Public Disclosure and the Corporate Glass Ceiling
GLASS CEILING COMMISSION PUBLIC HEARING
New York City, Summer 1994
Analyst, United States Trust Company of Boston
United States Trust Company of Boston’s trust and asset management division is the predecessor entity to Boston Trust Walden Company.
The Civil Rights Movement of the 1960’s proved that leadership and vision could create oneness of mind and spirit, working toward a common goal. During this time blacks, women and other minorities demanded full inclusion in the political and social fabric. Race relations was at the center of our political and social leaders’ conversations, and in 1964 the historic Civil Rights Act was signed to reinforce justice and empower the individual. Hope for a better nation, a more just nation, filled the voices and hearts of all. Mechanisms, such as the Equal Employment Opportunity Commission (EEOC) were established to ensure that open expressions of discrimination were no longer accepted socially, politically or legally. The machines of social, political and legal justice were fueled by the common person’s increasing awareness and benevolence.
While these campaigns for decency and fairness raged on, racism went underground, changing its face and voice. Open discussions of race relations in America were driven from everyday conversations. However, covert expressions of racism were institutionalized in our banks, insurance companies, board rooms and executive suites. Now obvious acts of racism are rare, but acts of discrimination are insidious and pervasive.
In thirty years, little progress has been made in correcting the conditions of high unemployment and job segregation among nonwhites and women, which originally motivated Title VII of the Civil Rights Act of 1964. Government agencies, like the Office of Federal Contract Compliance Programs (OFCCP), are ill-equipped to address the magnitude of the problem; on average the OFCCP conducts 5,000 glass ceiling audits per year yet the universe of facilities is 94,000 large – at this rate a government contractor would be audited every 20 years.
Recognizing the increasingly conservative, anti-affirmative action mood which swept the nation in the 1980’s the NAACP developed the Economic Development Program, Operation Fair Share which promotes minority economic advancement by developing long-term relationships with corporate America. As the former National Administrator of the NAACP Economic Development Program, I worked closely with a number of America’s leading corporations in the pursuit of economic justice. Since 1982 corporations like Chrysler, Toys R Us, Walt Disney and McDonalds have shared information, as “Fair Share” signatories, about their equal employment opportunity (EEO) policies, programs, goals and objectives with the NAACP. This information provided for rich dialogue which was, more often than not, viewed as a constructive vehicle for future planning and development efforts in addressing corporate glass ceiling issues.
More recently, my company United States Trust Company of Boston concerned about EEO issues has added its voice to the dialogue with companies, but has been frustrated by the lack of data and performance measures. Committed to issues of workplace equality, our social investors have begun to direct their economic capital toward corporations that share the same commitment to economic justice. United States Trust Company of Boston, has dedicated substantial resources to prying loose EEO data through increased dialogue, proxy voting, and shareholder resolutions which promote public corporate accountability.
Summary and Recommendations
United States Trust Company of Boston, on behalf of socially concerned clients, shares my belief that public disclosure of corporate employment data could be the single most important factor in breaking the glass ceiling. The experiences of the environmental public disclosure campaigns and the mandated disclosure of bank community lending data indicate that information is a powerful tool and that mandated disclosure motivates corporate management to begin a process of positive social change.
Drawing on our collective experiences with these two trends, our testimony makes the following recommendations:
1) Regularly (every 3 to 5 years) audit the EEO performance of government contractors and provide for electronic release of the findings;
2) Honor all FOIA requests for all EEO reports, or make the government’s EEO computer database available;
3) Publicly release the outcome of all EEO-related discrimination suits;
4) Expand the scope of Glass Ceiling audits to include library searches of less traditional sources and seek input from women and minority trade associations and community groups;
5) Track the length of time key positions are held open;
6) Monitor the highest compensated employees (either top 10% or top 500, whichever is less) by gender and race; and finally
7) Enforcement efforts should consider attaching a bidding penalty to those contractors that receive minor EEO violations and denying contracts to companies that have major violations.
Environmental Campaign and Public Disclosure
The Emergency Planning and Community Right-To-Know Act (EPCRA), Title Ill of the 1986 Superfund Amendment, requires chemical manufacturers to gather and publicly release information on their toxic emissions, commonly referred to as the Toxic Release Inventory (TRI). In large part, Title Ill was aimed at” empowering groups and communities with information to develop environmental disaster prevention and reaction plans so that incidents like the Union Carbide/Bhopal tragedy will not recur. In fact the “Right-to-Know More Act” is now being considered by the House of Representatives to increase the scope of industries that will be required to release information, as well as the number of toxic substances monitored and disclosed.
Impact of Public Disclosure
The environment and its corresponding campaigns have won significant successes and widespread awareness in a number of arenas over the last decade. Community groups, governmental agencies, non·governmental organizations and corporations have all begun to address the pervasive need for ethical environmental behavior.
Community Groups. Toxic Release Inventory (TRI) data has provided community groups the needed ammunition to substantiate claims of harmful polluting by corporate facilities. The Working Group on Community Right-to-Know has documented anecdotal cases crediting access to TRI data as the impetus for positive environmental changes. Individuals and Non-governmental organizations (NGOs). Concerned individuals and grassroots/community organizations have used TRI data to help propel environmental initiatives to a higher level by creating innovative ways the average person can use the information, by developing more efficient monitoring systems, and creating means by which comparative analysis can be done. Some examples of these innovations are:
1) Plume mapping, which has been used by concerned citizens and community groups to determine the impact of a chemical spill by near-by chemical manufacturer on the community and subsequent evacuation procedures;
2) The Emissions-to-Jobs Ratio E/J Ratio) which was developed by Paul H. Templet, an associate professor at Louisiana State University’s Institute for Environmental Studies, to help promote equitable and effective environmental management. The E/J ratio normalizes TRI data and thus permits analysis of numerous aspects of pollution control.
The Working Group on Community Right-to-Know, an affiliation of more than twenty national environmental and public interest organizations, draws on the strengths and knowledge of its constituents in developing a central repository of environmental data and the right-to-know campaign efforts. As one of the founding members of the Coalition for Environmentally Responsible Economies (CERES), a non-profit organization comprised of social investors, environmental groups, religious organizations, public pension trustees and public interest groups, United States Trust Company of Boston promotes a voluntary signatory program through which companies report publicly on their environmental practices in a standardized format.
Corporations. Since implementing Title Ill, many of the largest manufacturers covered under the amendment have developed public environmental reports. Additionally, industry groups like the Chemical Manufacturers Association for Responsible Care prod members toward greater accountability for ethical environmental performance. DuPont, which is a member of the Chemical Manufacturers Association, first began its public call for corporate environmentalism shortly after the release of TRI data. An excerpt from DuPont’s 1993 Progress Report, Corporate Environmentalism highlights the impact of public disclosure of TRI data, “In spite of our progress, DuPont remained at the top of the EPA’s TRI list. Our TRI ranking results principally from the practice of injecting dilute waste into engineered deepwells permitted by EPA. Because we have put first priority on higher risk emissions, we will remain high on the TRI list longer than we prefer…. Some groups continue to direct criticism at our position on TRI and at our past practices. We ask them to focus on what we are doing now and on the direction we have clearly established for the future.”
Government agencies. In 1991 the US Environmental Protection Agency, reported an 11% decrease of toxic chemical releases and transfers, over the previous year. Charged with protecting shareholder value, even the Securities and Exchange Commission (SEC) has begun to recognize the pervasive negative implications of poor corporate environmental behavior. As a result, the SEC issued a directive to require that public companies disclose potential liability for environmental compliance.
The Banking Industry and Public Disclosure
The Community Reinvestment Act (CRA) of 1977, which requires banks to meet the lending needs of low-income and minority communities, and the Home Mortgage Disclosure Act (HMDA) of 1975, which requires banks to track acceptance and rejection rates, were finally given enforcement teeth when they were amended by the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). The amendment required public disclosure of CRA ratings and HMDA raw data.
Impact of Public Disclosure
Across the country community groups from Massachusetts to California waged war on the wave of large bank mergers occurring in the early and mid 1980s. In the five year period prior to FIRREA (1984-1988), community groups such as ACORN (Association of Community Organizers for Reform Now) were as active as, if not more than, government enforcement agencies in CRA activity across the country. An analysis of published articles suggests almost fifty percent of the time community groups were at the center of the CRA debate, forcing government regulators to delay bank mergers on grounds that one or both of the banks exhibited discriminatory patterns in lending. While only two bank mergers in the history of CRA were denied as a result of violations, over 80% of the community group led initiatives resulted in voluntary agreements to increase minority and low income lending between banks and the communities they now serve. During this five-year period prior to public disclosure, the largest agreement signed was valued at $50 million.
After FIRREA was passed in 1989, media reports around CRA and HMDA data increased five-fold, mostly in the last two to three years. While community groups and government agencies share the burden of uncovering CRA violations, the pressure to force banks to lend in minority and low-income communities seems to be coming from many sectors. Institutions like the NAACP, Amalgamated Clothing and Textile Workers Union (ACTWU) and state and local governments are also using the power of CRA to promote economic justice. Moreover, the amount of money released for minority and low-income loans as a result of these agreements has grown dramatically. The largest single agreement after FIRREA was that forged between Nationsbank and the NAACP for $10 billion over a 10 year period. Some media sources are beginning to show slight improvements in CRA lending. In an article appearing in the Wall Street Journal on August 30, 1993 it was reported that Nationsbank, Chase Manhattan, Chemical Banking Corp, First Union and Wells Fargo & Co all increased lending to minorities; each of these banks at one time or another has been under agreement with local community ·groups to increase CAA lending.
Implementation of Recommendations
1) Public Disclosure. At minimum, release all EEO reports without requiring approval of the company, in a timely manner. At United States Trust Company of Boston, our government agency requests, under the Freedom of Information Act, for EEO reports have taken as long as five months.
Electronic access to EEO reports is one possible solution. A model for this is the access to the TRI data available through RTKNET, the Right-to-Know Computer Network based in Washington, D.C. and in large part sponsored by 0MB Watch and the Unison Institute (two organizations that specialize in TRI data). There are no costs to the public for using RTKNET other than the phone call, although organizations in financial need may apply to use a toll-free number. RTKNET also provides communications software to access this database.
The campaign by community groups fighting for just banking industry behavior will also find support via RTKNET. According to John Chelen, Executive Director of Unison Institute, one of the co-sponsors of RTKNET, they are working with Housing and Urban Development (HUD) to release HMDA data via the RTKNET system. The next logical step would be to add EEO reports.
2) Monitoring. Regularly audit all government contractors’ overall EEO performance and include library searches from less traditional sources, as well as seek input from women and minority trade associations and community groups. In addition, monitor the highest compensated, top 10% or top 500, whichever is less, by race and gender. Regular monitoring and input from groups and publications focused on minority and women’s issues may give a more complete picture of a company’s true EEO performance. There is an extensive network of minority organizations which place economic justice issues high on their agendas and therefore are able to provide insight within their local businesses’ EEO records.
A possible model for this is the process for CAA ratings, under which CAA examiners include dialogues with community groups in their assessment process.
3) Enforcement. Enforcement efforts should consider attaching bidding penalties to contractors that receive minor violations and denying contracts to companies that have major violations. As a result of the CRA Act, bank’s policies and programs for minority and low-income lending are rated every one to two years on a four point rating system: “outstanding”, “satisfactory”, “needs to improve”, and “non-compliance”. Those banks that receive either “needs to improve” or “non-compliance” ratings are denied contracts with some governmental units and may have their merger or acquisition proposal denied. Currently, OFCCP audits issue similar responses l”letter of compliance”, “letter of commitment” and “letter of agreement”), however, there are no mandatory penalties.
While it is impossible to legislate diversity, it is unlikely that discriminatory practices will survive full public disclosure. Public disclosure has been and continues: to be a contentious component of legislated change. However, it also seems to be the most effective. Legislation on environmental and bank lending issues have included public disclosure components which are critical mechanisms for change. Any true effort to break the corporate glass ceiling must include public disclosure.