Some companies are doubling down on DEI – more should follow

Within days of taking office, US President Donald Trump issued executive orders to rid US agencies of their diversity, equity, and inclusion (DEI) programmes. The impacts of the decision are far reaching, including affirmative action criteria no longer applied to federal contracting, including cuts in anti-bias training as well as funding for minority-owned businesses.

Trump is not alone is his determination to bring about the end of DEI. His actions follow a broader social – and corporate - backlash to DEI seen over the past few years, a trend that will continue to be a major issue for responsible businesses in the months ahead, as we highlighted in IHRB’s 2025  Top 10 Business and Human Rights Issues for the year.

Ever since the Supreme Court ruling in 2023 that ended college admissions based on race-based quotas, American companies have faced relentless pressure from right wing investors and commentators to roll back their DEI programmes. Arguing that such policies harm shareholders’ interests, anti-DEI investors have succeeded in compelling many companies to disband initiatives that promote workplace equality. This trend accelerated in the weeks leading up to the 2024 US elections, and has now become widespread.

Companies had begun backsliding on diversity initiatives before the elections, as was seen in moves by Amazon and Meta to de-emphasise their DEI commitments. Walmart and McDonald’s too have taken steps to end initiatives promoting DEI. Some companies which boasted their inclusiveness achievements, have withdrawn from surveys such as those undertaken by the Human Rights Campaign, which in 2023-24 evaluated over 1,300 companies for their LGBTQI+ policies. Other companies from a range of industry sectors are taking similar actions, including Harley Davidson, Tractor Supply (which is also moving away from its climate commitments), Jack Daniels, and John Deere,  as well as retail stores such as Target who last year faced a right-wing backlash and subsequently began to underplay commitment to Gay Pride Month.

In one analysis, Drew Keller, Director of Harvard’s Institute for Business in Global Society, studied 86 posts by a leading anti-DEI activist and found that their prime target were policies supporting LGBTQI+ employees and communities, including attacks on both internal measures as well as external support to LGBTQI+ groups. Programmes supporting ethnic minorities were also targeted, but came a distant second. 

These developments are alarming, but fortunately not all companies are capitulating. Some companies are fighting to protect DEI programmes.

Apple and Microsoft have vigorously defended their policies promoting DEI. Apple urged its shareholders to reject a shareholder move to abandon its diversity policies, calling the proposal ‘unnecessary,’ and restricting Apple from managing its business operations. While Microsoft laid off its DEI team in 2024 for business reasons, it stressed its commitment to the policy even after the Trump inauguration. And more than 98% of  Costco’s shareholders rejected an anti-DEI proposal asking the company to evaluate risks to the company as a result of its programmes. Experts argue that companies should continue such programmes, regardless of whether labelled under the banner of DEI. 

Corporate America in fact needs to redouble its efforts. The work needed to create more inclusive, diverse and representative workplaces is not over, far from it. The tech industry still remains overwhelmingly male – in 2022, women represented 26% of the industry’s science, tech, engineering, or math workforce, a mere one percentage point higher than the figure two decades ago, according to the U.S. Department of Labor. While Google now has more black employees than in 2019 (by 2.4%) they still represent less than 6% of the workforce, and black women, even less so.

The business case for DEI

The case for DEI is strong. It is well-accepted that economies that do not discriminate do well in the long run. It is also known that companies that aggressively pursue policies to recruit qualified candidates from under-represented communities have a better workplace environment and culture, and such diversity promotes innovation. A Harvard study has shown that companies committed to ‘inherent’ and ‘acquired’ diversity are 45% more likely to report their firms’ market share grew over the previous year and 70% likelier to report entering new markets. A Boston Consulting Group study shows reduced attrition levels in companies that promote DEI.

There are sound business and economic reasons to promote DEI as well. As Ann Marie Slaughter, president of the New America Foundation put it in a piece recently, a business person should read DEI as a ‘demographic  and economic imperative.’  America’s future workforce will not be monocultural or of a single colour, nor would suppliers, associates, business partners, or government officials be from the same ethnic group. In 2020, less than half of American children under 18 were white, Slaughter notes, and by 2027, Americans under 30 will be a ‘plurality nation,’ with no group dominating. Besides, gender identity that the Trump administration wants to impose are at odds with a changing population. It is a simple matter of ‘math and marketing,’ she adds.

Without a more diverse workforce, how is a business to engage hard-to-reach ethnic markets? By hiring people who understand those markets. If grocery stores in the US sell Chinese, Mexican, Indian, and Middle Eastern food products, or if bookstores stock books in Spanish as well as English, it is not because they want to kowtow to ‘woke’ liberalism; they want a share of the business that ethnic minorities offer.

Regardless of political or ideological orientation, a business would be foolish to disregard that economic dynamic.

There is a strong moral imperative, too. To be sure, companies’ recruitment policies and profitability are not necessarily correlated. And that’s exactly the point: respecting human rights is not an argument of dollars and cents; it is a legal, philosophical, ethical, and moral argument. Diversity is not only recruiting people from different ethnicities and backgrounds. There are other intersectional issues, such as the economic class to which individuals belong and the social capital they enjoy, which could make workplaces less representative if DEI is abandoned.

Barely two years ago, American corporations showed rare mettle in championing causes that mattered, from accepting the challenge of tackling climate change to speaking out for racial equality and against police brutality. Some companies even withdrew investment from US states that backtracked on equality. They embraced DEI programmes. These companies recognised their responsibility to respect human rights under the UN Guiding Principles, as well as the plethora of other initiatives and organisations which they have supported, including UN Women, Principles for Responsible Investment, and the Standards of Conduct for Business with regard to LGBTQI+ rights.

Where do responsible businesses go from here?

Thousands of US companies have business relationships around the world. Granted, they are facing political pressure domestically to roll back their progressive policies, but disengagement from international markets will be challenging. International regulations, including the European Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive will require compliance from major US companies with global presence. Pressure from consumers and investors (and not only socially responsible investors) will also require companies to adhere to international norms. US companies will have to tailor their policies to meet those standards.

Businesses will have to make a stronger case by demonstrating through data that pursuing DEI policies enhances, rather than harms, corporate performance. For example, when the Silicon Valley Bank (SVB) collapsed, conservative critics blamed the bank’s adherence to Environmental, Social, and Governance standards for its failure. That was simply not true, because SVB’s collapse had more to do with its emphasis on startups. More successful banks pursued the  ESG agenda and had not been hurt. Lower attrition rates, better quality of intake of recruitees, improved work culture, greater innovation are all examples of positive impacts due to policies that promote workplace diversity. Companies will have to articulate the case more forcefully.

As the Trump administration continues its efforts to undermine diversity initiatives, we shouldn’t forget the important work many companies have undertaken over the years to advance the rights of workers and communities. Many have taken steps to prevent conflict commodities from getting mixed with legitimate trade. More than 200 companies opposed state-level laws against LGBTQI+ groups, and hundreds filed amicus briefs supporting same-sex marriages. Some have spoken out against gun violence. And banks, defence manufacturers, and tech giants have committed to work towards ending modern forms of slavery. These and many other examples of business leaderships to advance respect for human rights have made a positive difference around the world, and have demonstrated that principles and profits can align. Now more than ever, today’s business leaders must double down on that spirit.