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Vaccine mandates ‘a real pressure point’ for companies, BCG global chair says

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Boston Consulting Group Global Chair Rich Lesser joins Yahoo Finance Live to discuss challenges corporate leaders are juggling, including employment, supply chains, COVID-19 vaccine mandates, and carbon emission reductions.

Video Transcript

BRAD SMITH: The employer-employee relationship has been in the spotlight while companies evaluate return to office timelines, vaccine policies, wages keeping up with inflation, and retention, of course, as well. To discuss these key decisions correlated with the employment situation, we've got Rich Lesser who's the Global Chair over at Boston Consulting Group joining us now. Rich, great to have you here with us today. You know, we'd love to get a sense and a pulse of your discussions with CEOs, especially as they are navigating a lot of these broader employment-based themes as they set their course for 2022.

RICH LESSER: So I think right now to be a CEO, you have to be thinking about three time horizons. One time horizon is the immediate-- the next couple of quarters. And you pegged the biggest issue well, which is the people challenges right now. We know attrition levels remain high, people are changing jobs, many companies are looking to hire and looking to hire ambitiously because their business outlooks are all-- not all, but mostly-- pretty strong.

And so navigating that is really tricky. And, frankly, how to navigate the uncertainties that Omicron presents-- I was talking to a retailer yesterday who had massive numbers of people out of work, and it's starting to come down now a bit-- they're more Northeast-based. But you know, many people are facing challenges.

The other thing I'd say is very much near-term are still supply chain challenges. We know China is still facing enormous pressures on its supply chains as it's navigating through the pandemic. We have all sorts of disruptions that have gotten somewhat better but still remain very challenging. Those are the short-term.

The medium-term, I think, centers around the future of work and digitization. The long-term is often around climate and sustainability. So they're juggling across three time frames right now, which is quite interesting.

AKIKO FUJITA: Yeah, Rich, I'm going to get to the long-term in just a bit. So specifically on the staff shortages, though, to what extent has that dictated a company's policy on vaccine mandates? We have seen a lot of businesses, hospitals as well, kind of walk back their policy because they aren't able to staff up in a big way if they keep that mandate in place. What are you hearing in your conversations?

RICH LESSER: It's a real pressure point, particularly for a lot of organizations with frontline workers that are trying to provide service to their customers, whether that's a hospital or a retailer. You know, the pressure is very real. But you know, I think some companies have succeeded to navigate that pretty effectively.

I mean, the list that you have on screen now are all companies that have made a choice that there will be some short-term pain. They try to educate their employees. They try to show support. But they also try to be clear that this is a responsibility. It's a responsibility to our community, to each other, and to our customers. And they've been able to get through it. But I do understand a lot of companies feel enormous pressure on this, depending on their locations, the state of their workforce, and so forth.

BRAD SMITH: In another kind of commitment to community and responsibility to community as well, on the climate front, you've actually collaborated with the World Economic Forum. And you produced the CEO Guide to Climate Change. You know, I would love to understand where you believe that some of the corporations are keeping their commitments in place in actively meeting some of those targets, or on the opposite end, falling behind some of those targets that they've set forth?

RICH LESSER: Yeah, so it was really terrific. We had our annual meeting of the Alliance of CEO Climate Leaders yesterday. It was virtual, of course. We couldn't all be in Davos like we often are. But it was nearly 80 CEOs from the leading companies around the world, all of whom have made bold pledges.

And the overall news, I think, is encouraging news. The chart you have on screen now, we've seen the growth of companies signing up for the science-based targets initiative, basically saying they have serious climate targets growing 65% a year over the last five or six years-- now over 2,000 companies. So I would say overall, many more companies are signing up.

The pledges themselves are getting more substantial, not just about the amount of reduction within their own operations but taking on the challenge of their entire value chains-- scope three as it's called in climate language-- to bring those down.

So those commitments are going up, but you highlighted in your question the other part of it, which is commitments are great, translated into action is what we need. And that requires new ways of operation, new skills, changes to the business portfolio, changes often to leveraging technology, and different strategies-- different strategies to compete. What we tried to do in the report that we did-- oh, sorry, Akiko, did you want to jump in?

AKIKO FUJITA: No, Rich, I wanted to follow up on that very point I was thinking about, which is moving beyond just sort of the headline commitments and really talking about scope three. We've seen some of the big companies, like a Pepsi, for example, make significant investments in working with suppliers. How much of that you think expands even further this year?

I mean, what are you hearing from companies about how much they are now willing to put aside to be able to work with suppliers-- they can truly say that they are carbon neutral?

RICH LESSER: So first of all, you're so right. Other than the people in the hardest to abate sectors, like steel and aluminum. For most companies, most of their footprint is in their scope three. It's in their supply chains. It's actually not in their own operations.

So if you only focus on your own operation, you don't deal with your suppliers, you're a big global company, you're leaving most of the need on the table. That's being more and more recognized. The commitments are going up. It will be a multi-year journey. Many of these suppliers are farmers or mid-sized companies-- people that may not even understand how to approach it yet.

So this isn't a flip a switch kind of thing. This is a multi-year engage with suppliers, educate them, partner with them, in some cases be willing to pay more for the products they offer because it's the only way they can afford to make investments, and figure out how to make your products more valuable to customers so that it gets paid for so that you can afford to do it.

The point of the work this year, because it is so important, is to show that, actually, there's a huge advantage to being an early mover in this, and that the risk for most leading companies is not that they go too fast, it's that they go too slowly. And going too slowly risks really falling behind.

Look at Tesla and what they've been able to do. You want to be ahead of the curve in your industry. And there's value in terms of employees and attracting talent. There's value in terms of the cost you can save. There's value in terms of cheaper financing and in terms of shareholder value. And there's an urgency to act for the planet, but there's also an urgency to act for the business. And I think that really comes through.

AKIKO FUJITA: Yeah, an added pressure from investors, increasingly. I mean, that's another layer for these companies. Rich, always good to have you on the show. Rich Lesser, Boston Consulting Group Global Chair joining us today.

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