It seems like Morgan Freeman had it figured out back in 2005 when he was interviewed by Mike Wallace.
Corporate America Drew Back From DEI. The Upheaval Isn’t Over.
From Ford to Walmart, some big companies dialed back diversity efforts as activists pressed. Under the next Trump administration, the pressure will grow.
By Theo Francis and Chip Cutter, WSJ
Dec. 28, 2024 9:00 pm ET
Corporate America pulled back on diversity programs in 2024 under pressure from activists. In the new year, it will face an even more powerful challenger.
Trump’s second administration is gearing up to end diversity, equity and inclusion, or DEI, policies in dozens of government and business programs after many of the same concepts came under attack at some of the biggest U.S. companies.
“The pendulum is swinging back and swinging back very hard against DEI,” said Mike Davis, a former Senate lawyer who runs the Article III Project, a conservative legal advocacy group, who is a close outside adviser to Trump. “Until DEI is eradicated from society there’s still work to be done.”
Wisconsin Institute for Law & Liberty, which has sued companies over DEI policies, is pointing to 61 federal programs it considers ripe for litigation and elimination, including technical assistance for minority farmers and contracting preferences for minority-owned law firms helping to collect U.S. debts. It will have an ally inside the White House: Trump adviser Stephen Miller, who ran a group that has also sued companies over DEI policies.
The assault on DEI—an umbrella term for policies designed to create more opportunities for minorities and their businesses—took off after the Supreme Court in 2023 struck down affirmative action in college admissions. In the wake of the decision, activists challenged corporate policies—and many businesses retreated.
Ford Motor said it would stop providing workplace data to a gay-rights lobbying group. UBS stopped giving out $25,000 grants directed at businesses led by women of color. Walmart said it wouldn’t renew funding for a charity it created to address racial disparities.
This month a federal appeals court rejected Nasdaq’s yearslong push to set racial and gender targets for the boards of its listed companies.
Supporters of DEI say most boards and executives still support diversity efforts, even if they avoid the term, bend to the demands of activists or try to sidestep skirmishes with Trump’s administration. CEOs also risk backlash among customers and employees.
“Diversity is a core American feature,” said Daniella Ballou-Aares, chief executive of the Leadership Now Project, a business group that hasn’t taken a position on DEI. “Do I think every company will emphasize the benefits of diversity in the workforce? No, and I don’t think everyone is doing that right now, either. But it won’t go away all together.”
Tractor Supply was among the first prominent companies to say it would pull back from DEI commitments: cutting roles and withdrawing support for LGBTQ events. “We have heard from customers that we have disappointed them,” the retailer said in June.
Tractor Supply made the announcement just weeks after social-media provocateur Robby Starbuck took aim at the company on social media.
Ford and a few others soon followed, saying they would stop working with the Human Rights Campaign, an organization Starbuck had singled out. The gay-rights lobby had over decades won support from big companies for policies hospitable to lesbian, gay, bisexual, transgender and queer employees and customers.
Changes to training programs
Human-resources professionals retreated during the summer as well. SHRM, a group with members across hundreds of companies, said it would drop the “e” from DEI, instead promoting inclusion and diversity.
“Equity” to HR professionals means companies should guarantee a level playing field for all workers. But anti-DEI activists slam equity as pursuing diversity at the expense of merit.
Companies also revamped training programs that once expounded on societal racism, instead favoring narrower efforts with broader support, such as closing pay gaps between women and men, said Josh Bersin, a longtime workplace analyst and corporate adviser.
“Inclusion and diversity and pay equity is still huge,” Bersin said. “But they’ve toned down the approach.”
In other cases, companies extended training opportunities—on improving communication techniques, for example—to all employees, said Sheila Abron, co-chair of the affirmative action and federal contract compliance practice at law firm Fisher Phillips. The goal: ensuring equal access.
“That’s where we’re seeing the legal challenges, when there is not an equal opportunity for all,” Abron said.
Some companies facing litigation or public criticism reaffirmed their commitments to diversity. Ford CEO Jim Farley said the carmaker was still committed to having an “inclusive workspace.” Walmart HR chief Donna Morris told staff that the retailer still wanted to create a sense of “belonging” internally.
Courts take up the fights
Separate federal courts this spring tossed two lawsuits accusing Amazon.com of discriminating through grants for delivery services with Black, Latino and Native American owners. Plaintiffs in both cases lacked grounds to sue because they hadn’t even applied to provide delivery services to Amazon and so weren’t eligible for the grants regardless of race, the courts found. Their appeals are pending.
Honeywell and Pfizer have also had cases against them dismissed: Honeywell, after an employee argued he was wrongly fired for refusing to complete a workplace DEI seminar, and Pfizer, which was accused of discriminating by sponsoring a fellowship open to Black, Latino and Native American applicants.
In June, a federal appeals court ordered Fearless Fund, an Atlanta investment firm championing minority women, to halt a program providing $20,000 grants for Black woman entrepreneurs. The court rejected an argument that the spending amounted to protected speech. Fearless Fund in September settled the lawsuit and shut down the grant program.
Representatives for Fearless Fund and Pfizer didn’t respond to requests for comment.
Activists also lobbied investors to help oppose what they called “woke” corporate policies. They filed dozens of shareholder proposals at S&P 500 companies. Often framed as getting politics out of business, such proposals found little traction—few won more than 2% of voted shares.
The activists say to brace for more anyway.
If the Trump administration adds to the pressure, “corporations are going to be even more receptive to the types of shareholders we work with,” said Jeremy Tedesco, senior counsel of the Alliance Defending Freedom, which rates companies on free-speech and religious-freedom policies and helps shareholders submit proxy proposals.
Internal backlash at Walmart
In November, Walmart joined the list of companies talking about winding down DEI programs. Among other moves, the retailer said it wouldn’t participate in HRC’s surveys or renew funding for the Center for Racial Equity, a nonprofit it had funded in 2020 with $100 million over five years.
Inside the company, some workers bridled at the reversal—a few years after the company trumpeted support for such efforts.
On Dec. 13, Walmart CEO Doug McMillon sent an all-staff email saying he had heard from many employees about the changes. “Some of the notes shared appreciation while others shared concern and disappointment,” he wrote. “We aren’t changing our values, but our approach is always evolving as we learn and receive feedback.”
The public pronouncements may not reflect sweeping policy changes. Walmart hasn’t announced changes to health insurance coverage or other policies that underpin its top ranking with the HRC.
Supporters of DEI initiatives spent most of 2024 on the defensive. Now they are waiting for the Trump administration to take shape before they decide how to respond.
“Trump is a charismatic leader who says things off the cuff, but you have to see what really happens,” said Bianca Agustin, co-executive-director of United for Respect, which is asking Walmart shareholders to support a racial-equity audit.
Among the strategies DEI supporters are considering: suing to support key programs or organizing public protests of the kind that helped lead to new diversity initiatives in 2020.
Like some allies, Agustin said she recognizes DEI efforts have to change. “We need to be able to articulate alternative visions,” Agustin said. “We can’t just defend the old programs.”
—Sarah Nassauer and Erin Mulvaney contributed to this article.
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