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As part of a rapidly escalating war on corporate and government diversity, equity and inclusion programs, President Donald Trump’s administration and allies are relying heavily on a two-year-old Supreme Court precedent that says virtually nothing about diversity in the workplace.

A series of lawsuits and threatening letters filed after Trump took office a month ago have cited the landmark 2023 decision that gutted affirmative action on college campuses — and have suggested that the ruling also requires companies to end their DEI programs.

“The Supreme Court said it best: ‘Eliminating racial discrimination means eliminating all of it,’” Republican attorneys general from 19 states wrote to Costco recently, urging the retail giant to suspend its diversity efforts. “For the good of its employees, investors, and customers, Costco should ‘do the right thing’ by following the law and repealing its DEI policies.”

But legal experts say that the notion that the Supreme Court’s 6-3 decision in Students for Fair Admissions v. Harvard spells out rules for the private sector is wishful thinking on the part of DEI critics.

Critics of DEI are “kind of deliberately overreading the decision in order to engage in a lot of bluster and threats,” said David Glasgow, a New York University law professor and executive director of the Meltzer Center for Diversity, Inclusion, and Belonging.

“The case didn’t say anything about private employment or DEI at all,” said Brent Siler, a labor lawyer at the Adams and Reese law firm. “DEI is not illegal, in and of itself, though some of it could be.”

The litigation dealt specifically with admissions policies at Harvard and the University of North Carolina that considered race as one of several factors in deciding whether an applicant would be accepted.

The Supreme Court’s six justice conservative majority held that the way the schools considered race — sometimes giving a plus-up to minority applicants to ensure a diverse student body — violated the equal protection clause. The decision was a significant victory for conservative legal groups who for decades had fought affirmative action policies.

Pro Affirmative Action supporters and and counter protestors shout at each outside of the Supreme Court in Washington, DC, on June 29, 2023. Kent Nishimura/Los Angeles Times/Getty Imges

While DEI efforts drew renewed interest and attention following the police killing of George Floyd in in 2020, experts note the programs have been around for decades. The initiatives are generally geared at leveling the playing field for people who have historically not enjoyed the same opportunities as White employees. That can include ensuring that hiring mangers are reaching out to minority candidates, for instance, and that they do not face discrimination once on the job.

Discrimination on the basis of race and sex in the workplace was already illegal under the Civil Rights Act of 1964, said Rebecca Baker, a labor and employment attorney at the Vinson & Elkins law firm. But neither that historic law nor the Supreme Court’s recent decision bars companies from ensuring they have a diverse pool of applicants, for instance, or requiring certain kinds of training.

“The landscape of employment law — and the law itself — have not changed,” she said.

Critics tend to define DEI efforts more narrowly: hiring targets for minority candidates. And they believe the Supreme Court, with its 6-3 conservative majority, will apply its previous decision more broadly.

“The Supreme Court is just not going to be looking favorably on many — if any — attempts to inject race into decision-making processes,” said Jonathan Berry, an attorney who wrote about limiting DEI policies as part of Project 2025, which was intended to serve as a blueprint for Trump’s presidency.

“President Trump is delivering on a promise for a colorblind Constitution, for colorblind laws,” he added. “For a long time now, DEI programs have been injecting race where it doesn’t belong.”

Trump’s crusade against DEI

Political pushback against DEI has exploded since Trump took office, forcing companies across the country to scramble to revisit diversity policies and wade into a murky area of law in which terms — including “DEI” itself — are not well-defined. Some companies, including Walmart and McDonald’s, have already rolled back DEI programs.

Trump, who repeatedly hammered on the programs during his campaign, signed a series of executive actions during his first week, including one that asserted DEI programs “violate the text and spirit of our longstanding federal civil-rights laws” and “undermine our national unity.” He required diversity programs to be eliminated throughout the government, attempted to cancel “equity-related” contracts and ordered the Department of Justice to develop a plan to “encourage the private sector to end illegal discrimination and preferences, including DEI.”

One of Trump’s orders cited the Supreme Court case briefly.

A federal judge in Baltimore temporarily shut down part of Trump’s effort late Friday. In a 63-page opinion, Judge Adam Abelson wrote that the vagueness of the terms used by the White House “invites arbitrary and discriminatory enforcement.” Abelson, nominated to the bench by President Joe Biden, said that Trump’s executive order likely violates the First Amendment.

“The possibilities are almost endless, and many are pernicious,” Abelson wrote. “If an elementary school received Department of Education funding for technology access, and a teacher uses a computer to teach the history of Jim Crow laws, does that risk the grant being deemed ‘equity-related’ and the school being stripped of funding?”

Colorblind laws

The Supreme Court’s 2023 decision clearly bars universities from giving candidates an advantage to applicants based on race, and experts said that logic will likely apply in other contexts, too. But the Trump administration and Republican attorneys general appear to be reading far more into the decision than that.

Earlier this month, the US Department of Education sent a detailed and aggressive letter to schools, threatening to cut funding within weeks if they did not remove all programs that touch on race. Programs teaching students that “certain racial groups bear unique moral burdens,” the letter claimed, “stigmatize students” and therefore deny them “the ability to participate fully in the life of a school.” According to the letter, the Supreme Court’s decision barred that kind of instruction.

“Although SFFA addressed admissions decisions, the Supreme Court’s holding applies more broadly,” the letter asserted.

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The letter also claimed that schools may not consider race-neutral factors — such as median income or geography — as proxies for race. But the Supreme Court’s decision in the Harvard case didn’t address that issue. And the justices have so far declined to take up a series of appeals attempting to clarify that very point.

Asked to square the letter’s demands with the opinion it relies on, Candice Jackson, deputy general counsel at the Department of Education, told CNN in a statement that its insistence on “upholding the Constitution” is “no threat.” Instead, she said, it is “a promise to American students and educators that the days of race-based discrimination ostensibly to fight discrimination, are over.”

States citing SCOTUS against private companies

As the Trump administration tries to root out diversity programs within the government, state officials are increasingly pointing to the Supreme Court’s admissions decision to lean on private companies to do the same.

Missouri Attorney General Andrew Bailey, a Republican, sued Starbucks in federal court this month, alleging that the coffee chain’s compensation and training practices are discriminatory and violate federal law. The very first ruling cited in that lawsuit was the Supreme Court’s decision on university admissions.

The principle at the center of that decision, Missouri asserted, “applies not only to college admissions, but also, as here, to employment decisions.”

Starbucks has countered that its practices are “inclusive, fair and competitive,” and, according to a statement provided to CNN, “lawful.”

Much of the anti-DEI focus on Harvard has focused on broad points made by Chief Justice John Roberts, who wrote the opinion.

For too long, Roberts wrote, universities had wrongly concluded that “the touchstone of an individual’s identity is not challenges bested, skills built, or lessons learned but the color of their skin.

“Our constitutional history,” he said, “does not tolerate that choice.”

The court’s three liberals dissented, though Justice Ketanji Brown Jackson recused herself from the case involving Harvard because she had served on its board of overseers.

“Ignoring race will not equalize a society that is racially unequal,” Justice Sonia Sotomayor wrote in dissent. “What was true in the 1860s, and again in 1954, is true today: Equality requires acknowledgment of inequality.”

In their letter to Costco, the Republican attorneys general noted that the company’s board had unanimously recommended against a proposal from a conservative think tank that would have required the company to evaluate and issue a report on the risks of maintaining its diversity and inclusion goals.

That, the Republican attorneys general asserted, “runs contrary to the Supreme Court’s recent decisions.”

But the letter didn’t discuss which policies, specifically, Republican officials believe violated the law.

The offices of Iowa Attorney General Brenna Bird and Kansas Attorney General Kris Kobach, who led the letter, didn’t respond to a request for comment.

Costco also did not respond to a request for comment.

In a statement to shareholders in December, the company said that, after reviewing the Supreme Court’s decision, it believes its policies are “legally appropriate.”

“A diverse group of employees helps bring originality and creativity to our merchandise offerings,” the company said in its statement. “Our focus on diversity, equity and inclusion is not, however, only for the sake of improved financial performance but to enhance our culture and the well-being of people whose lives we influence.”

CNN’s Tierney Sneed and Nicquel Terry Ellis contributed to this report.

A slew of American companies have scaled back their diversity, equity and inclusion (DEI) initiatives over the past year amid pressure from activists and concerns over legal risks, but many are standing firm despite pushback.

Significant brands such as Walmart, McDonald’s, Amazon, Ford and Lowe’s have all begun rolling back DEI initiatives in response to a cultural shift that included customer backlash, pressure from conservative-leaning groups and activists, and possible legal ramifications.

President Donald Trump made promises during the campaign to scale back federal DEI programs. In his first week back in office, Trump signed an executive order ending DEI offices and initiatives across the federal workforce.

Trump even slammed DEI initiatives at the Federal Aviation Administration (FAA) during a press conference related to the deadly midair collision between an American Airlines passenger jet and a U.S. Army Black Hawk helicopter over the Potomac River near Reagan National Airport in Arlington, Virginia.

All 64 passengers aboard the plane and the three crew members aboard the helicopter were killed.

With the investigation at such an early stage, information publicly available at this time does not suggest DEI initiatives at the FAA played any part in the crash. Still, it didn’t stop the president from signing a memorandum to end DEI practices in the aviation sector.

WHAT CAUSED THE REVOLT AGAINST DEI IN AMERICA?

Despite the rollback put in place by a number of companies and the political pressure under Trump, some companies are holding fast and maintaining their DEI policies.

Here are five of the biggest companies that have doubled down on DEI:

Apple

Ticker Security Last Change Change % AAPL APPLE INC. 209.05 -2.22 -1.05%

Apple, Inc.

In a proxy filing ahead of Apple’s upcoming annual meeting, the company’s board of directors urged shareholders to reject a proposal that would require the company to end its DEI programs, arguing the move would be “unnecessary.”

TARGET FACING RETRIBUTION AT HOME FOR ROLLING BACK DEI INITIATIVES

Costco

Ticker Security Last Change Change % COST COSTCO WHOLESALE CORP. 927.51 -7.06 -0.76%

Costco Wholesale Corp.

Costco’s board of directors came out unanimously against a proposal calling for a report on the risks associated with keeping its DEI efforts in place, and shareholders overwhelmingly rejected the measure.

Goldman Sachs

Ticker Security Last Change Change % GS THE GOLDMAN SACHS GROUP INC. 730.75 -1.23 -0.17%

Goldman Sachs Group, Inc.

The Wall Street Journal reported that in response to being targeted by anti-DEI proposals from activist shareholders, “A Goldman spokeswoman said the bank strongly believes that organizations benefit from diverse perspectives and that it is committed to operating its programs and policies in compliance with the law.”

COSTCO BOARD MEMBERS DONATED HEAVILY TO DEMOCRATS IN 2024 ELECTION CYCLE

Goldman Sachs CEO David Solomon said in a CNBC interview from the World Economic Forum (WEF) that the bank will “continue to stay focused on talking to our clients and doing the things we’ve always done.”

“They think about decarbonization, they think about climate transition,” he said. “They think about their businesses, how they find talent, the diversity of the talent they find all over the world.”

JPMorgan Chase

Ticker Security Last Change Change % JPM JPMORGAN CHASE & CO. 299.63 +2.59 +0.87%

JPMorgan Chase & Co.

JPMorgan Chase CEO Jamie Dimon also defended his bank’s DEI programs in a separate CNBC interview from the WEF.

When asked about the anti-DEI push, Dimon said, “Bring them on,” adding, “We’re going to continue to reach out to the Black community, the Hispanic community, the LGBT community, the veterans community…”

Microsoft

Ticker Security Last Change Change % MSFT MICROSOFT CORP. 513.24 +0.67 +0.13%

Microsoft Corp.

Microsoft doubled down on its commitment to DEI in its diversity and inclusion report in October, with Chief Diversity Officer Lindsay-Rae McIntyre writing, “We continue to believe it’s the business of Microsoft to be diverse and inclusive so we can build products, services, and a workforce that empowers the world.”

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McIntyre reiterated in a blog post last month that “Microsoft’s diversity and inclusion work is more important than ever.”

President Trump’s executive order banning diversity, equity and inclusion programs across the U.S. government is renewing debate over what DEI is and whether it has benefited workers and companies.

DEI has its roots in the Civil Rights Act of 1964, which barred employment discrimination based on race, color, sex, religion and other criteria. In the following decades, a range of policies have sought to root out bias in hiring, promote fairness in the workplace and open career pathways for people of color and for women, while also expanding to include sexual orientation and gender identity.

This push gained momentum after the 2020 murder of George Floyd, as politicians and social activists pressed companies to do their part in confronting systemic racism. But Mr. Trump’s Jan. 20 order, issued on his first day back in office, criticized DEI as “illegal and immoral,” while the following day a memo from the U.S. Office of Personnel Management called for all federal DEI employees to be placed on leave.

What is DEI in the workplace?

DEI is often misperceived as focusing only on race, according to DEI experts. But such initiatives comprise many practices that aim to uplift different marginalized groups in the workplace. For example, a policy that accommodates working parents, such as flexible work hours, could qualify as DEI. So could establishing affinity groups based on shared identities, like sexual orientation.

Many critics of DEI say employer hiring and promotion decisions should be based on merit alone without regard to race, color, gender and other categories. Other opponents of the policies go further, arguing that DEI itself promotes racism.

But DEI defenders say that policies that seek to foster diversity and inclusion within organizations aren’t in conflict with those that seek to reward the most talented or hardest-working employees.

“DEI enhances merit by saying, ‘How do we find the best people for the job or make sure we are promoting the best people?'” David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion and Belonging at NYU School of Law, told CBS MoneyWatch. “And that means thinking about barriers and biases that might be getting in the way of considering the full talent pool.”

In defining DEI, Glasgow described “diversity” as a commitment to diversifying personnel within an institution so that U.S. workplaces better represent the population at large. “It’s about engaging in effective outreach to places that might be overlooked and making sure hiring and promotion systems aren’t screening out women or people of color from being considered,” he said.

Meanwhile, when designed and implemented effectively, DEI programs are not discriminatory, according to Jessica Fulton, vice president of Policy at the Joint Center for Political and Economic Studies, a nonprofit that aims to improve African-Americans’ socioeconomic status.

“These policies don’t actually dictate who gets hired. They are ways to open doors to people who might not have access or aren’t as well-connected in an industry or occupation,” she explained.

The equity piece of DEI seeks to level the playing field for groups of workers who have historically been underrepresented in a given field or who, compared with their white or male peers, are underpaid for doing the same work.

“It could mean making sure women are able to enter traditionally male-dominated occupations, like construction or technology,” Fulton said. “It’s about addressing issues around equal pay for equal work, making sure people feel safe in the workplace so they don’t feel discrimination when they come to work, because workers who don’t feel safe are not the most productive.”

Corporations also commonly aim to develop inclusion policies that help people from diverse backgrounds feel safe within a given workplace and its culture, she explained. They are intended to be, and often are, inclusive of everyone and not just members of marginalized communities, according to Fulton.

“It is also making sure they can put certain policies in place to make sure their workers stick around and keep working. It is about building a great team and being able to treat that team well and retain the folks they hire,” Fulton said.

Given the recent backlash against DEI, though, a number of corporations are moving away from such inclusion policies, noting that they could pose a legal risk. That’s after many major U.S. employers already ditched their DEI programs in response to pressure from anti-diversity activists. Among them are Ford, Harley Davidson, McDonald’s, Meta and more.

How is success measured?

Many corporate executives have soured on DEI in recent years because of the perception that such policies don’t enhance a company’s performance, said Daniel Snell, co-founder of Arrival, a UK-based consulting firm focused on corporate leadership and culture. Other leaders, while recognizing the value of promoting diversity and inclusion, argue that DEI is inadequate for redressing what are at bottom much broader socioeconomic issues.

Glasgow of NYU Law concedes that it can be hard to determine if DEI programs are succeeding or otherwise clearly assess their outcomes. “It’s difficult to measure certain DEI interventions, like the effectiveness of implicit bias training in the workplace,” he said. “It also depends on what you are trying to achieve.”

One tool employers use to try to gauge the efficacy of DEI policies are internal surveys that ask workers whether they feel like they can be themselves in the office, believe they are respected by their peers, and feel that their opinions matter. When it comes to a company’s mentorship and promotion policies, employers will also monitor if members of a particular group of workers, such as veterans and Black employees, are quitting shortly after being hired — patterns that can yield insights into a workplace’s equity and inclusiveness.

By contrast, if over time more women or people of color ascend to leadership positions, that could be viewed as a company achieving its goal of building a workplace that’s more representative of its job applicant pool.

Corporate DEI programs aren’t altruistic, experts emphasize, pointing to at least some empirical evidence showing that such efforts can help companies adapt to change, support innovation and even boost the bottom line.

“The point of diversity and inclusion is that companies, the government, universities, all do better when there are diverse participants in management and throughout the enterprise,” said Michael Posner, director of the NYU Stern Center for Business and Human Rights. “The objective of this is not to set quotas or say we are going to take unqualified people because they fit a certain characteristic, like gender or race, but to create opportunity and try to overcome historic barriers to entry.”

In one noted study, McKinsey found that companies in the top quartile for the gender diversity of their boards of director are 27% more likely to outperform financially than those in the bottom quartile. In separate research, the consulting firm in 2024 found that women’s representation at work over the past decade has increased at every level of corporate management — women today make up 29% of C-suite level positions, up from 17% in 2015.

“[A] lot of the language and framing right now of DEI as illegal and discriminatory obscures who it’s really for, which is all of us, and to the benefit of companies,” Fulton told CBS MoneyWatch.

contributed to this report.

As the Trump Administration sets out to dismantle diversity, equity, and inclusion (DEI) programs across the federal government and private sector, a number of major companies have joined in the effort. Some others, however, have decidedly not.

While companies like Google, Amazon, Meta, and some Wall Street banks have reversed course on DEI-related policies and pledges—many of which were made in the wake of the murder of George Floyd and the Black Lives Matter Movement in 2020—others, like Pinterest, have expressed caution over how the Trump-led backlash against DEI could impact their business.

Still, others see an abrupt shift away from DEI to be short-sighted.

On Tuesday, Apple shareholders rejected a proposal to abolish its DEI initiatives, after the company’s board of directors made the case that ditching its DEI programs would “restrict Apple’s ability to manage its own ordinary business operations, people and teams, and business strategies.” And earlier Uber chief executive Dara Khosrowshahi told the Financial Times, “We think that building an employment group that is diverse, that is global, that thinks about all aspects of the business, that’s positive—that’s just good business,” although the company is adjusting its DEI-based executive pay incentives.

Here are some of the major companies that are resisting attacks on their DEI initiatives:

Apple

Apple became the latest major company to reject a shareholder proposal asking the company to abolish its diversity and inclusion programs, policies, departments, and goals. The bid was drafted by conservative think-tank National Center for Public Policy Research (NCPPR), which has submitted a number of DEI-related proposals to companies even before President Donald Trump’s second term began.

The proposal argued that corporate DEI programs expose the company to potential litigation, citing a 2023 Supreme Court ruling that reversed affirmative action in college admissions. But investors at Apple’s annual shareholder meeting on Feb. 25 rejected the measure, with 97% of votes cast against it.

Apple CEO Tim Cook, who met with Trump last week, said at the meeting that Apple has never had quotas or targets. However, he added that the company may have to make adjustments “as the legal landscape around these issues evolves,” according to Bloomberg News.

Ben & Jerry’s

Ben & Jerry’s has never shied away from social activism—with campaigns around marijuana legalization, racial justice, and LGBTQ+ pride. Unsurprisingly, when it comes to DEI, the ice cream company told CNBC that it has no plans to roll back or slash its efforts.

“We believe that companies that timidly bow to the current political climate by attempting to turn back the clock will become increasingly uncompetitive in the marketplace and will ultimately be judged as having been on the wrong side of history,” the company said in a statement.

Ben & Jerry’s recently accused its parent company Unilever of trying to mandate its silence on Trump. The company is suing Unilever for allegedly threatening to “dismantle” Ben & Jerry’s independent board and stifling its social activism.

Costco

Last month, the board of directors for Costco Wholesale unanimously opposed a proposal filed by NCPPR, which asked the wholesaler to report the risks of maintaining its DEI policies.

“Our Board has considered this proposal and believes that our commitment to an enterprise rooted in respect and inclusion is appropriate and necessary,” Costco’s board wrote in its recommendation to shareholders, who would vote on the proposal. “Our efforts at diversity, equity and inclusion remind and reinforce with everyone at our Company the importance of creating opportunities for all. We believe that these efforts enhance our capacity to attract and retain employees who will help our business succeed.” The board added that its DEI policies are legally appropriate.

Shareholders voted against the proposal at Costco’s annual shareholder meeting on Jan. 23, with 98% votes cast against it.

Delta Air Lines

Delta Air Lines maintained its line on DEI efforts last month. “DEI is about talent, and that’s been our focus,” Delta chief external affairs officer Peter Carter reportedly said on an earnings call in January. “We are steadfast in our commitment because we think they are actually critical to our business.”

Francesca’s

Clothing retailer Francesca’s affirmed its commitment to DEI in a LinkedIn post earlier this month. “DEI is not an abbreviation—it’s a Human Strategy, and respect and inclusion are good for business,” the post said. “At Francesca’s, we’ve built a culture where employees feel free to be you in all senses,” CEO Andrew Clarke said in an accompanying video. He added that as an openly gay CEO, he has faced prejudice, discrimination, and “even lost a job” over his identity. DEI is “not just part of the strategy,” Clarke said in the video. “It’s the human strategy.”

Clarke told CNBC that DEI was critical to the company’s rebound after filing for bankruptcy in 2020.

JPMorgan Chase

JPMorgan Chase CEO Jamie Dimon reaffirmed the bank’s support of DEI in a Feb. 24 interview with CNBC. The bank—the largest in the U.S.—will continue its outreach to Black, Hispanic, LGBTQ+, veteran, and disabled communities, Dimon said.

Dimon’s comments came after the bank’s latest annual filing earlier this month noted that it “has been and expects that it will continue to be criticized by activists, politicians and other members of the public concerning business practices or positions taken by JPMorgan Chase with respect to matters of public policy (such as diversity, equity, and inclusion initiatives).”

Lush

Cosmetics company Lush wanted its message on DEI to be heard—and smelled—putting out three new bath bombs named Diversity, Equity, and Inclusion. Hilary Jones, global ethics director at Lush, told ADWEEK that the company is “not going to roll back on anything, and we wanted to make sure that we were visible in not rolling back.”

The company, known for its colorful soaps with quirky names, has long been vocal about social issues: it launched a soap in the early 2000s called “Gay is Okay” and in 2014 supported its employees who staged a protest over police brutality at the Mall of America. After a complaint about the protest was posted on the company’s corporate page, Lush responded: “We are a campaigning company, and we support the right to free speech and peaceful protest. Standing in solidarity of fairness, justice and equality for all, regardless of gender, race, age, sexuality, and religion—this is something that as a business we do wholeheartedly believe in.”

Microsoft

Microsoft has not made any moves to repeal its DEI policies, according to Bloomberg Law. The company’s chief diversity officer Lindsay-Rae McIntyre put forward the business case for supporting diversity and inclusion practices in a Dec. 20 LinkedIn post.

“I’m thinking about the importance of continuing our diversity and inclusion work, expanding empathy, and anticipating the needs of all our stakeholders, both within Microsoft and beyond,” she wrote. “A workforce strengthened by many perspectives, experiences, and backgrounds is critical to our innovation.”

Patagonia

Patagonia told CNBC that it will not scale back its DEI policies. “We stand firm in support of our justice, equity and antiracism policies and practices,” the outdoor apparel company said in a statement.

The company has been well known for its activism around climate issues. “We know that when we come together and push back, we can win,” Patagonia CEO Ryan Gellert recently wrote in TIME, arguing against the Trump Administration leasing or selling 640 million acres of public lands. “As we have for decades before,” Gellert wrote, “Patagonia will mobilize our community and use our position as a business and supporter of grassroots conservation groups to protect public land and water regardless of who is in the White House.”

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Since Tractor Supply upended its longstanding diversity, equity and inclusion practices in June, more retailers, brands and other firms — including Lowe’s, Harley Davidson, Ford Motor Co., Indian Motorcycle, Molson Coors and Jack Daniels owner Brown-Forman — have similarly abandoned theirs.

These moves are reflective of an increasingly tenuous environment for any company or human resources department aiming to assemble a dynamic workforce and leadership team, according to coverage from sister publication HR Dive. As a result, many companies are scrutinizing their DEI policies.

And most are sticking with them.

A December 2023 survey by the Conference Board of nearly 200 chief human resources officers found “unanimous support for maintaining, if not intensifying, DEI efforts into 2024, with 63% actively seeking to further diversify their workforce.” Some companies are ducking the current spotlight on DEI by renaming their initiatives while keeping their substance intact, several experts said. Those that take this route should evaluate changes to be sure they align with business strategies and the interests of stakeholders, according to a recent report from the think tank on “repositioning DEI.”

Because companies have diverse stakeholders, including employees, customers and shareholders, and because it’s their business to be profitable, it’s not just acceptable but necessary for them to question their DEI programs’ effectiveness and evolve them as necessary, according to Diana Scott, who leads the nonprofit’s U.S. Human Capital Center.

In all, though, some 90% of those working with the Conference Board remain committed to DEI after doing so, Scott said by video call.

“Most organizations are trying to stay the course because they want to create an inclusive, diverse, vibrant culture in the organization,” Scott said. “Because they know that contributes to employee engagement, which contributes to employee productivity, which contributes to bottom-line business results. You don’t do DEI because you’re trying to be ‘woke.’ You do DEI because it’s actually serving your business.”

The fallout

While social media provocateur Robby Starbuck has been taking credit for most of the recent high-profile cases of what he calls “woke” companies scaling back or ending their DEI programs, the companies themselves are not stating that. Tractor Supply declined to comment for this story, and the other brands didn’t return multiple requests for comment. All were asked if Starbuck was behind their policy change.

Companies including Tractor Supply and Lowe’s haven’t confirmed that pressure campaigns from activist Robby Starbuck were behind their decisions to end their DEI programs. ​​​​​ Retrieved from Robby Starbuck Instagram feed on September 10, 2024

This reluctance likely stems from Starbuck’s position as a political agitator with maximal views, whose frothy approach doesn’t comport with sober business decisions, experts said.

“This is an extreme activist who’s actually profiting from his activism,” Valeria Piaggio, global head of DEI at Kantar, said by phone. “Most are not abandoning DEI. What we do know is that some companies are adjusting the language. Or if they have a program supporting young professionals in their company, instead of stating that this is benefiting a specific group, they are expanding it.”

The anti-DEI movement has been building in the last year or two, with this year’s presidential election and last year’s Supreme Court decision, which barred affirmative action at universities, adding to the uncertainty around and attention to DEI, according to Piaggio.

The Court’s ruling has inspired litigation against private companies, though not all have been successful. Earlier this year, a federal judge in Ohio dismissed a lawsuit against Hello Alice, a fintech platform focused on “equitable access to capital and support for underrepresented entrepreneurs.” The suit had been brought by America First Legal, an organization led by Trump adviser Stephen Miller that targets “woke corporations” and DEI, among other issues.

“You don’t do DEI because you’re trying to be ‘woke.’ You do DEI because it’s actually serving your business.” Diana Scott Center Leader of the US Human Capital Center at The Conference Board

In general, the anti-DEI outcry has been a blunt instrument that fails to take into account what well-executed programs do for organizations, according to Effenus Henderson, a human resources consultant who is also co-director of the Institute for Sustainable Diversity and Inclusion. He served as convener for the International Organization for Standardizations’ working group that developed the global diversity and inclusion standard that the ISO adopted three years ago.

“There is quite a bit of pushback by what I characterize as a small group of far-right extremists who are trying to completely obliterate, destroy and dismantle DEI efforts, both in terms of public policy and in terms of practices in private industries,” he said by video call. “It’s very short-sighted, and a lot of folks use the word ‘DEI’ without fully understanding it.”

The Conference Board also blames hastily implemented efforts for undermining the reputation of DEI. Many businesses belatedly embraced diversity following the 2020 murder of George Floyd by police, which sent brands scrambling to prove they were doing more than professing support via social posts and marketing. But the benefits of DEI don’t accrue to businesses whose policies are limited to largely performative initiatives like sensitivity training, book clubs or celebrations of heritage months, experts said. Bias training in particular has proven to be largely ineffective despite billions spent on it in the past few decades, according to the Conference Board.

“For diversity work to be sustainable, those that get this right generally look at it as a lens in which they evaluate all of their business practices and strategies, ensuring that it’s coupled with or aligned with their shared values as an organization,” Henderson said. “So it isn’t some set-aside program. It’s more of an integral part of how one does business.”

Moreover, the word “diversity” encompasses much more than the racial, ethnic, sexual orientation or gender-based issues that bother the likes of Starbuck, he said, citing work by Marilyn Loden in the 1990s defining diversity in a wide variety of ways. Those better known attributes as well as others like educational background, geography and formative experiences, including military records, all help bring valuable perspectives to a team, DEI experts say.

“It’s not just about race and ethnicity. It also has to do with women and people with disabilities, with all sorts of diversity,” Piaggio said. “And people who are looking for the end of DEI don’t realize that they are sometimes advocating against themselves.”

DEI why

Corporate America first embraced DEI initiatives in the 1960s, according to the Conference Board. Any company that has incorporated DEI in a meaningful way is unlikely to toss it aside, for a variety of reasons, experts said.

Some aspects of these programs are necessary simply because they help ensure compliance with antidiscrimination laws, Henderson noted. Landmark diversity-focused legislation includes the 1963 Equal Pay Act, prohibiting sex-based wage discrimination, and the follow-up law signed by President Barack Obama known as the Lilly Ledbetter Act; the 1964 Civil Rights Act, which according to the U.S. Department of Labor “prohibits discrimination on the basis of race, color, religion, sex or national origin” in hiring and promoting; the 1967 Age Discrimination in Employment Act; the 1978 Pregnancy Discrimination Act; the 1990 Americans with Disabilities Act; and the 2008 Genetic Information Nondiscrimination Act, which bars federal agencies from using employees’ or job applicants’ genetic information in hiring decisions.

But effective DEI measures go beyond adherence to such laws by helping to “create a workforce that reflects the customers, the communities and so forth that we operate within,” Henderson said. In that sense, DEI isn’t relegated to the human resources department. Rather, it means systems are in place that foster effective decision-making across an organization, from product design and supply chain, to operations and marketing, and to leadership and governance, according to Henderson. The process must also be flexible because demographics change, and this takes testing and market research, he said.

“Who’s at the table, and how do you invite those different points of view, to get feedback and help to solve problems?” he said.

“People who are looking for the end of DEI don’t realize that they are sometimes advocating against themselves.” Valeria Piaggio Global Head of Diversity, Equity, and Inclusion, Kantar

Teams with a variety of perspectives are more likely to be innovative and make sound decisions, according to Jo-Ellen Pozner, professor of management at Santa Clara University’s Leavey School of Business.

“If everybody inside an organization looks the same — shares the same political values, and represents the same racial, ethnic, gender, and age profile — it is going to make decisions that reflect that narrow perspective,” she said by email. “When the internal team is too similar, it tends to assume that all other stakeholders are also similar and therefore share a similar perspective and values system. Once an organization includes people with different perspectives, lived experiences, political values, and demographics, it is much better positioned to take the perspective of different external stakeholder groups into consideration in decision-making.”

Important to retailers and brands is that consumers value diversity programs, with 65% in the U.S. and 71% globally agreeing with the notion that “a diversity of cultures and ideas is necessary for my country to progress,” according to a brand inclusion index released by Kantar this year. Nearly 80% of Americans also say that diversity and inclusion are important to them.

While a rallying cry of anti-DEI boycotts has been “go woke, go broke,” the reality works in the opposite direction, according to ongoing research by McKinsey & Company from the past several years. Companies in the quartile with the most diverse executive teams in terms of gender and ethnicity are, on average, 9% more likely to perform better financially than rivals, for example. Those with the most gender and ethnically diverse boards are 27% and 13%, respectively, more likely to outperform, according to McKinsey’s latest in a series of reports on DEI, released last year. Those at the bottom of executive team diversity are 66% less likely to outperform financially, even worse than the 27% of four years ago, “indicating that lack of diversity may be getting more expensive,” McKinsey said.

“Once an organization includes people with different perspectives, lived experiences, political values, and demographics, it is much better positioned to take the perspective of different external stakeholder groups into consideration in decision-making.” Jo-Ellen Pozner Professor of management, Santa Clara University’s Leavey School of Business

That may be why even now some level of diversity is found on the boards of directors of John Deere, Harley Davidson and even Brown-Forman, whose leadership is still populated by the founding family. At Lowe’s, less than half of the 13 board members and just a third of its nine top executives are white men. At Tractor Supply — which according to Henderson had been making good progress with its DEI practices before it folded them up — less than half of the nine board members are white men, though its leadership ranks are less diverse. In a 2023 press release in which the company boasted of its recognition “for Diversity and Inclusion in the Workplace,” the retailer noted that its workforce is “49 percent female and its Board of Directors is 40 percent female.”

Indeed, while Starbuck has been gleeful whenever a DEI program gets canceled, those companies may still have ongoing DEI initiatives of some type, or may not be so willing to undo progress they have already made. In its June announcement, for example, Tractor Supply said it works “hard to live up to our Mission and Values every day and represent the values of the communities and customers we serve.”

This will be difficult to achieve now that Tractor Supply has let its DEI team go, experts said. Moreover, its decision to abandon DEI wasn’t well thought out, experts have said, and incited a counter-backlash from Black farmers and other upset customers.

That can hurt a company both internally and externally.

The costs of abandoning DEI

Most companies are holding fast to DEI because of its advantages, while the companies ditching DEI have a lot to lose, especially if their programs had been well designed and executed.

Those hanging on have often made it clear to their stakeholders that the point of DEI efforts is fairness across the board, according to the Conference Board’s Scott, who singled out Walmart as being particularly effective in that regard.

“A lot of the divisiveness comes out of one group feeling like they’re at a disadvantage because another group is being advantaged. I do think some organizations are better at sending the message that this isn’t a zero sum game — it’s not that if one group wins the other loses,” she said. “It really is an ‘all boats rise’ situation. So a focus on creating a more diverse and equitable and inclusive company is for everyone.”

While DEI is getting a lot of attention now, companies have embraced it for decades. Bias has been recognized as counterproductive to business interests for decades, for example, according to research from the Conference Board and the University of California-San Francisco that was funded by Walmart. Per that report: Bias hampers employee engagement and can gut productivity by some 20%; biased employers miss out on hiring talented people; and their bias often leads to turnover. The latter is expensive: The Conference Board cites a 2019 Gallup estimate that replacing an employee can cost one and a half to two times their annual salary.

“There is quite a bit of pushback by what I characterize as a small group of far-right extremists who are trying to completely obliterate, destroy and dismantle DEI efforts, both in terms of public policy and in terms of practices in private industries. It’s very short-sighted.” Effenus Henderson Co-Director, Institute for Sustainable Diversity & Inclusion

And young employees do seem prepared to leave or avoid companies without fair hiring policies. A 2022 Ernst & Young survey found that 76% of millennials said they’d leave an employer if DEI initiatives were not offered, and nearly a third said they were already planning to leave their jobs because their company didn’t meet their values. That research also found that about half of Gen Z, millennial and LGBT+ workers, along with 40% of racially and ethnically diverse workers, said their employer’s public positions on social issues affect, “a great deal” or “a lot,” whether they remain at the company.

Retailers that unwind their DEI programs risk alienating not just their workers, but also large cohorts of consumers, experts said.

Lowe’s last year launched a series of workshops to reach millennial homeowners with do-it-yourself projects, and Tractor Supply is actively working to reach a new generation of consumers as well, with CEO Hal Lawton telling analysts two years ago that its “new customers continue to skew younger,” thanks in part to “a net migration out of urban areas, largely driven by millennials.” Observers also say that the hobby farmers who are a major and growing segment of Tractor Supply’s customer base tend to be younger and more diverse.

“For many of these companies, this is where growth is coming from,” Kantar’s Piaggio said. “It is from populations that are growing in size, in buying power and cultural influence, which is critical for retailers or brands, especially in the mass consumer market. The companies making decisions today that are not in line with where growth is coming from are jeopardizing their future, when we look at the demographics of their young workforce and their young shoppers.”