The election of Donald Trump and his subsequent “war on woke” is having a chilling effect on diversity, equity, and inclusion (DEI) initiatives in corporate America, with significant ramifications for diversity and LGBT rights.
This shift began after July 2023, when the U.S. Supreme Court ruled that race-based affirmative action in college admissions was unconstitutional. Following this decision, attorneys general from 13 Republican-run states threatened legal action against Fortune 500 companies, leading many to reconsider their DEI policies.
Corporate retreat from DEI
After Trump’s victory, Walmart’s decision to withdraw from its DEI initiatives signaled a broader corporate retreat. Companies have faced increasing pressure from conservative groups, such as the National Center for Public Policy Research, through shareholder proposals to remove links between diversity initiatives and executive pay and examine DEI initiatives for legal and reputational risks.
Companies that maintained their DEI programs have faced legal challenges. For example, after Target dropped its DEI programs, shareholders in Florida launched a class action, claiming the company defrauded them into paying inflated stock prices and misused investor funds for political and social goals.
Some companies, like Apple, JPMorgan Chase, Microsoft, and Costco, have resisted these pressures. Others, such as McDonald’s, are recalibrating their initiatives, rebranding them under terms like “belonging,” “workplace culture,” or “inclusion” to avoid legal action.
Supplier diversity programs and black female entrepreneurs
One significant casualty of the DEI rollback is supplier diversity programs, which aim to include minority—and women-owned businesses in corporate supply chains. Google, Meta, Walmart, and Amazon were members of the Billion Dollar Roundtable, committing to spending at least $1 billion annually with minority—and women-owned suppliers. In 2023, its members spent a combined $123 billion, with an estimated economic impact of $321 billion.
“Hardest hit by the pullback will be Black female entrepreneurs, America’s fastest-growing demographic of small business owners, who face a loan-rejection rate three times higher than white business owners,” reports Terry Slavin, editor-in-chief of Reuters Events Sustainable Business.
Concerns for LGBT rights in Africa
The DEI retreat in the U.S. has profound implications for LGBT rights in Africa. Activists fear that Trump’s rhetoric and executive orders removing transgender rights could embolden reactionary forces, worsening an already dire situation for the LGBT community.
In Africa, only one country allows same-sex marriage, while 31 criminalizes same-sex sexual activity. “Activists in Africa are concerned that Trump’s rhetoric could embolden reactionary forces and worsen an already dire situation for the lesbian, gay, bisexual and transgender community,” notes Ben Payton in his article “Trump agenda sparks fears for LGBT rights in Africa.”
Impact on women and the gender gap
As companies abandon diversity targets and quotas, women are disproportionately affected. The World Economic Forum estimates it will take another 134 years to achieve parity between men and women. While China has a large female workforce, women still face discrimination, especially at child-bearing ages.
Companies standing firm
Despite the widespread retreat, some companies are standing up to the pressure. Apple, for instance, asked shareholders not to back a proposal to scrap its DEI program. In January, 98% of Costco’s shareholders voted down a similar motion.
Costco stated, “A diverse group of employees helps bring originality and creativity to our merchandise … We believe that many of our members like to see themselves reflected in the people in our warehouses with whom they interact.”
Importance of long-term commitment
Amira Barger, a communications and change management professor at California State University, argues that real DEI work requires a long-term commitment, not just a moment of reckoning. She adds that DEI fosters inclusion and equity for everyone, including white males.
David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion, and Belonging, notes that companies’ biggest legal risk remains traditional discrimination claims. He warns that stripping away DEI programs could replace one form of legal risk with another if workplaces become less inclusive.
Some argue for a shift to “Merit, Excellence, and Intelligence (MEI),” which emphasizes qualifications and ability in hiring. However, Barger counters that equity isn’t about lowering standards but ensuring fair opportunities and that MEI may prioritize merit as defined by existing structures, which often perpetuate bias.
Business case and evolution of DEI
Despite the challenges, the Boston Consulting Group research indicates that DEI can reduce employee attrition and increase employee motivation. A consultancy EY report recommends that companies take a data-driven approach to DEI, including robust data collection, analysis, and target-setting.
Glasgow states, “A lot of leaders have come to genuinely believe that having a robust set of DEI policies has been good for their organization, in the sense that it has enabled them to attract a wider range of talent … (and) reach different consumers”.
Sandi Wassmer, chief executive of the Employers Network for Equality & Inclusion, believes that DEI is evolving. She says, “We’re in a different place now socially and politically, so we need to evolve, and that’s OK. We can’t continue to do the same things over and over again if they’re not working … It isn’t the end of DEI, it’s an evolution”.
“Federal and state civil rights laws serve to deter and provide remedies for current acts of racial discrimination,” Supreme Court Justice Sotomayor pointed out in her dissent in SFFA. “Diversity is now a fundamental American value, housed in our varied and multicultural community that only continues to grow.”
While the assault on DEI may spark a fightback, the immediate future appears uncertain. Global companies’ actions in response to changes in the U.S. will significantly impact diversity and inclusion efforts worldwide.
