Spending $1.2 billion with diverse businesses. Doubling Black and Latino leadership. Increasing recruitment from historically Black colleges and universities.
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Those diversity goals were highlighted in companies’ annual reports in 2022. A year later, those references were gone.
Dozens of companies altered descriptions of diversity, equity and inclusion initiatives in their annual reports to investors as DEI programs come under legal and political threat. The changes highlight the balancing act companies face as they navigate pressure from both critics and advocates of diversity efforts.
In general, companies say they aren’t cutting back on their programs or longer-term goals. Lawyers and other experts say the disclosure changes reflect uncertainty about the legal parameters of diversity programs along with wariness of political backlash following the Supreme Court’s 2023 decision overturning affirmative action in college admissions.
The nature and degree of the changes vary, according to a Wall Street Journal analysis of 10-K filings to the Securities and Exchange Commission. Some companies shortened descriptions or removed entire sections, while others changed a few words or phrases to cut mentions of race or specific hiring or other targets.
Kohl’s no longer says it is cultivating “diverse leaders” for advancement, as it had for the past three years. The retailer’s latest annual report says its priority is to develop “leaders.”
GameStop cut mention of “diversity and inclusion” from a list of philosophy tenets for its human-resources department.
Software company UiPath used to define DEI measures as “a business priority and a moral imperative.” Now they are “key to creating an environment where our people feel safe to be themselves, are empowered to grow their careers, are rewarded competitively, and are challenged to do their best work while embracing the power of automation.”
People and interest groups along the political spectrum are watching the companies’ words and actions.
Shortly after the affirmative-action decision, a group of Republican attorneys general wrote a letter to Fortune 100 companies warning them against race-based preferences in hiring and promotion. Soon after, Democratic attorneys general wrote to the same companies noting that corporate diversity programs are essential to combating discrimination and encouraging firms to double down on their efforts.
“There’s been a re-evaluation of the level of political risk these companies are willing to take on,” said Lindsay Stewart, an analyst at Morningstar who studies corporate reporting.
The affirmative-action ruling, which struck down the consideration of race in college and university admissions, doesn’t directly affect companies. But the ruling raised the specter of more legal challenges by people and groups who see race- or gender-based goals as discriminatory.
Survey data suggest most companies aren’t making substantive changes to their diversity efforts. Around 93% of employers said their DEI commitments and activity increased or stayed the same between 2022 and 2023, according to a report published in January by employment law firm Littler Mendelson.
UiPath, for example, says its commitment “has deepened in the past year” and that it has “strengthened our operating procedures in talent acquisition toward higher goals for a more diverse workforce.” A Kohl’s spokeswoman said the company’s strategy and beliefs around DEI are still in place and it routinely makes revisions to that section of its annual report. She said additional information about DEI at Kohl’s is on the company’s website and in its annual ESG report.
Still, some companies are saying less. “Forget about any ideological agenda. You’re just trying to figure out, how do I follow the law? You don’t want to overcommit or undercommit or misdescribe where you’ll eventually land,” said Jason Schwartz, a partner with Gibson Dunn and a leader of the law firm’s DEI Task Force. Schwartz currently represents the Fearless Fund, a venture firm whose grants to Black female entrepreneurs have been challenged in court.
The legal landscape shifted again last week, when the Supreme Court opened the door to discrimination claims related to a broader range of workplace actions.
Conservative legal activists have taken aim at some hiring programs and other initiatives by companies, saying they are discriminatory.
“There is a pullback from any explicit mention of race,” said Dan Lennington, deputy counsel for Wisconsin Institute for Law and…
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