Much to my surprise and delight, The Economist published a slightly edited version in their 21 September 2019 issue of a letter to the editor that I sent to them on 28 August 2019. The letter was included in a collection of letters to the editor with a focus on “corporate purpose”. This was triggered by report by The Economist of a recent new policy statement issued by The Business Roundtable, an American association of large businesses, including the likes of AT&T. My letter relates to the time I was a vice president for federal government affairs at AT&T. Here is the letter I sent, followed by the letter as it was published and a draft of a letter that I did not send but that includes more details about the issue at hand. Citations are also provided for all of these sources.
“The Letter” as sent to The Economist on 28 August 2019:
To the Editor:
In your “Briefing on Corporate Purpose” in the 24 August 2019 issue, you cited the new “Statement on the Purpose of a Corporation” at the Business Roundtable (BRT) while still concluding that shareholder value should remain paramount. However, I would suggest that the commitment to stakeholders as well as shareholders has long been integral to its policy positioning in practice. I see the new Statement as more of an affirmation of its de facto record, especially in the political domain, rather than a new policy. My own direct experience involved a bold initiative by the BRT to meet with civil rights and women’s rights leaders to reach agreement on a major piece of civil rights legislation. The rationale for breaking away from the rest of the business community was both that the member companies were already committed to responsible policies on race and gender and that this was where the entire business community needed to be. The new Statement is far more than a response to a recent ESG fad. It is a reaffirmation of the combination of shareholder and stakeholder value that the BRT has long implicitly conveyed as the corporate purpose of its members.
(Former Federal Government Affairs Vice President, AT&T)
Letter as published in The Economist, in a collection of letters “on the purpose of a company”, 21 September 2019, available here:
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 this was where the entire business community needed to be.
Former vice-president for government affairs at AT&T
Draft of Letter to the Editor that was not sent:
As someone who worked with the American business community in the 1980s and 1990s, I am not surprised by the new “Statement on the Purpose of a Corporation” released by the Business Roundtable on 19 August 2019. Although it may well be the case that the new statement replaces one that reflected the distorted view that shareholder value is all that matters, the BRT did display a willingness to recognize that these other stakeholder groups mattered regardless of what the older policy statement might have said. I only mention one example in which I was personally involved. I was working in the Federal Government Affairs office of AT&T when the CEO of AT&T, Bob Allen, agreed in 1990 to take on the chairmanship of the BRT’s Social Affairs Committee. Soon after, the BRT was confronted with a challenge from the NAACP. Why should BRT members oppose a major civil rights bill when the companies were already engaged in policies of diversity and inclusion in their workplaces? The BRT accepted the challenge to meet with the civil rights and women’s rights groups to negotiate a compromise, much to the distress of the other business associations. When the compromise was about to be reached, it was abruptly blocked by a hostile President Bush. The BRT backed off, but the contours of that compromise were incorporated into the legislation that ultimately passed as the Civil Rights Act of 1991. This was years ago, of course, but it illustrates how the BRT recognized even then how relevant it is for all stakeholder groups of a corporation to matter.