Axios Markets

April 02, 2024
👋 Welcome back. Emily here. Hope you made it through the first of April relatively unscathed by pranks.
- Today I'm taking a deep look at what exactly happened to corporate diversity efforts — it's not pretty.
Today's newsletter is 760 words, 3 minutes.
1 big thing: DEI's rise and fall


Diversity, equity and inclusion, or DEI, was the hot thing in corporate America a few years ago. Now: not so much, Emily writes.
Why it matters: The business community, long averse to political risks or controversies, backed away from DEI programs over the past two years in the wake of widespread attacks from lawmakers, high-profile rich guys, and conservative activists like former Trump adviser Stephen Miller.
The big picture: Companies that never cared much about DEI, or that fear lawsuits over programs, are using the moment to back away. Others are sticking with these efforts but doing it quietly.
Between the lines: Some business leaders are increasingly reluctant to speak publicly about the subject, but behind the scenes, they're fed up with DEI, Johnny Taylor, president of the Society for Human Resource Management said in a January interview with Axios.
- "The backlash is real. And I mean, in ways that I've actually never seen it before," he says. "CEOs are literally putting the brakes on this DE&I work that was running strong" since George Floyd's murder in May 2020 pushed businesses into action.
Flashback: After Floyd, the chief diversity officer role "was the hottest position in America," says Kevin Clayton, senior vice president, head of social impact and equity for the Cleveland Cavaliers.
- But some CEOs are feeling like they didn't hire well for these roles, bringing on people with civil rights backgrounds instead of more corporate expertise, says Taylor, of SHRM.
State of play: Some businesses are changing programs designed to support women and people of color because of lawsuits — many have been filed over these programs, more than 20 by Miller's America First Legal. And other companies worry about litigation.
- Comcast expanded a small business grant program called Rise, for "Representation, Investment, Strength and Empowerment," last year to include entrepreneurs of all backgrounds.
- The company's 2020 press release about Rise discussed advancing Black businesses. But in 2022, Comcast was sued by an anti-DEI group that alleged the program discriminated based on race.
Goldman Sachs opened up its "Possibilities Summit" for Black college students to include white students. Bank of America broadened internal programs to "include everyone," as Bloomberg reported last month.
- "The seemingly small changes — lawyerly tweaks, executives call them — are starting to add up to something big: the end of a watershed era for diversity in the U.S. workplace, and the start of a new, uncertain one," per Bloomberg.
Meanwhile: There are still companies committed to the principles behind DEI — the idea of hiring people from diverse backgrounds, figuring out how to foster inclusive workplaces, and treating people fairly.
- "You can kind of get your programs growing," without using those initials, Bruce Van Saun, chairman and CEO of Citizens Financial Group, told Felix recently.
- Instead, Van Saun said leaders can talk about their commitment to diversity and inclusion so that everybody feels that their voice is listened to and respected. "We want to make sure that we don't trigger somebody with some of these words."
The bottom line: Companies started caring about diversity a lot more after a flurry of lawsuits — with employees alleging race and sex discrimination — in the 1990s and early 2000s, as this Harvard Business Review piece explains.
- A new kind of litigation risk is sending them fleeing in the other direction.
2. Beyond backlash
Illustration: Annelise Capossela/Axios
DEI programs were long criticized in the business world for not doing enough to combat discrimination — and even for being counterproductive.
- Now, critics on both the left and right say these same programs are having such an outsized impact that they risk advancing folks who aren't qualified.
The backlash has gone far beyond good faith critiques: When a container ship crashed into Baltimore's Francis Scott Key Bridge last week, one lawmaker blamed the accident, baselessly, on DEI.
- A user on X, with hundreds of thousands of followers, posted a video of Baltimore Mayor Brandon Scott, who is Black, responding to the tragedy, with the comment, "This is Baltimore's DEI mayor commenting on the collapsed Francis Scott Key Bridge."
- DEI has also been blamed for airline safety failures and the collapse of Silicon Valley Bank.
What they're saying: "We know what these folks really want to say when they say 'DEI mayor,' " Mayor Scott told The Baltimore Banner in response to the comments. "Whether it is DEI or clown. They really want to say the N-word."
- "[L]et's not lie to ourselves. The vicious attacks against DEI are not being made in good faith," writes Bloomberg Opinion's Sarah Green Carmichael. "They're based in racism."
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Axios Markets is edited by Kate Marino and copy edited by Mickey Meece.
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