Whatever happened to DEI?

By Doug Bailey

Sara Taylor remembers with disappointment when one of her biggest corporate clients told her simply “We’re not going to do this anymore.”

As president and founder of DeepSEE Consulting, a Minneapolis-based diversity training company, Taylor has worked as a specialist and coordinator in the field for 35 years, long before the acronym DEI (diversity, equity and inclusion) entered the public consciousness.

The client, which Taylor declines to name, joined a long list of corporations that recently ditched their DEI programs after facing growing attacks by conservative activists and “anti-woke” factions.

“The backlash really started in education, with colleges announcing they’re not going to teach this anymore,” said Taylor in an interview one day after newly inaugurated President Donald Trump ordered the shuttering of all DEI offices in the federal government. “I said back then that they’re really setting up students to be successful in the workplace of the 1950s. It’s the same with corporations. The reality is that diversity is a fact. It’s not a good or bad thing; it just is.”

And yet the backlash against initiatives has reached screeching proportions at many of the country’s top corporations.

Walmart, Amazon, Meta, Toyota, American Airlines and at least 10 other major companies — Ford, Lowe’s, Boeing, Caterpillar, Harley-Davidson, John Deere, Jack Daniel’s, Molson Coors, Polaris and Tractor Supply Company — announced rollback of their DEI initiatives earlier in the year.

Some companies insisted they remained committed to DEI, but said they were drastically revamping the programs. McDonald’s, for example, said it was “retiring its aspirational goals” and “retiring Supply Chain’s Mutual Commitment to DEI pledge in favor of a more integrated discussion.” DEI by any other name, apparently.

For some, DEI is ‘evolving’

“We are evolving how we refer to our diversity team, which will now be the global inclusion team,” the giant fast-food company said in a statement.

Best Buy changed “inclusion and diversity” to “culture and belonging.”

The insurance sector joined the chorus. State Farm two years ago ended its partnership with GenderCool, an organization aimed at raising awareness of transgender and nonbinary youth, following backlash from conservative political figures and media outlets.

Ameritas is one financial services company with several employee programs dedicated to the needs and interests of diverse groups in its workforce. When asked if the company is continuing these programs, an official from Ameritas would say only “Yes.”

“Ameritas continues to have employee resource groups,” said April Rimpley, senior vice president, human resources.

The National Association of Insurance and Financial Advisors did not give out a Diversity Champion Award in 2024 and has no diversity-related events on its calendar for this year.

Yet Kevin Mayeux, NAIFA’s chief executive, said this does not indicate a retreat from DEI.

“NAIFA names a Diversity Champion, up to one per year, when it is appropriate,” he said. “Award decisions for 2025 have not yet been made and NAIFA may have a 2025 Diversity Champion.”

Choir, a diversity certification program for financial services conferences, disbanded at the end of 2024, nearly three years after it was launched. The program’s goal was to make industry events more representative of the U.S. population. Choir maintained a list of Choir Certified Conferences, which were subject to assessment of their most recent event to determine the prominence and visibility of women, nonbinary people and people of color on stage in comparison to their representation in the U.S. population.

In making their announcement about Choir’s closing in December, cofounder Sonya Dreizler told InsuranceNewsNet that a range of factors led to the end of the program, but two factors were especially relevant.

“The willingness to discuss and advance racial equity that followed George Floyd’s murder appears to have been temporary for many companies and organizations,” she said. Dreizler added that some organizations are dialing back any mention of DEI out of fear of being targeted by legal attacks from anti-DEI campaigns.

An analysis by Strive Asset Management found more than 60 companies, including some in the insurance industry, have made changes that eliminate or materially alter references to DEI in executive compensation plans.

Strive, a hard-liner against DEI-related corporate policies, was cofounded by former Republican presidential candidate Vivek Ramaswamy.

Value of DEI should be ‘particularly clear’

“In the context of insurance, the value of DEI should be particularly clear,” said Paolo Gaudiano, co-founder of Aleria, a DEI tech company. “Treating employees poorly leads to several costs and risks. The costs result from reduced productivity and increased employee churn. The risks come in the form of lawsuits — which of course also lead to financial losses — and negative reputation.”

So, what’s behind the DEI backlash, how long it might last and what the overall impact will be are high on the minds of executives, advocates and members of the DEI consulting industry that exploded in recent years. Its sister progressive programming, ESG (environmental, social and governance principles), is undergoing a similar fate.

The decline in corporate interest in such initiatives can be attributed to several interrelated factors:

1. Political and legal backlash

Conservative activists and lawmakers have increasingly targeted DEI programs, calling them divisive or discriminatory, and Trump has even described them as “illegal” and “immoral.” This opposition led to legislative actions in various states, such as Florida and Texas, where laws have been enacted to restrict or prohibit DEI activities in public institutions. Additionally, legal challenges have been mounted against corporate DEI policies, prompting companies to reassess their initiatives to mitigate potential legal risks.

2. Supreme Court decisions

The Supreme Court’s ruling in Students for Fair Admissions v. Harvard (2023) effectively ended affirmative action in college admissions. Although this decision directly involves educational institutions, it has had a ripple effect, causing corporations to reevaluate their DEI strategies.

3. Shifts in public opinion

There is a growing skepticism toward corporate activism. For instance, a Gallup poll revealed that only 38% of Americans now believe businesses should engage in such activism, marking a decrease of 10 percentage points since 2022.

4. Economic considerations

In the face of economic uncertainties, companies are scrutinizing expenditures more closely. DEI programs, often perceived as nonessential, have faced budget cuts or restructuring as firms prioritize core business operations.

5. Internal reassessments

Some organizations are reevaluating the effectiveness of their DEI initiatives. Critics argue that certain programs may be superficial or do not produce meaningful outcomes.

Yet some DEI consultants believe the movement has itself to partially blame.

Some mistakes cited

The DEI community, said Aleria’s Gaudiano, made some significant mistakes in how it promoted and implemented the initiatives, especially after the May 2020 murder of George Floyd.

“Focusing only on ‘representation’ — the percentage of people of a given group in an organization — creates a sense of competition, leading white men to feel that they are being discriminated against,” he said. “This problem was exacerbated when companies began implementing initiatives carelessly, in some cases literally telling employees things such as ‘We can’t give you a promotion because we have to promote a female/Black/LGBTQ+ person.’”

Gaudiano said much of the energy was spent trying to explain why and how things have been unfair for people, especially Black people in the U.S.

“This has led a lot of people to feel attacked or guilty, which is not a good way to promote ideas,” he said.

Finally, few, maybe none, of the proposed solutions and initiatives were linked to measurable outcomes that matter to leaders.

“Instead, promises of superior performance were based on limited research showing high-level correlations between various aspects of diversity and some financial KPIs,” he added. “CEOs do not use correlations across hundreds of companies to make decisions — they need to know what will happen in their organization.”

Nevertheless, the focus on DEI has led to a number of initiatives that have proven popular with employees and valuable for organizations, many experts say. This is why, after a wave of companies announcing that they were reducing or terminating DEI initiatives, other companies such as Costco, Apple, Johnson & Johnson and many more are revitalizing their support and making it clear that eliminating DEI would be a mistake.

In fact, most of the nation’s largest companies still maintain some form of commitment to these practices, according to a recent report from conservative think tank The Heritage Foundation. Reviewing company statements, annual reports and other publicly available information for every Fortune 500 company, Heritage said it found 485 of the top 500 companies continue to maintain DEI priorities.

Thus, some are still optimistic about DEI despite the rollbacks.

“I call this a caterpillar moment,” says Sacha Thompson, the visionary founder of The Equity Equation, which fosters inclusive leadership and workplace equity. “You know, the whole process of a caterpillar turning into a butterfly is ugly, and you have to shed, and we have to be uncomfortable, and I think that there was some complacency in where we’ve been. It’s two steps forward, and you take a step back.”

Thompson and others say the movement has been undermined by disinformation about what DEI really intends or means. They say it’s up to individual corporate leaders to keep the initiatives alive, even in the face of loud opposition.

“I think it’s really going to depend on the commitment from the leaders of those companies and the commitment that they’re going to get from their employees,” said Vanessa Matsis-McCready, associate general counsel and vice president of HR services at Engage PEO, a national professional employer organization and HR consultant. “The focus doesn’t need to be on DEI, or DEIB, or DEIA. It should really be a respectful work environment, and you can still have the inclusivity, because that’s going to be key for people.”