Corporate America is bracing for whiplash on the question of how to value diversity in the workplace: from an administration that has encouraged DEI programmes to one that wants to decimate them.

Back in January 2021, Joe Biden wasted little time in repealing Donald Trump’s executive order restricting company diversity, equity and inclusion (DEI) initiatives.

Three-and-a-half years later, with Trump neck-and-neck against presumed Democratic presidential candidate Kamala Harris in the polls, business leaders are shoring up their DEI programmes to make them less vulnerable to criticism and legal challenges, say employment and legal experts.

While a Harris win in November will likely mean a continuation of supportive policies for diversity, American businesses are already in the midst of reassessing, and in some cases, eliminating, certain DEI initiatives.

“Our clients understand what’s at stake for DEI in the upcoming election,” said Lauren Hartz, a lawyer who co-chairs Jenner & Block’s DEI Protection Task Force. Her firm is advising businesses on the “work to fortify their programmes in an increasingly difficult legal and regulatory environment”.

Corporate retreat

That compounds the headaches for companies navigating the political landscape. Over the past year or so, US business leaders have become increasingly cautious about promoting their diversity programmes publicly, some striking references to terms such as “anti-racist”, “unconscious bias” and “mandatory allyship” from regulatory filings.

They’ve done so as conservative groups mounted legal attacks, and prominent businesspeople from Bill Ackman to Elon Musk savaged DEI policies in the wake of the US supreme court’s decision to ban affirmative action in college admissions.

A second Trump administration is set to reinstate the executive order Biden so quickly quashed, putting further pressure on companies. The order prohibited government contractors from offering bias training. When the Republican first introduced the directive as president, many companies paused training and reassessed their programmes, according to Vasu Reddy, director of state policy for workplace justice at the National Women’s Law Center.

As part of his 2020 crackdown, Trump’s labour department chastised Microsoft and Wells Fargo – both federal contractors – for pledging to double their ranks of black executives. It also started a hotline to root out diversity training deemed discriminatory to white employees.

The former president has pledged to create a team to “rapidly review every action taken by federal agencies under Biden’s ‘equity’ agenda that will need to be reversed. We will reverse almost all of them. Maybe, in fact, all of them”, he said in a video posted on his campaign website last year. More recently, the former president has decried “anti-white feeling” in the country.

“Trump has made no secret of his vendetta against diversity, equity, and inclusion,” said Reddy. “The point really is to scare people into just steering away from these topics entirely, and I do think you will see that – especially for businesses that really rely on federal funding,” she added.

Division

There are several levers a government can pull to influence corporate policy.

First, it could use the Civil Rights Act of 1964, which set out anti-discrimination statutes, rules that are enforced by the Equal Employment Opportunity Commission. That law bans discrimination against anyone, black or white, male or female, though traditionally, it has been used to protect underrepresented groups.

Secondly, a new Trump administration could wield more direct power by setting anti-DEI rules that federal contractors must meet in order to win or maintain government business.

While Trump shied away from a direct stab at corporate diversity programmes in his lengthy speech accepting the Republican nomination as the party’s candidate, some of the other speakers at the gathering leaned into the argument. Democrats “stand for DEI, which really means ‘division, exclusion and indoctrination’, and it is wrong,” Florida governor Ron DeSantis said at the Republican national convention in Milwaukee last month.

The Trump administration is going to be better prepared than in 2016 to use its levers of power to get companies to ditch DEI if they want to do business with the federal government, according to Robby Starbuck, a film-maker turned anti-DEI activist. Retailer Tractor Supply and tractor maker John Deere retreated from diversity initiatives after Starbuck attacked their policies on social media.

“I think you’re going to see a massive shift,” away from corporate DEI, Starbuck said. “You’re going to see movement from day one of a Trump administration, maybe even literally before day one. Let’s make America sane again, let’s get away from all this crazy stuff, find unifying things,” he said.

‘A good thing’

Conservative activists, many of whom are poised to wield influence in a Trump White House, want him to go further. The Heritage Foundation’s Project 2025 proposes amending the Civil Rights Act, and “deleting” terms like diversity, equity and inclusion and gender equality “from every federal rule, agency regulation, contract, grant, regulation and piece of legislation that exists”.

Its other proposals include rescinding rules barring discrimination on the basis of sexual orientation and ending data collection on gender and ethnicity. Trump has tried to distance himself from the playbook, though more than 100 of those leading the effort served in his administration and many of its ideas hew closely to his and the Republican Party’s platforms.

In spite of the political and legal backlash, Americans continue to support diversity programmes – and the acronym “DEI”. A Washington Post-Ipsos poll in April found 61 per cent of adults think DEI programmes in the workplace are “a good thing”. Even larger shares supported specific initiatives like anti-bias training (75 per cent) and internships for underrepresented groups (70 per cent).

Backlash to backlash

Harris is likely to stick closely to the Biden administration’s agenda on DEI, rather than go any further, to avoid being attacked as too liberal on these issues by republicans and to present as the moderate choice, according to Alison Taylor, a professor at New York University who focuses on corporate responsibility and business ethics.

The first woman, and woman of colour, to be vice-president, Harris has personally faced criticism from anti-diversity activists, with some conservative commentators and Republican lawmakers labelling her a “DEI hire”.

For companies trying to figure out what to do next, Taylor warns of a backlash to the backlash. Younger employees especially tend to be more liberal-minded and want to work for companies that nurture underrepresented groups, putting the onus on businesses to create “organisations that look like society and look like their friends”, she added.

Workers aged 18-29 are most likely to consider DEI in the workplace “a good thing”, with 68 per cent saying so, compared with less than half of workers aged 50-64, according to a Pew Research Center study last year.

Even if Trump is the next president, it is “hazardous” for companies to simply change their policies to pander to politics, she said. “To say we can just cancel ESG and DEI, and that phase is over, is deranged.” – Bloomberg