The shifting DEI landscape: Why directors should stay the course

Over the past year, and more noticeably in the past two months, a shift in the corporate stance on diversity, equity and inclusion (DEI) has emerged, spurred by political pressures, changing market dynamics, and heightened scrutiny from shareholders and consumers, particularly in the United States. 

Despite this evolving landscape, directors have a responsibility to recognise that maintaining and advancing DEI initiatives is not only a moral imperative but also a strategic one, critical to long-term business success.

Political rhetoric, the re-election of President Donald Trump and recent court rulings have amplified scepticism about the role of DEI in corporate strategy. In December 2024, in a nine to eight vote, a New Orleans-based Federal Appeals Court ruled against the Nasdaq Stock Market’s board diversity rules on its companies’ boards. Some of President Trump’s earliest actions after his inauguration were an executive order halting DEI initiatives in all federal agencies and rescinding a 1965 anti-discrimination directive.

Several high-profile corporations have publicly scaled back or reevaluated their DEI commitments in recent months. Companies like Meta, Ford, Amazon, Walmart and McDonald’s have faced criticism for reducing investments in DEI programs, citing economic challenges and shareholder concerns. As companies pull back from DEI, they risk alienating key stakeholders, including employees, customers and investors.

Despite the rhetoric, DEI policies and initiatives simply reflect a commitment to creating a workplace culture that promotes fairness, representation and a sense of belonging for all employees. DEI efforts often include training programmes, mentorship and inclusive policies such as parental leave policies, anti-discrimination and anti-harassment policies, flexible working arrangements, pay gap reporting and equal employment opportunities (EEO) policies.

Costco’s recent actions have drawn praise for bucking the trend. In January 2025, 98 per cent of Costco shareholders voted against a proposal to review its DEI initiatives, reaffirming its commitment to fostering an inclusive workplace. 

By emphasising that diversity strengthens organisational resilience and innovation, the company reset the narrative, proving that such commitments can co-exist with robust financial performance. Consumers and employees alike have responded positively, reinforcing the notion that DEI can be a source of competitive advantage.

Similarly, at Apple’s most recent board meeting, a shareholder proposal to roll back DEI initiatives was rejected, signalling an ongoing commitment to inclusivity amidst a vocal minority of stakeholders demanding a shift.

The current retreat from DEI presents an opportunity for directors to lead with courage and conviction. Rather than succumbing to external pressures, directors should advocate for initiatives that align with their company’s values and long-term objectives. They should emphasise data-driven approaches to demonstrate the tangible benefits of DEI and communicate these successes to stakeholders.

As the Costco example shows, a steadfast commitment to DEI is not only possible but can also be a catalyst for positive change. Directors must recognise that, while the landscape may shift, the principles underpinning DEI – fairness, representation, and opportunity – remain critical to sustainable success. In standing firm, directors can ensure their organisations are not only on the right side of history but also positioned for enduring growth.

Why directors should champion DEI

• Long-term value creation: Research consistently shows that diversity leads to better decision-making, improved risk management and greater innovation. In a global economy, diverse perspectives are essential to understanding and addressing the complexities of the market.
• Reputation management: Companies perceived as inclusive and equitable are better positioned to navigate reputational risks. In an era of real-time feedback, failing to prioritise DEI can result in public backlash and lost consumer trust.
• Workforce expectations: Employees increasingly demand workplaces where diversity and inclusion are prioritised. Maintaining DEI initiatives can boost employee morale, productivity and retention.
• Futureproofing: Global markets are evolving. Companies that embrace inclusivity will be better equipped to meet the demands of an increasingly diverse customer base and future workforce.