Further Reflections on Racism in America: (3) Corporate Transformations

The Civil Rights Act of 1964 and the Voting Rights Act of 1965 continue to be the legal foundation for equal rights in America.  Fair housing was addressed in the Civil Rights Act of 1968, while revisions in 1972 (Title IX of the Education Amendments of 1972) broadened civil rights coverage in education. In the years that followed, however, the courts interpreted these laws in ways that often narrowed their scope. In 1990, an accumulation of legislative provisions to reverse the case law was consolidated into a 1990 Civil Rights Act that was vetoed by President Bush. The legislation was reintroduced in 1991 and enacted into law with the help of an unusual coalition that I spearheaded. Many changes in our society since then may affect our current understanding of racial justice, but the lessons learned from this experience in 1991 include some useful insights regarding the role of the private sector in social policy, even today.

The segment starts with some background on how I came to be representing AT&T and the Business Roundtable in searching for a consensus with the civil rights community on the 1991 Civil Rights Act. It continues with a description of the negotiating process and what happened when the CEO of AT&T decided to pull the Business Roundtable out of the effort. The lessons learned in this segment focus on understanding the limits of legislative collaboration and on the changing dynamics of corporate social responsibility. My personal investment in that collaborative effort was very intense, and I learned how difficult it is to face a contentious issue head-on. Sometimes one simply cannot build an all-inclusive consensus. Nonetheless, I have continued to be a strong advocate of corporate social responsibility and commend the Business Roundtable for its recent endorsements of both multiple stakeholder responsibility in principle and the Black Lives Matter movement in particular.

The Background

I joined AT&T in 1983 with the expectation that I would absorb what it was like to participate in the breakup of the Bell System and then move on to something more socially responsible after five years or so. My corporate adventure lasted longer than I initially expected it to be – more than twice what I had intended. In spite of my initial hesitation, I did come to appreciate the strengths and weaknesses of its corporate culture, and I ended up using the opportunity to work within it to have the kind of social impact that I had thought would require moving away from it.

I was recruited to join a subsidiary of AT&T in 1983 after having concluded that it was time for me to move on from North Carolina.  This was actually the second time that I had reached that conclusion. The first time had been when I was chosen for a White House Fellowship and chose to resign from the NC Senate with the hope of a more nationally-focused political future. But that hit a snag with the defeat of the Carter/Mondale re-election bid in 1980. Returning to North Carolina to work on that campaign and finish my law degree but then exploring alternative political options at the Congressional or statewide level filled the time until that 1983 offer came along.  As noted in the previous segment, the options appeared unrealistic for someone like me, and I was ready to move on.

The subsidiary that I joined was a company I knew as Western Electric, a company that manufactured telephone lines and telephone equipment. In my innocence (or call it ignorance about all things business), I saw it as a separate entity, only loosely affiliated with AT&T as part of the Bell System. The company had recently relocated its headquarters in Greensboro, and I had appreciated its being a union company. The Communications Workers of America, after all, had been one of my earliest supporters politically, and I developed an excellent rapport with the pro-union company’s distinctively supportive approach to gender and racial equality.

Of course, skeptics will say that the Bell System monopoly had only adopted enlightened human resources policy on gender and race because it had been forced to do so in a class action suit – in fact, a court-ordered consent decree on affirmative action that was being implemented at Western Electric and throughout the Bell System. And part of that implementation included inviting me to meet with their senior management to talk about the benefits of gender equality.  No other business group had invited me to speak on the issue. Consent decree or not, this was a company looking for ways to support both gender and racial equality.

And as I learned later, the consent decree was even welcomed by many in the top echelons of this company as a tool that enabled the leadership to implement affirmative action. The CEO and the rest of the top management of the company, at least at its headquarters, were consistently open-minded and supportive of both gender and racial equality.  It was illustrative of the changing times that both the civil rights and women’s rights movements were gaining ground in the US.

Civil rights and the Business Roundtable

The offer to join the company then seemed like an opportune path to advancing my career even if it was only a way station to something else more promisingly political somewhere else. Serendipitously, after a couple of years learning their labor and employee benefits law with the parent company in New Jersey and New York, I ended up back in Washington, DC, this time as a lobbyist in the Federal Government Relations office – for AT&T, and not just Western Electric. This was a new AT&T, in that another consent decree (besides the one on affirmative action) had done a more drastic dismantling of that Bell System than anyone had anticipated. The AT&T I worked for was still a huge company – all the long-distance phone service, manufacturing of telecommunications equipment and top-of-the-line research facilities of the old Bell System.  As this new AT&T adapted its business plan to an increasingly competitive telecommunications market, the new (as of 1990) CEO Bob Allen decided to play a more active role in the Washington political scene by chairing a newly created committee on social issues at The Business Roundtable.

The BRT was one of three major business associations to which AT&T belonged for purposes of developing a common business position on legislation affecting business. The BRT represented the Fortune 500  – big business, as it were; the National Association of Manufacturers represented business interests in manufacturing (e.g. Western Electric or what it had been renamed “AT&T Technologies” in the new AT&T); and the US Chamber of Commerce was a more broadly diversified network of businesses and associations of local and state-level affiliates. My responsibilities included coordination of AT&T’s position on social issues (labor and employee benefits law, environmental law, taxation) with these associations as well as more directly with Congress and the executive branch.  But the CEO’s role at the BRT meant that this group had priority.

First on the social issues front in 1990 was a major civil rights bill. This was the first major initiative to address civil rights since the Civil Rights Act of 1964 and the Voting Rights Act of 1965. Sponsored by Senator Ted Kennedy and Representative John Lewis, the bill sought to make significant changes to the judicial interpretations of these laws. It had encountered a veto from the US President, George H.W. Bush, and late in 1990 the business community actively lobbied to uphold the veto – including the BRT and including, unfortunately, AT&T. This was extremely painful for me. I was horrified to be associated with what appeared to be solid business opposition to civil rights and wondered what my options were if and when the bill would be reintroduced in 1991.

To my great relief, on a cold December morning before the holiday break, the head of the AT&T lobbying office came to my office holding a letter that had been sent to our CEO by the head of the NAACP Legal Defense Fund with a note from the CEO asking what we should do about it. This was a letter from none other than my old North Carolina friend and colleague Julius Chambers, who had moved to New York in 1984 to head the Fund. He wanted to know why AT&T, with all its policies in support of civil rights, had supported President Bush’s veto of a bill that was merely trying to bring the interpretation of American law in line with what AT&T was already doing. As I remarked to my boss, this was indeed an uncomfortable position for AT&T to be taking. There was nothing in that vetoed bill that would hurt AT&T or require it to do more than it was already doing for the good of its employees. Furthermore, supporting civil rights was good business policy for any enlightened business concern. Perhaps, I suggested, this is something that Mr. Allen could take up with his new committee at the BRT. It would be good for AT&T to publicly reaffirm its support for civil rights (and women’s rights) and bring others in the business community along with it, too. And besides, I knew Julius Chambers personally, and maybe we could find a way to work this out with him directly.

The go-ahead for this adventure started in January with a preliminary high-powered dinner on the top floor of AT&T’s new headquarters building on Madison Avenue in New York City. Three CEOs from AT&T, Johnson & Johnson and American Express and the head of the Roundtable were joined by Mr. Chambers and the top leadership of several major civil rights and women’s rights organizations – the NAACP Legal Defense Fund, the Urban Coalition, the Lawyer’s Committee on Civil Rights, the Women’s Legal Defense Fund, the National Women’s Rights Law Center, and the Mexican-American Legal Defense Fund.  An agreement was reached to bring the legal experts together to go over all provisions of the proposed legislation and see if language could be crafted to the satisfaction of all parties. These negotiating sessions were to be conducted confidentially, in Washington, DC, with no announcements until all parties were comfortable with a consensus. Senior representatives from the Roundtable companies, led by AT&T’s Senior Vice President for Human Resources Hal Burlingame would meet from time to time to review the progress from the business side of things and to keep the three CEOs informed – plus the full membership of the Roundtable’s Social Policy Committee. The group also agreed on a timeframe to complete the discussions no later than early spring (perhaps around Easter?).

On behalf of the Roundtable, AT&T hired a legal expert on civil rights litigation, Larry Lorber, to coordinate the business input to these negotiating sessions. Larry also worked with the leading lawyers from all three participating companies. I was responsible for convening the technical meetings as well as the senior management review sessions. For the civil rights groups, the main interlocutor was the head of the Lawyer’s Committee on Civil Rights, but he also had strong support from the two women’s rights law groups. There were no Congressional or White House staff involved in the negotiations. The whole objective of the exercise was to see if the business group and the civil rights groups could agree on common ground before bringing in any more public negotiations. And of course, this also meant no other outside groups either. As word quickly spread that the Roundtable was doing this without the support of either the NAM or Chamber, both of which remained totally opposed to any legislation at all. But as AT&T was a member of both the NAM and Chamber, I was expected to attend their strategy meetings on civil rights and other social policy issues while declining to answer any questions about our progress. These meetings were very tense.

The initiative eventually required meeting with key members of Congress to inform them of the effort, with the understanding that nothing would move before we knew if we could reach an agreement. At this stage, the civil rights groups were the ones who maintained contact with Senator Kennedy and Representative Lewis. And since the House had a Democratic majority while the Senate had a Republican majority, the Roundtable’s role was to communicate with friendly (and unfriendly) Republican Senators. I have vivid memories of meetings with Senators Danforth and Jeffords in particular, but also Senator Kassebaum – three essential votes to join the Senate Democrats for the legislation eventually to pass. We also met with Senator Hatch, chair of the Senate Human Resources Committee, who was very critical of our initiative and was opposed to the legislation. He very sweetly said to me that I was deserting the small and medium businesses who just could not afford to comply with civil rights requirements the way that big businesses were able to do.

Meanwhile, the negotiating group developed a good rapport, and I was hopeful that we were moving toward a consensus position on the entire package.  Then three things happened. First, there was an impasse in the negotiations themselves, involving the matter of damages for cases of gender discrimination. Then, the White House stepped in. We already knew that President Bush’s chief legal counsel, Boyden Gray, was not friendly. But this Legal Counsel then arranged for President Bush himself to call my AT&T CEO Bob Allen to convey his concern – and opposition to what we were doing. On top of that, the Democratic chair of a key House committee on AT&T’s telecommunications issues, Rep. John Dingell, had called my boss to express his concern about our work from the Democratic side of things!

Enough, said Bob Allen. He was not interested in participating in this “three-ring circus” of the Washington political scene! Once word of his withdrawal reached the office of the House Majority Leader (a Democratic majority in those days), however, we were all called in to his office, where he made it clear that the committee chair had no business criticizing us and urged us to continue. But since President Bush had already objected directly to the CEO, the AT&T position did not budge. Too many rings in the circus.

The Outcome and Lessons Learned

The legislation did eventually pass, in the form of the Civil Rights Act of 1991. It was essentially what the BRT negotiating process had produced, even with a restriction on the damages issue regarding gender discrimination that had been the final impasse. By then, however, I had gone on maternity leave and was at home watching the televised hearings of Anita Hill testifying against Clarence Thomas. The bill was moving through committees even as the media attention was directed to the nomination of Clarence Thomas to replace Thurgood Marshall as first and only other African-American to serve on the Supreme Court.  The turbulence around Anita Hill’s testimony and the insistence by the White House to go ahead with the Thomas nomination in spite of the charges against him were certainly part of the highly charged political atmosphere when President Bush decided not to veto the civil rights bill this time around.  The idea that he would support someone who was accused of sexual harassment and then veto a bill that would help enforce gender discrimination had to  have been too much of a political risk.

It was also the case that a number of moderate Republicans in the House and Senate (particularly Senators Danforth and Jeffords) did get involved in negotiating the final package and thereby helped to mobilize enough Republicans in the Senate to let the President know that the Senate could probably override his veto if he so chose to veto the bill. His Legal Counsel Boyden Gray, a Southerner himself from a blueblood North Carolina family associated with this emerging Republican strength in the South, must have been disappointed by all of this, even if he did get Clarence Thomas onto the Supreme Court. Of course, all of this is ancient history. We are again confronted, however, with a similarly outrageous replacement of a Supreme Court Justice with a strong civil rights and women’s rights legacy, Ruth Bader Ginsburg with a woman who is likely to be a consistently anti-RBG vote on the Supreme Court, just as Clarence Thomas has been the opposite of Thurgood Marshall.

As for the lessons learned from this exercise, one might think that a major message is that legislative negotiations should be left to legislators. Most of the historical accounts of how this Civil Rights Act of 1991 passed do not give any attention to the Roundtable’s initiative. Instead, they describe how the staff of the key Republican Senators worked out a compromise with Senator Kennedy’s staff – or they refer to how the Leadership Committee on Civil Rights worked with President Bush’s Justice Department appointees. Both of these tracks were probably followed, but I still believe that the Roundtable initiative is what set the stage for the contours of the package that ultimately passed. One can also be encouraged by the fact that old friend Larry Lorber still practices law and still lists on his website that his role with the Roundtable on the Civil Rights Act of 1991 as one of his proudest accomplishments. Unorthodox coalitions like the one put together through the Roundtable do require a lot of work and are repeatedly challenged to identify a commonality of interests among the diverse groups. One also has to be willing to defend against external challenges, as the Roundtable did from the rest of the business community.

Informal coalitions like this one may also operate to negotiate the details in a way that fulfills the objective but still encounters resistance and even insurmountable barriers. The fact that the women’s rights groups could not agree to limit damages for sex discrimination cases was a barrier that the Roundtable group probably could not have resolved. Or alternatively, one could argue that the women’s rights groups might have done better in the long run if they had negotiated a resolution of the issue within the ad hoc group itself. As it turned out, though, they had to settle for what the legislative process produced, which was indeed a ceiling on damages for sex discrimination cases.

Finally, there is a tendency to classify the private sector as a single entity with common interests that are not compatible with the interests of society as a whole. I certainly opted to act differently through the Business Roundtable and to endure the hostility of the rest of the business associations by doing so. It was the right thing to do, even though one can understand why these other business groups had to be opposed to reforms even where they are in the best interests of everyone concerned. But there are pressures on businesses that might prefer to deviate from a common business position simply to avoid disrupting the image of a common front.

As someone who has favored the inclusive approach for the private sector to be part of any negotiating process, I do understand that the Roundtable experience did show how difficult that might be. If the private sector’s representatives think that their role is to block any change rather than to support reasonable change, the inclusive approach will not work. Both the NAM and the US Chamber of Commerce criticized the Roundtable’s effort and But the emphasis is better to rest on conditionality that good intentions are expected from all participants and then include all who agree rather than to exclude any entity outright.

Going Forward

Soon after the Civil Rights Act of 1991 was signed by President Bush, the US managed to move in a slightly more progressive direction.  Democrats won the 1992 election with a moderate coalition under Bill Clinton and Walter Mondale, and this even enabled the judicial system to be less problematic. Two justices appointed by President Clinton joined the Supreme Court – William Breyer and Ruth Bader Ginsburg – and helped end the judicial setbacks on civil rights even with the Bush appointment of Clarence Thomas. Of course, all of that changed in the decades that followed, and we now face another pivotal year for civil rights – and for democracy and human rights!

While I left AT&T in 1993 to work on global issues, first with the International Labor Organization and then with the Global Social Observatory, I have continued to be deeply committed to the American political scene and to racial justice. In this segment, my focus has been on the role of that responsible business interests can play in advancing racial justice. I conclude here with some good news about the Roundtable today.

I was not surprised by the new “Statement on the Purpose of a Corporation” released by the Business Roundtable on 19 August 2019. The new statement was described as an update of the organization’s Principles of Corporate Governance, but it did stir widespread public debate because it dropped the long-standing view of shareholder primacy in corporate governance. This view had been espoused by conservative economists, first associated way back in the 1960s and 1970s with Milton Friedman and his “Chicago School”.

It is sad to note that this notion of shareholder primacy had been added to the Roundtable’s statement in 1997, some years after I had worked with them on the 1991 Civil Rights Act. Maybe the Roundtable went through a phase, but I sense that they still took policy positions that belied that narrow-minded perspective. It was certainly the case that the Roundtable companies continued to be engaged in policies of diversity and inclusion in their workplaces and in the communities where they operated, and this was not solely because they had been forced to do so.

Nonetheless, it is encouraging that the Roundtable did reverse this shareholder primacy perspective in the 2019 statement. The new statement lists five stakeholder groups – starting with customers, employees, suppliers, communities and ending with shareholders. Each of these stakeholder groups is deemed “essential”, and the Roundtable further commits to delivering “value to all of them, for the future success of our companies, our communities and our country”.  The fact that The Economist criticized the Roundtable led me to write them a letter in protest – a letter that was actually published in the 21 September 2019 issue of their “letters to the editor” section. Here is what they published (slightly modified unfortunately):

The Business Roundtable’s commitment to other stakeholders as well as shareholders has long been fundamental to its policy. Its new statement is an affirmation of this de facto record rather than a response to an environmental and social governance fad. My own experience involved a bold initiative by the Roundtable with civil-rights and women’s-rights leaders on some major legislation. The rationale for breaking away from the rest of the business community was both that its member companies were already committed to responsible policies on race and gender and that his was where the entire business community needed to be.

Much to my delight, I also received a note from the Roundtable thanking me for the letter:

Thank you so much for your note to our Business Roundtable President Josh Bolten. We especially appreciate your taking the time to write a letter to the editor of The Economist on our new Statement on the Purpose of a Corporation.

Drawing parallels with the new statement, a colleague recently mentioned to me the 1990-91 negotiations between Business Roundtable and civil rights groups to craft a new Civil Rights Act that President George H.W. Bush would sign. He also noted the central role that you and AT&T played in that ultimately successful process.

Your letter made the connection between those earlier discussions and our recent statement very well; it goes far beyond a mere response to ESG issues. The CEO commitment to such principles, especially as they relate to employees, does indeed have deep historical roots.

Thank you again for your note.

Carrying forward with this new Statement on the Purpose of a Corporation, the Roundtable has also responded to the murder of George Floyd and the protests that spread across the country. As early as 5 June 2020, the Chairman Doug McMillan (also the CEO of Walmart) announced the formation of a Special Committee of the Board to identify how Roundtable companies can advance racial equity and justice. While both the US Chamber of Commerce and the National Association of Manufacturers also issued statements condemning the death and calling for racial justice, one can still sense that the Roundtable is more proactive than these other two. On 1 July, the Committee announced support for federal policing reforms and subsequently endorsed the legislation that passed in the House – with an emphasis on the Roundtable commitment to “bipartisan” reforms.

Then on 15 October 2020, the same Committee issued a detailed set of recommendations for both corporate actions and public policy changes in six areas – employment, finance, education, health, housing and the justice system. There may be no specific mention of Black Lives Matter or systemic racism in these recommendations, but the 15 October statement does identify the need for everyone to take steps to end “systemic inequities”.  Subcommittees were chaired by Roundtable CEOs on each of the six themes, and the recommendations are substantive.

We are in a different world from the 1990s, and the turbulence of anti-democratic populism and extreme ideological divisions make for scary times. We can still try to work with organizations like the Business Roundtable and others who are directly in the forefront of the fight for human rights around the world. Let’s use these lessons learned from the past to keep us going, to stay awake, as MLK asked us to do, and to keep running to, and not away from the noise, as Michele Obama advised us to do.

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