Corporations Are Quietly Walking Back Their Diversity Policies 

Corporations Are Quietly Walking Back Their Diversity Policies 

Jason Cohen on January 8, 2024

• Companies are backpedaling on their diversity policies as conservative groups and shareholder activists issue various legal challenges. 
• Conservative groups have countered and will likely continue to target corporations’ DEI programs through legal actions, prompting them to shift their focus away from these initiatives. 
• “Shareholders have every right to question whether the DEI programs that made us feel good in the past are now unjustified because their true economic and social effect is simply replacing one form of discrimination with another,” shareholder plaintiffs lawyer Mark Lebovitch, who has participated in these discussions, told Semafor.

Corporations are quietly reversing their diversity, equity and inclusion (DEI) practices amid intense legal pressure from conservatives and even their own shareholders, multiple outlets reported.

Conservative activists, shareholders and investors have issued challenges to various corporate diversity policies, including Republican attorneys general and others sending letters challenging racial recruiting quotas, alleging unlawful discrimination. Companies have increasingly become worried about DEI following the Supreme Court striking down race-based admissions at universities in June, and they have reversed course by eliminating certain policies and renaming initiatives in anticipation of further legal turbulence, Axios reported.

Further, a coalition of lawyers and investors have begun exploring ways to utilize corporate law in an attempt to pressure firms to scale back on their DEI policies following a rise in antisemitism concerns on elite college campuses, Semafor reported on Thursday.

DEI, because it discriminates on the basis of race, gender and many other factors, is not merely immoral, it is also illegal

— Elon Musk (@elonmusk) January 3, 2024

Diversity policies could negatively impact shareholders, as companies run the risk of missing out on qualified applicants, the coalition argues, according to Semafor. It also contends that inconsistent implementation of workplace regulations, influenced by racial or other DEI factors, could potentially violate federal employment laws.

“Shareholders have every right to question whether the DEI programs that made us feel good in the past are now unjustified because their true economic and social effect is simply replacing one form of discrimination with another,” shareholder plaintiffs lawyer Mark Lebovitch, who has participated in these discussions, told Semafor.

Corporations began implementing DEI policies at warp speed following George Floyd’s death in May 2020, shelling out around $340 billion to advance “racial equity” between then and October 2022, according to the McKinsey Institute for Black Economic Mobility.

“Anything that smacks of a quota” is no longer acceptable, Diana Scott, Leader of the Human Capital Center at The Conference Board, told Axios.

Companies like investment giant Blackstone are focusing on socioeconomic diversity in place of racial diversity, according to Fortune. They are also using terms like “wellbeing and inclusion” instead of DEI, Scott told Axios.

“Companies are really starting to look at other ways to do the work without saying that they’re doing the work,” Cinnamon Clark, cofounder of DEI consulting firm Goodwork Sustainability, told Axios.

Harvard President Claudine Gay resigned over plagiarism allegations but it has contributed to escalation of the debate about corporate DEI as critics have linked the movement to her alleged lack of qualifications for her role, according to The New York Times.

Billionaire Bill Ackman suggested corporations should receive pushback for their DEI programs in a piece for the Free Press on Wednesday following Gay’s resignation.

“Here we are in 2024, being asked and in some cases required to use skin color to affect outcomes in admissions (recently deemed illegal by the Supreme Court), in business (likely illegal yet it happens nonetheless), and in government (also I believe in most cases to be illegal, except apparently in government contracting), rather than the content of one’s character,” Ackman wrote. “As such, a meritocracy is anathema to the DEI movement. DEI is inherently a racist and illegal movement in its implementation even if it purports to work on behalf of the so-called oppressed.”

Shareholder activists have also sent letters to 25 corporations alleging their DEI initiatives unlawfully discriminate and violate fiduciary duty to investors since 2021, with several of them making changes afterward, according to Reuters in December. American Airlines, BlackRock, JPMorgan Chase and Lowe’s have edited their DEI language to be less racially oriented following conservative lawsuit threats.

Consulting firm Paradigm Strategy CEO Joelle Emerson disagrees with the characterization that DEI is discriminatory but acknowledges that argument is gaining steam in a commentary piece for Fortune on Thursday.

“Their strategy is working: critiquing DEI has become more mainstream,” Emerson wrote. “Increasingly, even people who likely support some of the most common and visible examples of these efforts (parental leave, fair pay, and hiring processes that promote objectivity and mitigate bias) are questioning whether the movement that produced these policies has gone astray.”

American Airlines, Blackstone, Lowes and JPMorgan Chase did not respond to the Daily Caller News Foundation’s request for comment.

BlackRock declined to comment.