Mattel, Inc. (MAT) Earnings Call Transcript & Summary

Please welcome the panel on The Listening Project: Charting a New Course for Global Leaders, moderated by CEO of The Harris Poll, John Gerzema.

Good afternoon. Really excited to be here and to share with you a deeper conversation into The Listening Project by the Milken Institute and The Harris Poll. We conducted a research endeavor into 27 nations, and we've presented the findings yesterday morning in a plenary. And it kind of got into a real simple overarching theme, which is that the majority of people around the world at this point still feel somewhat left out of the recovery. And so how do we really manage and balance economic expansion with inclusivity? And I've got a great group of panelists here that are the experts. I'm going to dare say that they're the sort of the avengers of this topic because they're going to come at it from a lot of different areas of expertise. We have experts that span the range of both corporate leadership and how we look at ESG and investing and how you guide a culture toward transformation. We have experts focusing on global philanthropy and fundraising, and we're going to look at it from a lot of different angles. So let me get in real quick and sort of introduce our esteemed panelists. I have first with us Ynon Kreiz who is the Chairman and CEO of Mattel. Ynon is an amazing leader. He's taken Mattel into a dramatic growth trajectory and has also worked on expanding it beyond products into becoming an entertainment brand. And also really interestingly, and I'd love for you to talk about this, how you've been able to sort of imbue values into the products and how that's been a growth driver also for the company. And then I have a fellow Minnesotan here sitting right next to me. This is Michael Nyenhuis. Michael is the President and CEO of UNICEF USA. Previously, Michael was former journalist, I understand, which is quite interesting. And he is an expert now with 25 years of experience in global humanitarian development and fundraising and was previously the President and CEO at Americares. Then I have over here on my side, Samuel. Do you want me to call you Sam or Samuel?

Please do. Absolutely.

Okay. So Sam Stephens is the Executive Director of AB InBev Foundation, and he has 20 years of international NGO and philanthropic leadership experience that he's going to bring to this discussion. And your passport, you must have a pretty thick one because I understand you have 110 countries.

112, actually.

112 and counting. Amazing. And then last but not least, Stephanie von Friedeburg, so great to have you, the SVP of Operations at IFC, and you are also the first Senior Vice President. And you've really been sort of taken on this huge job of overarching and transforming of your organization during the pandemic, which I think has been no small feat. I'd love for you to talk a little bit about that. And you're also focusing on managing your $60 billion debt and equity portfolio in more than 100 countries. And I'd love to hear you talk about the types of areas where you're making your investments.

So let's get into it. The first thing that we learned in our data was that 56% of people around the world actually feel that the pandemic -- the worst of the pandemic is still ahead of us. And this feels like a far different sort of tenor and tone than what we're sort of experiencing here at the conference, at least from my perspective. And I guess, the main thrust of this brief conversation is going to be, at the same time, business has done a tremendous job of earning respect around the world. We saw very high levels of expertise and support for business. And with that, how can business make a real difference in the post-pandemic world? So let's kind of get out and talk about that. The first thing that our data showed was there was a lot of anxiety about people feeling left out of the recovery. Just any thoughts, group, about the reasons why. What are sort of the underlying challenges that you see?

So first, thank you very much for the panel, John, and the opportunity from the Milken Institute. When my team actually said they want you to come and speak on The Harris Poll, I thought what kind of content do I have that might actually be meaningful? Then I read the results. And I would actually say that as global leaders, we have really failed in 2 areas or are failing in 2 areas. And I think the data speaks to that. The first is clearly COVID and the vaccines. Yesterday, somebody referred to it as a vaccine apartheid. And in our lowest countries of the world, the countries we deal, only 4% of the people have been vaccinated. So I think the second place where we're really missing out as global leaders is climate. Our planet is on fire. We've seen floods, fires, famine this year. And you put those 2 things together, 100 million people in abject poverty. They're living on less than $1.90 a day. And they've all happened in the course of the last 18 months. That's 10 years, a decade, of development that we've lost. So what do we do about it? I think that's the really big question. And I -- we've got to do 2 things. We've got to get jabs in arms. It's really not okay that only 4% of the poorest countries don't have vaccines. And at IFC and at the bank, we're working on the supply side, getting manufacturing done in our countries of operation. And on the bank side, we're making money available to governments. But we're thinking it's the end of 2022 before we actually have global herd immunity and enough people vaccinated. And then second, I think we need to really focus on how do we build back better. That's what everybody is talking about. Our definition of that is what we call GRID, so Green, Resilient, Inclusive Development. And it really around how do you get the right policy and regulation to incent private sector-led growth, job creation, projects that are shovel-ready that people can invest in and then leveraging all of everyone's commitment to net zero. $88 trillion worth of balance sheet is committed to net zero and no idea how they're getting off the taxi rank. So we have to figure out how we get those guys to play and help us.

Really interesting. Sam?

That's fantastic. I totally agree with Stephanie. I think we've got a lot of challenges ahead of us. And I think the results -- incredible results, by the way, John, and thank you for your leadership on that. I think the results were heartbreaking but not necessarily surprising. I think, to Stephanie's point, there are so many people in the world that aren't able to tap into the optimism that so many of us have the privilege of feeling. So many people left out of the vaccine campaign so far. And even those that have had access to the vaccines feel let down by what they perceive to be broken promises. A lot of leaders saying, "Don't worry, the pandemic won't last long." "Don't worry, things will get better when this happens or when that happens." And so there's a growing level of mistrust, I think, which The Poll also spoke to. And so I think what we can do is look at the great deal of respect that the business community is engendering right now and leverage that and work to do a few different things. I think we have to be more transparent about the realities of situations, what we know and what we don't know. And I think we really have to think about the approach that we're taking. To Stephanie's points, so many people globally are living either in abject poverty, extreme poverty or on the cusp of catastrophe. They are one setback away from not being able to meet their family's needs. And those of us that have the capacity and the resources at our disposal need to think about this is a breakthrough opportunity. I was at a dinner last night with Van Jones, and he had a great quote, and it said that, "When there is a breakdown, it can lead to a breakthrough." And I think COVID pandemic has been a real breakdown for the global community. But we have an opportunity to turn it into a breakthrough by reevaluating the approach that we take to be more inclusive in an intentional way, to look at like we're doing at the AB InBev Foundation, from a philanthropic standpoint, where are there neglected communities around the world that we have an opportunity, given the networks, given the resources at our disposal, to help meet those needs? And how can we bring in the broader networks and the connections that we have to help meet those needs? Because we have an opportunity to ensure that truly a rising tide does lift all boats, but it's going to require a new approach, and we're excited about talking about that today.

Thank you. Michael, same?

So I was, maybe 9 months ago, doing a virtual visit to our team in South Sudan. And UNICEF, as you know, is child-focused, the largest platform to reach underprivileged kids around the world. We have a large program in South Sudan. And this is in the middle of the pandemic, and the kids there are out of school just like our kids are out of school. And we had worked out, our team there had worked out kind of an innovation using current technologies, radio, working with the Ministry of Education and the local radio stations to deliver curriculum to kids in their homes over the radio because that's the primary means of communication there. So we're actually virtually in this little home there and watching this 8-year-old girl who got a workbook out under a dim light, taking notes from this curriculum on the radio. And I tell you that just to say that things are really broken in a lot of places. And we -- we're concerned. At UNICEF, we have numbers to show that there may be about 11 million girls who are lost to the education system because of this year-long or more gap, like they're not going back. Life has changed that much. So if you're in any of those communities, things are not going to get back to normal fast. This is where some of the data that you have that shows people are pessimistic, I think, is real. It's a difficult place to be. And we need to change that. And you need to get through that because we have to take -- the way to do that is we have to take equity seriously. We're part of a large global effort to get COVID vaccines to the whole world that was set up to be equitable distribution of it. And equity is fine until it runs up against self-interest. And what has happened is the wealthy countries absorbed all the vaccines. And there are many countries where we're working where only 2% of the population is vaccinated so far. So if you're in those places, optimism is really hard.

You point that out, and also, Ynon, you've taken equity and really looked at that across the organization, doing some amazing things at Mattel. I know you focused on 100% pay equity about removing degree requirements to sort of open up the candidates' applications that can come into the organization. Can you talk a little bit about that? How do you take these big inequity problems and bring that into the corporate level and to try to create parity or equity?

Yes. So Mattel owns one of the most important portfolio of iconic franchises in the world. So it turns out we don't just sell toys; we actually manage franchises that are cultural icons and have societal impact. And with that, as part of our transformation, we define the purpose of our company to empower the next generation to explore the wonder of childhood and reach their full potential. And as a company that has so much impact in that what we sell, kids hug, they go to bed with, it's a source of inspiration, it bears even more responsibility than a corporation that has some economic targets and goals. And we do the work internally as well as externally. So we -- as it relates to how we engage with consumers, each and every one of our franchises has a purpose, a reason to be -- beyond the play system. And this is something that resonates with families, with parents. Barbie inspires a limitless potential in every girl. We look to work against injustice. We look to promote equity, diversity, inclusivity. We also do a lot of work on sustainability, but I'm sure we're going to touch on that later. And of course, internally, inside Mattel, we set very clear goals to achieve pay parity among all employees that perform similar work, and we have done that globally. Today, 58% of our employees are women, and 46% of leadership positions of the company are held by women. So it is a very important part of our journey. And it's an ever-going quest. It's also really interesting to see how our brands touch and make impact in communities. During the pandemic, we launched different services, free services, leveraging the appeal of our brands to offer solutions for families and give explanations around different topics that were very current. And with that, what is interesting to see is how the toy industry as a whole became such an important partner for parents in entertaining kids, occupying time, especially when it was about important or quality product, trusted brands, played a really important role during the pandemic and in collaborating with parents and supporting children during difficult times. So we -- both as a cooperation, as an employer and as a toy company, we touch a lot of really important areas that matter to society.

Yes. It's excellent. And I think as we stay on this theme of sort of how do we take economic expansion and equity and drill down just a little bit more, I'd love to kind of get into the finance and investment side of this a little bit more. Ynon talked a lot about sort of bringing parity and bringing equity. As to Michael, I mean, how do we look at the financial system? I mean if you could drill a little bit deeper on this. How do you, Sam, look at investments from the foundation at AB InBev? And is that changing as you're trying to sort of find ways to sort of drive greater equity in your investments?

Well, John, for the last 70 years, IFC is the mother of impact investing. And we have proven that you can do well and do good. And we spend a lot of time thinking about how do our investments do good, not just well. So we have created a number of really interesting tools that we use to actually measure what we're doing because we knew our -- well, our Executive Director said about 5 years ago, "How do you actually know that you're having impact?" And it was a fair question. So as part of our kind of rejig of the institution and changing our strategy, we created something called AIM, which is our Anticipated Impact Measurement. So for every single project that we do, we look at the return. So what's the IRR? What's the RAROC? And then we give it a score of 1 to 100 that actually tells us what kind of impact are we going to try to have. So we do it ex-ante and we do it ex-post, and we track. And every year, we have a conversation with our Board about on a matrix, where do we want to be on each one of those and then how do we move north and east over time so that we can do well. And the interesting thing is that our business has shifted and shifted pretty considerably into emerging markets and trying to -- again, to create projects. And in those instances, we get much higher AIM scores. But we did a recent study with Harvard Business Review, and we looked at the 65 years we've been investing in equity because we invest across the capital stack. And on a risk-adjusted basis, we outperformed the S&P. So you can do well, and you can do good.

Really interesting.

That's fantastic. I love that, Stephanie. I think from the philanthropic standpoint, we've taken a look at how can we really maximize the impact of the investments that we're making. And when you think of philanthropy, there's a traditional model, if you give money and you think you're doing good, right? We want to rethink that a little bit. We really want to make sure that we are filling the gaps that exist in the world. Those moats neglected needs this philanthropic white spaces, but not necessarily doing it in the old ways. We're going all-in on the sustainable development goals. We believe that is key to making the world a better place. And we know that the pandemic has really shed a light on the disparities and the gaps that we need to fill in order to make that happen. And so with the resources that we have, we want to make sure that we're touching those philanthropic white spaces, but we're doing it in a way that looks at women's empowerment because gender quality is so key not just for the work that we're doing but for the achievement of the SDGs in general. And then we want to make sure that we're looking at innovative solutions. Somebody once told me that the solutions to all the world's problems exist in the minds of people in the world today. So we just have to figure out how do we get them the resources that they need to bring their ideas to fruition. So we really want to find those innovators, those world changers and empower them and equip them with what they need. And to Stephanie's point, we have to look at measurement evaluation. Everything that we do, there has to be very, very in-depth analysis of what is that impact. And then the last 2 things for us are, we want to make sure that once we learn from that impact, we share that. We scale up what works. We share what doesn't work. We don't want to withhold that information. We want to make sure that everybody out there learns from us, so that others aren't duplicating the work or trying to reinvent the wheel, that they can share -- learn from our sharings and, most importantly, that the work that we do is sustainable with the impact that we create. It doesn't do any good if we make an investment today, pat ourselves on the back, and then, 3 years from now, the situation on the ground in that community goes back to the way it was. So we want to make sure that sustainability is incorporated in that. So this new approach is something we're really excited about, and we hope that we can take a lead and demonstrate to others that these types of investments philanthropically can lead to the type of change that we need to see globally.

Michael, are you seeing the same sort of things in terms of overall sort of metrics changing in different ways?

Yes. We -- there's all the traditional metrics of tracking kind of the projects that we deliver in the field, whether water and sanitation, nutrition and all of that. But increasingly, what we're interested in is thinking about how systems are important to change. And this is a harder metric to get at is how do you change not just like the availability of a particular drug to combat a disease and then that disease's outcomes. But how do you change a health system so that it's stronger and can be more resilient when a pandemic comes by or when Ebola hits or when you have another waving -- wave of disease or other issues. We really want to start thinking more about systems thinking, how do you put together health systems, education systems and develop the measures that show that those are progressing. Because one of the realities still of philanthropy is whether it's foundations, corporations, individuals, they want to see results. And what they traditionally are looking for are simpler metrics and short-term metrics about did you change a particular outcome in health or in education? But as we all start thinking more about systems change, we have to think a little bit more in a complex way about how does that show up in these kinds of evaluations that we can do as well. So I think that's a big part of the change, and we need to get some of our funding friends to go along. And many of them are going along on that journey with us to move away from some of the more simple, short-term metrics and think longer term about systems change.

Well, speaking of longer-term metrics, Ynon, there's also brand metrics and the fact that I think what you're doing that's so interesting is you're taking metrics of DEI, ESG and also kind of putting those into the culture, right, with brands.

That's right. We are a commercial enterprise. So obviously, we want to do good business. But it turns out that doing the right thing is good for business. And if you look at the journey of some of our big brands, take Barbie, for example, Barbie went through a transformation. Many people think of Barbie the way it used to be many years ago. But Barbie today is the most diverse doll in the market. There are more than 10 different body shapes, more than 35 skin colors and about 100 different hairstyles. Barbie, the blond, classical Barbies, is less than half of the business today. And the second most popular Barbie in the Fashionista line, which is the fashion line of the franchise, is a Barbie on a wheelchair. So diversity is very much part of the language, part of the Barbie offering. But also with American Girl. American Girl, the Girl of the Year last year, Joss Kendrick, was a surfer with a hearing aid. This year, we're launching 3 new doll that are all about being iconic characters from different cultures, which is also very interesting. If you look at UNO. UNO, we had a line that was designed by Nina Chanel Abney, which -- where a percentage of proceeds was designated to support black entrepreneurs. So you have all these examples and activities, including -- another example is an UNO deck of cards that was designed in partnership with the National Association for the Blind (sic) [ National Federation of the Blind ] that is available for people who can't see properly. So these things are not done for marketing, are not done for positioning. They are real products that are heavily invested with a clear campaign and audience that is out there embracing them. And it turns out that when you do the right thing, it resonates with parents, resonate with families. And back to the recognition of what we do and the societal impact we have, it goes hand in hand. And in today's world, especially with children that are the most sophisticated consumers out there, you have to be authentic. It has to be real, and it has to be part of the offering, part of the DNA of the company. And this is how we design product, how we think about the communication with consumers. And the more we do that, we're seeing the results coming back. And again, also, it turns out it is good for business. But it's been a clear part of the transformation being very methodical, very intentional about our brand purpose and playing our role as a corporate citizen.

And bringing more consumers arguably into the franchise, maybe...

Absolutely.

Well, I'm going to go into one last section on access before we get into the thrust of our discussion about how business can get more involved. But in the briefing call, all of you basically said, "If we're going to solve any of these challenges, we have to solve digital, digital access." Can you talk a little bit about that? Like how are you looking at digital or the lack of it as -- and telecom is sort of a fundamental barrier to any change?

So digital property is real. It's real in this country, but in our countries of operation, it's really real. I actually ran our telecom and technology business for many, many years and invested all over the world. And when we finished in Africa, which really was the last continent to be connected, we raised our heads and said, "Okay, we've done a great thing. We've helped them leapfrog." But I think what we've realized now is that they leapfrogged to 2G into 3G. But they don't have the backbone infrastructure. They don't have any of the digital infrastructure to create digital economies, which is the way of the future. So we actually have our moonshot project for Africa, which is how are we going to connect as many people as possible. There are only 13 countries in Africa that actually have the majority of their citizens connected to the Internet. So Michael was talking about education. I look at education and COVID, 1.6 billion children out of school, 450 million of them didn't have access to the Internet. And we know, as a result, they felt pretty far behind, and many of them are not going back, and most of those are girls. So they're not going to have the basic reading and writing skills. They're not going to be able to develop the digital skills that will make them valuable employees going forward and valuable, therefore, to their economies and as citizens. It's really a serious problem that we need to address. How do we actually get those digital literacy is another piece of our strategy. And then the final piece is investing in young venture start-ups. And what we're finding is, unlike Silicon Valley where people think, okay, how am I going to disrupt this business? We have people thinking about how am I going to use technology to solve really difficult development challenges? And we're finding really interesting companies to invest in. Actually, one of them is based here in California. It's called Apeel. And they've created a vegetable coating that goes over fruits and vegetables that extends life for as much as a month without refrigeration. So imagine when we work with an avocado farmer in Mozambique or Madagascar, we can coat that fruit at the source and send it directly to Europe, and it does better. And it does better for the environment because it saves food waste. It prevents us having to build refrigeration chains and whatnot. It's fabulous. So we look at a lot of technology, and we're very heavily invested in Africa as well as in Asia and other countries.

Incredible. Mike will jump on that.

Yes. So we've had an initiative that was -- has been really ramped up because of the disruption to education caused by the COVID pandemic that really an audacious goal to connect every school in the world to the Internet because we've just recognized the importance of giving that digital access, pandemic or not, just to give -- as you were just saying, to give students some of the same advantages that our kids have to access to information. And so that program is rolling out. And I was talking with our Kenya Country Director recently. $3,000 will connect a school to the Internet. So they're trying to put together the funding now to continue to do that. They're doing it 1 school at a time, $3,000 connect a school, do another one, do another one, increase digital access because it is the future of education, and we can't let another generation of kids in poor communities fall behind. Frankly, we have some of the same issues in our own country. There's just lack of full digital access for too many kids in our country here that we need to address, too. But it is the future. We need to solve it today.

Ynon, Mattel is not only a product brand, it's an entertainment brand. As you look at sort of digital and the potentials for a business and sort of promoting the values that you want to bring across, how does that cascade out of your business, out of your products into the other properties?

Yes. So part of our strategy is to expand our business beyond the toy aisles. Given that we own such a strong catalog of brands, we have an opportunity to touch and engage children in other categories. Think film, television, live events, consumer products and merchandise, music and, of course, digital experiences. On the movie side, we are now making -- we are now developing 13 different movies with -- for Barbie and Hot Wheels, American Girl and Masters of the Universe. Stars like Margot Robbie, Tom Hanks, Vin Diesel, Daniel Kaluuya and many more. So this is part of our strategy. We're also doing a lot on the television side with many shows that we sell to Netflix and Nickelodeon and really through just expanded distribution for Thomas the Tank Engine in more than 150 countries. So we do a lot of engagement through content that is somewhat obvious. But given where we are and -- where we are in our transformation, it's a new opportunity that is really driving a lot of momentum. But of course, when it comes to digital experiences, this is a whole new opportunity for Mattel. And we do that in multiple ways. We do some licensing. This is where we partner with a game developer. They make the game based on our own intellectual property, and they distribute it through their own platform or channel. We also have our own mobile gaming studio in partnership with NetEase, which is one of the largest mobile gaming companies in the world, where we make our own games and then we distribute them on our platform. And we already have 3 games between UNO Phase 10 and Skip-Bo. And we also publish games on popular platforms for children, and that is part of how we reach and engage. But in all of those cases, we stay true to our mission and purpose. The brand values that we talked about earlier dictate and really impact how we connect with children. And even when we make a theatrical movie with big talent, big stars, big writers, big producers, we always have creative control. We can -- we work with them, of course, to make sure that we stay true to the DNA and the core values of the franchise. It's in their interest to do it because the brands are successful already. So it wouldn't make sense to deviate too far because then you don't capitalize on the opportunity to connect with kids for whatever reason made the brand successful in the first place. But we do give our partners creative freedom for them to imagine and reimagine and interpret the brand as they see it in their eyes. But the opportunity to engage children on digital platforms is definitely a key part of our strategy. This is where they spend time. This is not part of their day-to-day. And we're looking to be -- to engage with children wherever they are. And that's a key part of our journey, a key part of our transformation.

Excellent. And presumably, a lot of these types of engagement also is the ability to sort of convey health information and things like that.

Absolutely. Absolutely.

Great. I want to remind the audience, we're going to go in about 15 minutes to questions from you. So you can use that fancy QR code that will pop up there and log your questions in, and we'll read them out on the stage. But before we do, just to kind of tie this off, Sam, how would you look at digital in terms of the investments that AB InBev would be making in terms of trying to solve some of the problems that the panel has been discussing?

Yes. Great question. I think the points that everybody have made are so important and really showed the need for and the potential of connectivity and technology to advance the sustainable development agenda. And I think we all know, to achieve the SDGs, underpinning almost all 17 of them is the need for connectivity and technology. So we see that when we're looking to invest in innovators, what new technologies can we invest in that can leverage things at scale and look at affordable connectivity opportunities even in some of our pillar work. So one of our pillars is sustainable agriculture, for example, really looking at the well-being of small holder farmers globally, helping improve their incomes, generating sustainable livelihoods, improving the overall well-being of their families, making them more resilient to climate change issues going forward, addressing also food and security within their community. And one of the most important things in the work with small holder farmers is access to technology. So that technology is going to provide you with training about how to operate farms, about how to manage soils, about how to manage and rotate crops, about different types of products that you can bring in based on your geographic area. It can connect you to platforms where people can share best practices. It can connect you to markets, so that you know what -- where you can avail your products to the broader community. And all of that requires connectivity. Without that connectivity, you don't have the opportunity to provide the skills training, the capacity building at the scale that is necessary to achieve the kind of impact that you need globally.

It sounds like all of what you guys are really saying that be kind of fundamental. It was interesting in the data from The Listening Project from the Milken Institute and Harris Poll, the #1 issue this year when we ask this question, what would be the biggest solution that, if solved, would make the most difference in your life and that of your community, it was actually food insecurity and water scarcity. And then followed by that, it was access to health care and social services. Then #3, education and jobs. But down the list was climate change at #7. And I'm just curious why. Is that what you're seeing? Is that because that's not the most direct noticeable impact that most people are facing?

So I think it differs between the developed world and the developing world, at least that's what I'm seeing. The developed world seems more focused on mitigation. The developing world needs to focus more on adaptation. So again, if we go where did the GHG emissions come from, they're coming from the developed world in Asia. They're not coming from Africa. Only 4% of the GHG emissions outside of South Africa come from the continent. So farmers, small business holders, they're all thinking about adaptation. And I think they have higher needs than to think about climate. So you're right, health care, I mean, the COVID crisis laid bare in our countries of operation, the health care systems. Michael touched on that. But just to put it in perspective, there are 274,000 ventilators in the United States. There are 3 in the Central African Republic. There are 1,500 critical care beds in Nigeria, a country that has over 200 million people. So when the COVID crisis hit, it really did show us the lack of resilience in the health care systems in most of our countries of operations. So that's an area of focus for us going forward. We've talked about education. Clearly, that's important for families and for parents. And COVID has really demonstrated that we don't have strong enough education system in our countries of operation. I mean imagine an entire generation of young girls that are lost. That's shocking to me. So I do understand the results of what you're seeing. And I think the developed world is putting pressure on the developing world to address climate because 75% of the growth in GHG emissions in the next decade are going to come from emerging markets. The governments in those countries aren't looking at it the same way.

Interesting.

I thought about the statistics that you have there. So I think the ones that were 1, 2 and 3 on your list are really symptoms of a problem being caused in part by climate change, right? So I think in a lot of the countries that we deal with, people are really interested in those symptoms, like there's food scarcity, the environment is changing and water is scarce now. We have more floods or droughts or fires or whatever. These are the things that are at the top of people's minds. And so they may not initially think that that's climate change, but they're all enhanced or made worse by climate change. So symptoms versus kind of an underlying cause, and I think people really focus on what the symptoms are.

Well, it seems to me, Michael, to what the solutions that people around the world in this study was 27 nations and 17,000 people, the largest, biggest voice that they said of change that could happen was if business gotten more involved. And what I thought was quite interesting in this out of The Learning Project (sic) [ The Listening Project ], we found that 75% of people around the world have the same or even more positive impression of business across 21 different sectors. And there were 2 really interesting stats, and this kind of comes at maybe perhaps a little bit of their frustration with their own local governments because around the world, there was a significant decline, almost 17 points, of people believe in their countries have effectively handled the pandemic. But get this, 60% believe that their companies were more reliable than the government in keeping their country running during COVID, and 54% said they trusted their companies more than the government. And so really high levels of impressions, positivity at about 76%. So there's sort of this clamoring for business to get involved. And I guess, I'd start there with the panel. Why do you think that is the case? And where do you think business could do a better job?

Go ahead, Stephanie.

I'm going to start? Okay. So I actually think that a couple of things happened. First, we were really able to run many economies virtually. So if you look at the strength of an Amazon or some of the online platforms where you could actually get what you needed, I think that helped. I think even more importantly, Project Warp Speed and brought vaccine so quickly to the market. People looked at that and said, the private sector can solve problems my government can't. I actually think what people don't realize is that, that was a public-private partnership. And the funding for that actually came from the government. And I think it's an important reality that we need to keep bringing back to the table because I actually have pause when I hear people say we're going to rely on the business community to solve all of these problems. And the reason why, John, is I hear it around how do we build back better, so how do we actually enact our GRID strategy, what are we going to do about climate change. So remember, as a result of COVID, the economies have decoupled. So the U.S. is coming back. China is coming back. But the middle-income and lower-income countries contracted 8.6% last year. That's a lot of ground to make up. And there is no fiscal space left. The governments can't borrow anymore. The debt -- they've reached their debt ceilings. So everyone says, well, private sector will solve it. The private sector will go from investing billions to trillions. But we've been saying that since 2016 when we met Natus, and we haven't seen the shift from billions to trillions. So I actually have trepidation that we're putting on the private sector what the private sector can't do by itself. And without the right kind of collaboration, and this is really from a global leadership perspective, how do we think differently, how do we collaborate differently and how do we create those public-private partnerships like Warp Speed that actually help us solve some of these really audacious problems.

Excellent point.

Yes, I echo that. I think -- in my mind, I focus less about the why and more about the, well, what do we do now? And I think this presents us with a huge opportunity to leverage that goodwill, that affinity that we're feeling right now towards the corporate sector and demand that the corporate sector leverage that to build more public-private partnerships, to work with philanthropies, to work with NGOs to establish collaborative partnerships and really advance the social change agenda. Because there is such an affinity, people are respecting the corporate so much. This is a rare opportunity to really leverage that and demand action from those corporates. So I would say to everybody out there, let's take advantage of this. And let's think about what we can do together to make the world a better place, and let's leverage this goodwill to engage the communities where we work to move this forward.

And Ynon, from a corporate standpoint, Mattel has been focused. You've been focused on updating your ESG and your DEI policies. I mean how do you sort of look at this? How do you look at business in this moment for business right now? And how would you respond to these 2 that want to do more public-private partnerships?

It's interesting. The -- we're a public company, and we have quarterly reports, right, quarterly earnings and -- that we -- where we report to the market. And often, I -- being inside the company and seeing the rigor, the process, the attention to detail, the accountability for every number and every letter, and you sometimes say, you know what, I wish governments would have run like that. I actually do think that the business sector is doing a really good job. Not just Mattel, there are a lot of other great companies out there that really go out of the ways -- or out of their way to do the right thing by the consumer. There is a system in place. The accountability is measured every day. And there are repercussions if you don't stand up to what you said and what you committed. And it happens at a faster pace than the public sector. Of course, governments get elected, but it's every 4 years and -- or whatever period is established in whatever country. But I do think that the business sector is very quick, very nimble and responsive to changing conditions. We talked about some of our goals, and we mentioned earlier sustainability. Here is an important area where, really, I mean, this is on government to take on given the size and scale and impact, but many companies are also contributing and going through real effort, real work to contribute and do what they can to help mitigate impact on our planet. At Mattel, we, on our own accord, put out a goal that is quite lofty to achieve 100% recycled, recyclable or bio-based plastics -- plastic materials in all of our product and packaging by 2030. We recently, just recently, on top of that goal, committed to reduce our greenhouse emission gas by 50% and achieve zero waste from manufacturing by 2030. These are goals that we defined. We decided to pursue. We committed to achieve them, and we're on that road. And just last year, we already achieved 97% of recycled or FSC-certified paper, wood fiber in all of our product and packaging, which is ahead of our own goal that was 95%. So we do what we can to contribute to a really important area that is affecting all of us and will affect more so future generations. No one asked us, no one gave us those goals. These are all self-imposed for good reason. And so I do think that the private sector has a key role to play here. I do think there's a great opportunity to collaborate with government and organizations and NGOs to achieve that. But I think everyone should do what they can to do the right thing, to do the right thing.

You answered an audience member's question about what Mattel was doing in the CSR area. So thank you, you beat me to that one. But there's another interesting question here from the audience based on the point, Stephanie, you started, which is how do we encourage -- team, how do we encourage more public-private partnerships solve big problems? I mean what's the formula, Michael?

Yes. I think part of the formula is understanding where we have really common points of interest or common principles. So we were just talking about Mattel and UNICEF. So on the one hand, we are very different organizations. We're a very large global humanitarian and development organization focused on vulnerable children. Mattel is a consumer products company. But at its core, we're both interested in the well-being of children. That's where we can come together on that. We were talking about mental health. We're really concerned and focused on mental health, especially coming out of the pandemic, and this really big unmet need for children around the world. And the products that Mattel is producing are tools in improved mental health play as a way toward mental health. So we have much more in common than we have differences just because we're different kinds of organizations. And one of the unique roles that UNICEF plays around the world, because UNICEF itself, the United Nations Children's Fund, is a UN agency, we have access to governments and partnerships with governments all around the world. But we partner with corporations and foundations and with individual philanthropists to make projects happen around the world. So we become this convener of public-private partnerships literally all over the world. We know that it works. We do it every day. And I think the more that we come around these real common understandings of what we're all trying to get at, the more of those can be really productive partnerships.

I do think on the way here, we already formed a partnership. So something good already came out of this panel. But the opportunity really is to come on it from different angles where the credibility of an organization like UNICEF and the resources and the reach, together with our ability to speak to kids in the most common language there is, which is play, leveraging our characters and brands to do that at a way that is engaging. It's one thing to try and get kids to play with something that is not that exciting and inspiring, and it's another thing when the brand and the franchise is something that they really truly love and feel very connected. And by definition, every person was, at some point, a child. We all remember our favorite toys. What is interesting about toys is the level of emotional connection and engagement. And arguably, there is nothing more engaging and connected to a child than their favorite toys. And if you sit in that place where you are that connector, there are a lot of opportunities to do great things and in the right way. And again, while we are a commercial enterprise, we do have an opportunity to influence children's lives and do that in a positive way. And we will embrace every opportunity to collaborate with credible, large, government and public organizations to do that. And I think, as you said, we're aiming for the same thing, and if we can collaborate, even better.

That's great. Well, there's a little pressure on here. You guys got to get a deal done.

I was going to say we got to get a deal done. But if I can just jump in on this subject because I do think that we have to think differently about public-private partnerships. And what I hear is people trying to put round pegs in square holes. And I think we all, as global leaders, need to have better listening skills. And we need to be able to say these are the strengths of the philanthropic organizations. These are their constraints. This is what the multilateral development institutions and the UN can bring. This is what the private sector can bring and how do we fit those all together in slightly different patterns to actually start to create a better world that's more inclusive, that's more resilient and that's really building us back better.

Well, and these guys were talking about one, which is to take 2 organizations that, just on this surface, seem very different, but they, actually, as Michael, you pointed out, they have common goals and ambitions around their audience. I mean are there other sort of ideas about like how do we strengthen the bonds between very diverse different groups, being corporations, public and private?

So I've been thinking a lot about it in relation to climate. And I go back to Mark Carney's $88 trillion. All of those companies need to figure out how they get to net zero. They've all made commitments. So I think that's a really interesting opportunity to take the private sector and help us solve climate problems in emerging markets by linking their desire to get to net zero with carbon credits and the development of proper tradable carbon credits that we can put together, that they can provide the funding that we can then use for decommissioning coal, we can use for new technologies that will be around green hydrogen and some of the other things that are carbon capture, some of those kinds of things. Those are the kinds of ideas that we really need to push forward, and it's going to take the public sector because we need regulators to help us. It's going to take the private sector. And it's going to take philanthropists. Because if you actually look at how frothy the markets are, most of the philanthropic organizations in the United States today have a lot of money, and they want to figure out what to do with it and how to put it in the right place. So how can we harness that money to actually help us create some of these projects?

Really interesting. Underneath those types of creative thoughts about partnerships is also just the very basic nature of trust. And in our briefing call, Michael, you said something really interesting. You said to me that trust is a track record. Can you kind of explain that? What that means and maybe, Ynon, jump on it from a leadership standpoint in an organization like what -- how do you engender trust and what does that mean?

Yes. So one of the things we work a lot on -- UNICEF is the largest procurer -- every year, largest procurer and distributor of vaccines pre-COVID. We're also now engaged in the global rollout of COVID vaccines. But we do that because we vaccinate 45% of the world's kids every year around the globe. And so we're in communities. We're in touch with communities. We deal with like vaccine hesitancy, for instance, all the time in communities on polio vaccines and basic other childhood vaccines. And because of that, we know the communities well. They know us. So as we're dealing, for instance, with COVID vaccine hesitancy around the world, one of the things that we bring to the table is trust and a track record. We've been there for 75 years working with children in these communities. The communities know us. They trust us. We're not just coming along at the last second to say, "Hey, here's something that is important for your health." But we've been there year after year after year after year. And I do think that, that kind of track record is what builds trust.

Look, trust is foundational to everything we do. It does take time to build it. In our case, some of our brands have been around for 90 years, in the case of Fisher-Price. In my office, I have a toy that was made the year my mother was born, and it's still working. This is quality. And so it is -- it takes generations to build generational trust. There's no shortcut. But we are very clear about what consumers should expect when they buy our product between quality, safety and value. We are very clear about our mission, which is to create innovative products and experiences that inspire, entertain and develop children through play. And we -- every day, we try to stand up -- to deliver and stand up to our commitments. And you can lose it in a second, and it takes years to develop and build and earn. But it is a journey. And in being who we are, it is -- and the strength and appeal and the heritage value of our brands, we're in a very important place of trust. And we look to continue to protect it and build it. But it is -- for every organization, private companies, public companies, it is foundational to have that level of trust where consumers know what to expect, they can rely on what you say and believe your promise is key to any organization's success and longevity. It is key to us, and we're very clear about that.

I love that. I think there's almost a flip side to that. And that is, when you have emergent groups, innovative groups, new organizations that are on the scene working to make the world a better place, if they don't have that track record, it's harder to engender that community buy-in, right? And so what I love about the work that Michael and Ynon are doing is that they're also lending that credibility to the investments that they're making, right? And we try to do the same thing at AB InBev Foundation as well. And then it's how can we help a start-up, a group that we believe in profoundly that might not have the trust of that community yet, how can we leverage the trust that we have to help the community trust this group more or at least shorten the length of time it takes for that community to trust. So I think there's an opportunity there as well. That track record does equal trust, and we can leverage that trust to help other groups thrive as well.

Interesting. Stephanie?

So I think Sam is right. Trust is built over time. And it feels to me, just having run an organization where we have really shifted the way we do things and how we do things, a couple of things that I learned is, first of all, honesty and transparency are critical. I think part of the reason people have lost trust in our government institutions is they don't see the transparency, and they don't feel the honesty. They also, I think, lack empathy. And empathy is really important and maybe a skill that all global leaders need to focus on more going forward. I don't think we demonstrate enough empathy. And COVID has really, I think, demonstrated that.

It's interesting. Honesty was the #1 attribute in modern leaders that people cited in the survey by a 2:1 margin. It's really interesting. So I'm going to take on the last topic as we talk about sort of this change, which is this focus on companies taking action on social issues. And we had some interesting Harris Poll data that showed some discrepancies. First, it was roughly about 2/3 of people said there's more reward than risk in a CEO speaking out on social issues and -- so that was at 62%, and then 67% say CEOs being more involved in expressing their own political views or that other company is good for their company. Now could we unpack this a little bit? Because also on our Harris Poll data, when we talk -- just in the U.S., when we talk to BIPOC Americans and millennials and Gen Z, they are diametrically supportive of that statement as the global data was, whereas boomers are diametrically opposed to it, almost by a 2:1 margin. I wonder, again, if we're getting caught up in definitions of what taking social action means versus what speaking out on political issues mean. But just help me kind of understand that and if you think anything is amiss here.

So John, I think it might actually be technology. And I say that because when my parents started 50 years ago, their comparator base was the neighbor across the street, the local paper, the local news station, a local television station. Today, my children, who are millennials and Gen Z-ers, are on social media. They see people taking positions consistently around all sorts of different topics. And so I think they think about taking political stand differently than we did when we were growing up. And I really actually believe it's a fundamental shift in the way that the younger generations are looking at the world and what they expect from their leaders.

Interesting.

Yes. I think you're absolutely right, Stephanie. I think technology plays a huge role in that. And I think the perception that people have, they come at it from the belief that this company is trying to change me or this company is simply trying to do what they feel is right. And I think that, that fundamental perception at the end of the day is what's so important. But I do applaud organizations like Mattel that are saying we're going to do the right thing. And we try to do that at AB InBev Foundation as well because we do have that trust, because we do have that affinity base that we can hopefully move the needle in the right direction and bring people with us. So at the end of the day, if we're going to make the world a better place, you have to take a stand, and that requires sometimes getting out there and being a little bit controversial.

Great.

Yes. I would say the -- one of the interesting things over the past 1.5 years has been both with COVID and with the racial justice issues in our country, the expectations of employees, of our staff, about the role that we, as an organization, play in their lives and reflecting their values out into the world. We're not just an employer anymore. And I'm sure you feel this as much as we do, but UNICEF tends to attract a lot of activist-type people, anyway. And so much pressure this past year that really is grounded in the sense that the younger workers really see their identity wrapped up in their -- in the organization they work for and expect that, that organization then reflects that identity out into the world.

I'm getting the 2-minute warning, so I'm going to go real fast, so this is the last great question that's come from the audience for the panel. What leadership qualities do you emulate and cultivate on a day-to-day business within your teams and your workforce? Ynon, do you want to kick us off?

Yes. We very -- there are 3 things that we really care about and look for leaders: it's innovation, collaboration and execution, which is really getting things done. Collaboration, we have to be -- work as part of the team, part of a team. No one -- there are no lone wolves. There are no individuals. It's always part of a team. Innovation is in everything we do, not just in being creative or making a television show. Innovation plays in every part of what we do. And of course, ultimately, get the job done, get things done. That's -- these are the 3 features.

And I would say 4 things that we kind of think about, I think about every day, one, mission-driven, what's our purpose and calling people to that; inclusivity, making sure everybody has an opportunity to be involved in that; curiosity, which is the innovation and just exploration; and then accountability, execution, getting things done.

I love those. Very quickly from my side. I think it's enthusiasm around the vision; it's empowerment, giving people what they need to get the job done; and it's transparency, being honest, good and bad.

So fully agree with all the panelists, and I would just put empathy back on the top because we have to have that in our workplace.

Excellent. We'll leave it there. Thank you all so much for your time. We really appreciate it. Thank you.

Thank you.