Coca-Cola backtracks on ambitious D&I policy
Coca-Cola US has formally renounced the controversial diversity and inclusion proposals unveiled by its former general counsel Bradley Gayton last year, it has been revealed.
The beverage company’s general counsel Monica Douglas confirmed the development in a letter issued to its external counsel, and later published by the American Civil Rights Project on March 25.
In the letter Douglas confirmed that Gayton’s policies “are not now and never have been company policy”.
In January 2021 Gayton, published the policies in a highly-publicised open letter addressed to “US Firms Supporting The Coca-Cola Company.”
According to the proposal, the beverage company’s external counsel was required to staff matters relating to Coca-Cola so that diverse attorneys performed at least 30% of all hours billed, with Black attorneys performing “at least half of that amount”.
Gayton announced that Coca-Cola would withhold a nonrefundable 30% of fees from law firms that failed to meet its new requirements, as he criticised the legal sector for not viewing D&I as a business imperative.
A heavy heart
Gayton told US law firms he was mandating the unprecedented move for the legal sector with “a heavy heart”.
To show compliance, these law firms were asked to submit quarterly reports of the race, ethnicity, sex, gender, and disability status of all individuals they assigned to legal matters relating to the company.
The letter stated that non-compliance for two successive quarters would impact the company’s future consideration for both new legal work and inclusion in the company’s preferred-vendor list.
Critics of Gayton’s proposals had suggested that such policies contravened Title VII of the Civil Rights Act of 1964, which holds that employers can’t treat people differently based on their race.
In April 2021, Gayton left as Coke’s GC and was replaced by Monica Douglas, prompting the beverage company to stall its D&I plan.
According to his agreement, Gayton received a $4 million sign-on bonus to serve as a consultant to Coca-Cola CEO James Quincey and will earn additional monthly payments totalling $8 million in 2022.
During a meeting with Coca-Cola’s global legal team that same month, Douglas said the company was “taking a pause for now” but would retain some aspects of the diversity plan.
But in the letter sent earlier this year, Douglas appeared to entirely repudiate the earlier policy initiative, while affirming the company’s continued commitment to D&I.
According to the ACR this policy, if implemented, would have violated a plethora of anti-discrimination laws.
ACR’s executive director Dan Morenoff said in a statement posted on its sites that: “It’s amazing that neither the general counsel of a large corporation like Coke, nor the large, prominent law firms the policy involved, seem to have considered its direct conflict with American civil rights laws. It’s even more amazing that so many other sophisticated, American corporations have similarly disregarded obvious legal problems…”
The Project on Fair Representation also sent a letter to Douglas last year, urging the company to rescind the policy.
Edward Blum, president of the project, said: "It is obvious to all observers that Coca-Cola's recently enacted law firm contracting policies are illegal. The company should publicly withdraw these racial quota requirements immediately.”
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