A recent report shows that many publicly traded companies are increasing their diversity, equity, and inclusion (DEI) efforts, even though the recent DEI backlash has caused some companies to cancel or significantly change such efforts. It is suggested that they continue to maintain and promote the
According to the new “State of Sustainability 2024: DEI Will Survive” report from global consulting and advisory firm Teneo, which analyzed 250 sustainability reports from S&P 500 companies, “just under half of S&P 500 companies (43 percent) continue to include time-bound DEI goals in their quantitative, sustainability reports, and nearly 80 percent of these goals is unchanged from last year, with representation goals being the most common, present in a third of companies, followed by supplier diversity goals (14 percent). It also mentions other DEI goals, including recruiting goals from Historically Black Colleges and Universities (HBCUs) and investing in underrepresented communities.”
However, Teneo's report notes that the use of the acronym “DEI” in sustainability reports has declined from 99 percent of companies surveyed in 2023 to 94 percent in 2024. . Instead, companies are “prioritizing 'inclusion' by putting 'inclusion' at the beginning of their acronyms.” Alternatively, they emphasize terms such as “culture” and “belonging” when referring to such efforts. The report said companies were making this move “to reduce the risk of a backlash.” This year, Tractor Supply Company, John Deere, Ford, Lowe's, and Harley-Davidson all announced they were eliminating DEI initiatives, citing pressure from conservative groups.
Acknowledging that anti-DEI sentiment is not going away anytime soon, the report concludes with a warning to corporate boards:
“DEI communications are being scrutinized by a wide range of stakeholders. To better navigate different and often conflicting perspectives, ESG reporting is designed to provide insight into how DEI efforts align with business priorities. Many companies include DEI in their previous 10-K or ESG reports. have been established as important financial factors, any decision to moderate or adjust these reports will likely require a similar effort with investors.”
Based on the findings of the Teneo report, corporate directors may need to consider the following:
Determining how vulnerable the company is to anti-DEI backlash will be on the board’s agenda in 2025 Given that several large companies were targeted by anti-DEI campaigns in 2024, existing DEI-related efforts at most companies (diversity goals, targeted talent programs, supplier diversity programs) ) seems reasonable to review. It doesn't hurt to make sure these efforts comply with current law and are not exclusive, as critics claim. Boards must be clear about the implementation and intent of the company's DEI-related programs and be willing to defend those programs if challenged. Reviewing the program will ensure that the board is not caught by surprise.
Survey key shareholders and stakeholders about their views on DEI. Companies need to find ways to continually monitor shareholder and stakeholder developments on this issue. In some cases, DEI backlash arose from shareholders. In some cases, consumers stirred the pot. Corporate directors may need to communicate directly with various groups to negotiate policies acceptable to multiple parties to avoid shareholder actions or consumer boycotts.
Review previous communications regarding DEI programs and reaffirm or make appropriate adjustments to your company's commitment to the program. How things are communicated is important to provide transparency and clarity to shareholders. If a company states in previous disclosures that these programs are financially significant, this clears up misconceptions about how DEI initiatives are being implemented and that they are having a positive impact on the organization. This is your opportunity to provide evidence.
