purpose attracted so much more attention than I think even the business round table anticipated. And I think this year's one year anniversary is gonna attract a huge amount of attention, um, because it really was a marker. I know there was a lot of
00;55;23;06 skepticism on both, um, both sort of sides, meaning, you know, people just thought it was just window dressing didn't really mean anything. Um, and no, just thought this was like a radical departure from what companies should be focusing on. So, but I think we know from our own work, that actually be our Ts. It was a very courageous thing I thought, and we lauded them for doing that. And I think it was a great marker to put down and now it, it sort of begs
00;55;53;17 the question, well, how a company's doing. Um, and so I think that's going to be the issue. We've we adjust have a lot of data on that. And we'll obviously we'll be saying something about that. Um, this year has been a tremendous opportunity for CEOs, uh, BRT CEOs who signed that to demonstrate that leadership, um, perfect opportunity. If you want to be a
00;56;21;11 purpose, led a stakeholder led company, um, there's no better time than a global pandemic to show that and to put that into action. So I think that's what we'll see. Um, I also was interested in a recent fortune poll of CEOs where, and I've, I'm going to get the numbers a little bit wrong, but not a lot wrong. I think it's something like 60%, low, 60% felt like the
00;56;53;16 stakeholder model was business as usual.
00;56;56;14 [Martin Whittaker]: Um, it was something like 30 or low, 30% felt like it was actually a change. Um, this was a change in the way we needed to do business. And then a tiny minority said, we don't agree with this, or I forget the exact wording, but we felt like this was, this was not something we should be doing or supporting. Um, what was interesting though, was the CEO's he felt like it was a change. Um, we're actually, you might consider to be CEOs who are already leading on stakeholder performance. So I think
00;57;27;06 there's still a lot of work to be done to be, to be quite honest, putting some meat on the bones. What exactly are we talking about when we say cycle to performance? How do you know, how do you measure that? What data do you gather? You know, how do you objectively say whether a company is, or is not doing well on creating value for its stakeholders? That's where we need to go. That's certainly where JUST Capitalist is going. And, you know, I think this, I think the, the, the August
00;57;57;01 anniversary and then the September, um, the month of September, this year will also be very instructive because of course, it's the 50th anniversary of Milton. Friedman's New York Times OpEd. It's a moment where I think to reflect on the next 50 years, what do we want them to look like? Um, are we going to change at all? Are we happy where we are in terms of how companies truly build value for stakeholders and investing communities? Um,
00;58;29;28 or do we think we can do better? And I imagine that most people would think, um, we can do better. So that's, that's what I think will happen in late August and September. And I, um, I'm looking forward to it.
00;58;45;18 [Michele Nellenbach]: So the 50th anniversary of Milton Friedman's article, it's a, that will be a landmark day. That that's interesting. I had no idea that was coming up. Um, but yeah, I, I agree. And I, the interesting thing is, so BPC is, is going to start looking into some of this in terms of, you know, you, cause you hear from companies that they are doing a lot of their working with their communities and doing things for their workforce and not getting any credit for that. Or they're not sure there's a number of different metrics out there. And so we are going
00;59;17;09 to launch a project to kind of provide some more around that. And I think a lot of the polling Martin that you all do, it's very informative for companies and I am very late in and reminding folks to please post questions via YouTube, or you can do it on Twitter at BPC live. And I do want to touch on one more topic before we turn to audience questions and, uh, Oscar and Jason had talked some about it. So we know that COVID-19 has had a disproportionate impact on black and Latino
00;59;48;29 populations. We've done some polling that has shown that their households are much more likely to dip into the emergency savings during the crisis around 40% of black and Latino households have missed bill payments compared to less than 20% of white households. Um, so events over the last two months have also heightened awareness and scrutiny, obviously around racial injustice and inequalities. What role can corporate leaders as opposed to
01;00;15;06 elected officials play in addressing these disparities?
01;00;21;10 [Tom Quaadman]: That's a great question. I, you know, I'll give you one other example too. The digital divide has really shown itself as well because when you take a look at remote learning for children, there were segments of our society that were not able, they don't have the access to technology to do that. So I think one is, um, that the business community actually can play a very strong role, um, with some of these, I mean, you're seeing the pharmaceutical companies, not only in terms of the development of their vaccines and therapeutics to deal with COVID-19. In
01;00;52;13 fact, we came out with a map this week that shows just the breadth and depth of all that research that's going on in the United States. It's actually happening in 85% of the threshold districts in the U S but then ensuring we're, we're seeing pharmaceutical companies also, um, talking about how they're going to make this widely available as quickly as possible. Um, additionally, I, you know, I raised that issue about the digital divide broadband development of broadband deployment is going to be important part of economic recovery, but we also came out with principals on I'm closing
01;01;25;19 the homework gap so that disadvantaged students can have access to remote learning. So I think it's a matter of, it's not an either or it's a partnership, right? So I think there are some policies that, or some objectives that government can put in place, but that the business community can really fill in a lot of those details. So I think to the extent that we can have that partnership, we can, we can be a stronger nation moving forward.
01;01;54;07 [Michele Nellenbach]: Martin, do you want to try it?
01;01;57;21 [Martin Whittaker]: Yeah. Thank you. I, um, look, uh, we will, can CEO’s do what is their role. They have a tremendous role to play, um, you know, providing a living wage for your employees is addressing racial inequity in the country, providing health, prioritizing worker health and is Addressing racial inequity in the country. So we feel as though when you talk about, um, racial inequity issues and matters of, you know, social
01;02;32;00 unrest that the private sector has a huge role to play, that you can't really have a conversation about, about, um, racial equity without talking about economic inequity. And therefore you're really talking about the role of business in society cause that's really where wealth is generated and distributed. So we feel as though it's as central actually to our own strategy, we feel as though companies have a massive role to play, not just by themselves, as leaders of large corporations who influence the lives of
01;03;01;00 hundreds of thousands of families, if not millions of families and hundreds of hundreds of thousands of communities. Um, and in addition to all the small businesses and the suppliers that you mentioned earlier, so really just focusing on, you know, how can we, how can we, uh, create more, uh, equitable policies, actions, practices throughout our business on pay good jobs, supporting communities? You know, those are the, those are the core issues. And I think we see some, let's call it more superficial responses
01;03;32;06 around diversity, equity and inclusion without getting into the meat of what really is a sort of an operating financial economic systems change issue. Um, but I'm sure that's where we're going to go over the next six, 12, 18 months.
01;03;48;14 [Michele Nellenbach]: Great. And so again, if anyone wants to pose a question you can do so on the YouTube channel or through Twitter. Uh, so I want to go back a little bit. We had touched some on, uh, so there's this tension between, uh, businesses and not attention, but in government and who should be, what role should each should play. And so, like you've seen, whereas we talked about with the masks, um, in some States there is no mask requirement. You've had businesses step in to do one. Um, we do hear a lot
01;04;21;07 from businesses about regulatory flexibility. What is that appropriate balance between the company leaders and businesses during COVID and, and how is that playing out? I mean, obviously we've seen it through masks, but I think it's also, um, apparent other areas. What are you hearing some more, what are your company's asking of from the government to make this, to ease the reopen? Yes.
01;04;47;00 [Tom Quaadman]: Yeah, there, there, there are a few things. Uh, one is liability concerns and litigation. That is a very big issue. Um, it's not only about the business community, it's about universities, it's about the educational systems. It's about public transit authorities, um, that are all very concerned about, um, the fact that they, they face litigation. So one of the issues that is being, uh, debated now in Congress are liability protections. And in fact there are already liability protections
01;05;14;17 built into, uh, the act in a couple
01;05;17;05 [Tom Quaadman]: Of places. So for instance, uh, volunteer medical workers, uh, you know, got some liability protections there. Um, uniformity, as I mentioned, and certainties is something that is very important because, you know, I think initially we were looking at the shutdown as a 30, 60, or, you know, maybe 75 day event. Obviously we're dealing with something for a much longer period of time. So businesses are also trying to rethink of how they're going to reopen, um, where you look at businesses that have, you know, predominantly white collar workforces,
01;05;51;00 how can they, um, they may not reconvene and let's say the way that they normally did, but they may have to reorient their operations if they're doing some, they can't, people are convene on a satellite basis, you know, um, as well. So we're also going to see some shifts in the economy of, of how we're going to be operating that may not be readily apparent, but will be maybe in the course of 18 to 24 months innovation, uh, you, you
01;06;19;24 mentioned it earlier, Michelle innovation has a very big role to play. Uh, one is, um, as an example, we have CVS and ups actually testing out the delivery of prescription drugs, uh, you know, through automated vehicles. Um, but we're also seeing the rise of artificial intelligence as well as a, as a tool to help con combat COVID-19 and also a tool that businesses are using in different ways in terms of research. So I think there are going to
01;06;50;21 actually be a lot of leap forwards, um, that will eventually happen coming out of this while we, we sort of seem to be a little bit stuck in a quagmire right now, but I think, you know, we're going to be in a very, very interesting period of time, uh, where I think we're going to see some dynamic change in the economy for the better,
01;07;13;04 [Martin Whittaker]: Yeah. Just to build on that. Well, in this, in this instance, you see government set the rules, set the parameters, provide incentives, showcase leadership, help companies come together, um, present perspectives and requirements of other stakeholders. Um, all of that's crucial and, you know, be nice to see more coherent leadership, for example, on business responses to worker health and safety masks wearing
01;07;44;22 personal protective equipment across the board. But one thing that is clear to us, um, is that leading businesses now go beyond what is required. Businesses are, are acting. And the increasingly the public expects business leaders to act, um, by doing more, and this is, you might call it enlightened self interest, but it's not just doing what policy and and government requires us to do. We see that on wages, you know, steadily
01;08;16;12 progress is being made on lifting wages, uh, living way towards a living wage in the retail sector. We've seen Amazon Walmart target lift wages, um, dollar tree during the covert crisis. So we are seeing companies step up and take action. And I think that's kind of, that's kind of thing Oscar was talking about earlier. Um, businesses leaders can act in their own enlightened self interest. They
01;08;46;17 know what's good for their business. They know what's good for their company over the long term. And when you think about value creation and note in that sense, it creates a lot of incentive for companies to go beyond what is required, that, that where the boundary is depends on your, your own personal views and depends on the industry too, and the underlying issue. But I think the general sense is we're looking for corporate leadership to go beyond that and actually begin to say, okay, here's what
01;09;13;06 we're going to do. Why? Because we feel like business can and must be better on these underlying issues. And we've got examples of companies stepping up to do that all through, you know, the just model,
01;09;28;01 [Tom Quaadman]: If I could also just raise one thing regarding stakeholder capitalism, I think it's an important point. Um, and it goes, and it goes well beyond COVID-19 I guess two separate points. One is, um, when we talk about these issues or if, if we were to be in Europe talking about these issues, very often, they're related on climate change and you know, and that's fine, right? Because for many industries, climate change or response to climate change is something that, uh, relates to the bottom line of a company. Very often. When we talk about these issues in the
01;10;01;05 United States, they could be social issues. Some of them do tie into the bottom line of a company, some don't, but you know, something I think we need to remember too. And it would be great to have further discussion on is some of the issues that have come up in this space, right? Get viewed through a left of center lens, which is fine. But when you start to look at it, there are conservative groups that are using the beginning to use a lot of these different tools to also bring their side of the
01;10;31;05 equation into, uh, into some of this. So when you take a look at, um, sort of diversity shareholder proposals, or you take a look at a shareholder proposals, looking for an accounting of, uh, corporate payments to foundations, they're coming from the corporate side. So I think that is something we have to also think about as well is if we're talking about issues directly relate to the bottom line, fine. But if we're talking about
01;10;58;09 essentially political issues that people are looking to have the debate on that leaves businesses in the middle, and that is not necessarily something that they are either equipped to do, nor are they even there to, you know, to address those that's something that, you
01;11;13;05 [Tom Quaadman]: Know, unfortunately needs to happen inside the beltway.
01;11;19;02 [Martin Whittaker]: I don't, I don't disagree with that, Tom. I would say that's probably a great conversation for our next webinar presentation. Like what, where is that line? You know, we saw the DOL ruling this, or, you know, a couple of weeks ago on or proposed early on, um, fiduciary responsibility and clarifying. So the role of fiduciaries and selecting, let's say ESG funds for 401k plans, um, you know, what, where it begins, you begin to see politics creep in. Um, you know, I would say that is a
01;11;53;19 reality and that many companies are going to have to navigate that anyway, they're going to have to navigate their, their approach on what our, what some might see as being political issues. Why? Because the public expects that. I think it's very difficult for companies to say silent now. And so what, what companies should do hard to say, I don't want to present a blanket answer, but I think you're absolutely raising a crucial issue. And I think it's, it's sort of, um, you know, it really strikes to the heart of
01;12;24;04 what it means to be a business leader today and how to contend with, with those, with that, you know, the reality of a very complex competitive environment.
01;12;34;17 [Michele Nellenbach]: Well, and that's a great note to end this on laying the groundwork for future events. Cause I do think that's exactly right. There's, there's a lot of pressures coming from all sides on, on business leaders and trying to help them navigate that, those tensions where maybe do a few more of these. So thank you both to Tom and Martin and also to Jason and Oscar. It was a really great discussion. Appreciate you, uh, taking the morning with us. And again, you can follow all of us on Twitter, um, both just capital the chamber and BPC, and, uh, stay tuned for future,
01;13;09;17 um, corporate governance related events. Thank you all very much for joining us.
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While federal and state governments have responded to the COVID-19 crisis in a variety of ways, American business has also stepped up to help workers and communities. This corporate crisis response comes as increased attention has been brought to corporations’ role in society.
Join us for a discussion exploring how companies responded to the crisis. We will explore how public perceptions of corporations may shift as a result of the crisis, and what the long-term implications could be.
Featured Participants
Jason Grumet
President, BPC
@JasonGrumet
Oscar Muñoz
Executive Chairman, United Airlines
Michele Nellenbach
Director of Strategic Initiatives, BPC
@mcnellenbach
Tom Quaadman
Executive Vice President, U.S. Chamber Center for Capital Markets Competitiveness
@QuaadmanT
Martin Whittaker
Chief Executive Officer, JUST Capital
@MWhittaker_
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