There aren't many who would willingly take on Apple (AAPL) icon Steve Jobs—and lecture him on technology. But Thomas J. Donohue, the combative head of the U.S. Chamber of Commerce, isn't one to step away from a fight.
So on Oct. 6, a day after Apple became the fifth—and most prominent—company to resign or reduce its role at the Chamber because of its aggressive opposition to climate change legislation, Donohue fired back. "It is unfortunate that your company didn't take the time to understand the Chamber's position on climate and forfeited the opportunity to advance a 21st century approach," he wrote to Jobs. He stressed the Chamber's belief that business can spur much of the technology to reduce greenhouse gases, much as the private sector has "developed the innovations that we now take for granted, from the personal computer to the medicines that keep us healthy."
Donohue is renowned for his bulldog style. Now he and his colleagues find themselves embroiled in a fight over climate change that raises questions about how broadly they speak for business—and whether the Chamber, allied with the Republican Party for the last decade, can retain its influence in a heavily Democratic Washington.
$100 Million War Chest The Chamber has moved sharply to oppose much of the legislation and many of the regulations and policies streaming out of the Obama Administration and the Democratic Congress on health care, labor issues, and finance. In a move some see as little short of a declaration of war on the White House, Donohue has been crisscrossing the country to raise $100 million to launch the "Campaign for Free Enterprise." It is intended to promote open markets and fight a rise in regulations and tax hikes that he argues will undermine job creation and the economy. "We are certainly not alone," says Donohue, adding that the Chamber's controversial policy choices reflect his members' views: "This is not me.…This is not my staff. We are delivering on the issues that concern the business community."
Many well-placed Democrats believe that hard-nosed attitude is starting to cost the Chamber credibility—on energy and beyond. "The more they get out in opposition on core issues to the Democrats, the more they will continue to alienate them," says a top aide to a key Democrat in the Senate. "The Chamber's best shot is to influence moderate Democrats, but the more unrealistic they get, the more they will leave the moderates wondering why they should work with them." As proof of the Chamber's flawed approach, Democrats point to its recent leading role in what many saw as an over-the-top attack on the Administration's plans for an agency to protect consumers from predatory lenders. Even moderate Democrats who are often supportive of the Chamber took note. "It's unfortunate that some business groups are allowing misleading information to confuse the debate," says one influential representative in financial matters, referring to claims by the Chamber and others that many small businesses would be covered by the proposal. "We should be debating the real issues."
The Administration, meanwhile, is going out of its way to foster ties with CEOs and business leaders on its own, rather than rely on the Chamber. "I'd rather talk to [Cisco (CSCO) boss] John Chambers than to the Chamber," says Valerie Jarrett, the Presidential adviser responsible for outreach to the business community. "I don't stop listening to the Chamber, but [the resignations] do make me question whether they have the pulse of their membership." Adds Hilary Rosen, managing partner of the D.C. office of communications strategy firm Brunswick Group and a White House confidant: "Most business leaders we speak to are looking for solutions. The Chamber's posture has become a barrier."
Business Roundtable More Pragmatic The White House appears to be turning more to the Business Roundtable, a group of over 160 CEOs, for feedback and input on its policies. John Castellani, the Roundtable's president, says its members have met frequently with White House staff in recent months. The group's leaders, such as Ivan G. Seidenberg of Verizon Communications (VZ) and Andrew N. Liveris of Dow Chemical (DOW), have featured prominently on the list of CEOs invited to dine with the President or his top aides.
The Roundtable is seen as having a more pragmatic take on the business community's agenda. "We strive to be politically relevant, but not partisan," says Castellani. Much of its work is data driven. On climate change, the Roundtable neither opposes nor favors a tax or a cap-and-trade system as the best way to put a price on carbon emissions. Instead it has provided policymakers with extensive data on how different companies and markets would react at different price levels.
Donohue maintains many chief executives hold back on what they really think when dealing with the Administration. "We see CEOs act all friendly to get a seat at the table," he says. "Then they call us up and say: 'You better fix this.'" He plays the bad cop, the guy who has to tell it straight.
That dynamic has been driving the fight over climate change. The Chamber vehemently opposes legislation now before Congress as well as moves by the Environmental Protection Agency to regulate harmful carbon emissions. In late August a top Chamber official even called for a public hearing, similar to the Scopes Monkey Trial, to rule on the evidence of human responsibility for global warming.
Rebellion Spreading The Chamber has since repudiated the remarks, which referred to the 1925 trial that pitted religion against evolution. Donohue says the Chamber doesn't dispute the science of global warming, but it wants more debate on how the U.S. regulates it. Still, the damage was done: Utilities PG&E (PCG), Exelon (EXC), and PNM Resources (PNM), all of which back the congressional legislation, quit. "We came to the conclusion that the legislation they were looking for was not the legislation that would address carbon," says Shawn Cooper, chief of staff to PG&E's chief executive. "The difference on this issue—where we were and where the Chamber wanted to go—was just too significant."
That rebellion is now spreading from utilities to consumer companies that are burnishing their green credentials. On Sept. 30, Nike (NKE) announced that it would resign from the Chamber's board, although it will remain in the group and continue to debate climate change from within. Not so Apple, where CEO Jobs recently stepped up efforts to reduce its own emissions. On Oct. 5 the maker of the iPod withdrew from the Chamber. In a letter to Donohue, Apple chastised the Chamber, saying: "It is frustrating to find the Chamber at odds with us in this effort."
Donohue minimizes the importance of the defections. While he says the group would support strong curbs if they were combined with an effective international pact, it doesn't back the current legislation because it would hurt U.S. competitiveness. Those who have quit, he implies, either will benefit from the legislation or won't be harmed. What the opposition suggests "is that we are having an effect," he says. "We are amongst those who have raised serious questions about the content of the legislation."
Plenty of companies are sticking with the Chamber. Dow is in the Chamber as well as the Roundtable, but supports the current climate legislation. "We have let the Chamber know our position," says Rich A. Wells, vice-president for energy and climate change. So why not pull out? "They do other things for us, such as tort reform," he says. C.A. Howlett, a Chamber board member and senior vice-president for public affairs at US Airways (LCC), says that since "Tom [Donohue] came along, the Chamber's been completely revitalized." As for the recent uproar, he adds: "You can't make everybody happy all the time."