Anti-DEI Outcry Online Spurs Flurry of Big-Name Firms to Retreat

(Bloomberg) -- At the end of July 2020, as the Covid-19 pandemic raged and unprecedented supply-chain challenges distorted markets, then-Ford Motor Co. Chief Executive Jim Hackett started the company’s earnings call not with financials or strategy but with a message on racial justice and the murder of George Floyd.

“Ford is committed to leading from the front, with action to enable social mobility and economic success in the African American community,” Hackett said. Floyd’s death is “much more than a moment in time that will fade, but rather we must make it a turning point for our society.” 

Just four years later, the company sent a very different message.

“The external and legal environment related to political and social issues continues to evolve,” Ford’s current CEO Jim Farley wrote in a note to employees. He listed out several bullet points on how Ford will change its diversity policies, including no longer speaking publicly on “polarizing issues of the day.”

Ford declined to comment beyond the memo.

The carmaker is the latest in a string of high-profile companies that have pulled back from pledges to commit to diversity, equity and inclusion programs, many of them made in the wake of Floyd’s death. Others include home improvement retailer Lowe’s Cos., motorcycle maker Harley-Davidson Inc., Tractor Supply Co., Deere & Co. and Jack Daniel’s whiskey maker Brown-Forman Corp. While many more have gone quiet on DEI policies, what makes these firms unique is the publicity surrounding their reversal. 

The catalyst appears to be fear that they will become the next Anheuser-Busch InBev NV, whose Bud Light brand lost its title as the bestselling US beer after including a transgender influencer in a marketing campaign. Robby Starbuck, a conservative activist leading the charge on publicly “exposing,” as he calls it, companies that have a base of conservative consumers and DEI policies, has been taking to social media to rile up his over half-a-million followers in calling for boycotts. 

Some of the firms, according to Starbuck, announced changes to their DEI policies after the influencer merely contacted them with threats that he will go public. And while many of the changes are vague and it’s unclear how much diversity programs are actually being withdrawn at the firms, the takeaway is clear: public outcry works.

“What’s happening now reminds me of what happened in reverse after George Floyd,” said David Glasgow, the executive director of the Meltzer Center for Diversity, Inclusion and Belonging at New York University. Four years ago, “you’d be shamed or embarrassed if you didn’t have DEI initiatives — now political circumstances have shifted so much that pressure is going in the other direction.”

Companies across the US have been reassessing their diversity initiatives to comply with a changing legal landscape since the Supreme Court overturned affirmative action in college admissions last year. They’ve sought to protect themselves from conservative legal activists like Edward Blum and Stephen Miller, who’ve filed law suits and regulatory complaints over programs they argue unfairly benefit traditionally marginalized groups at the expense of others.

Starbuck is giving company executives a popular excuse to abandon these policies, which were pushed on them by large passive Wall Street investment firms, said Scott Shepard, general counsel at the National Center for Public Policy Research, a conservative think tank.

“Those execs had to know that embracing equity-based discrimination, expensive and unreliable energy and radical left-wing extremism in violation of fiduciary duty was about as dumb a set of business judgments as could be possible,” he said. 

But there are business justifications for these initiatives, according to Judy Ellis, who leads the DEI advisory business at recruiting firm AMS.

Employee resource groups can offer valuable marketing insight and ameliorate retention issues, Ellis said. “When people feel psychologically safe and that the employer is for them, they’re more engaged and they’re more willing to give 100% devotion to their work,” she said.

Investors like Amber Fairbanks, a portfolio manager at Impax Asset Management, says she’s concerned by the alacrity with which these companies have given way to social media pressure. However, many companies following the 2020 racial reckoning turned to superficial shows of support, without a deeper examination of corporate culture, Fairbanks said.

“I don’t think its necessarily a bad thing that we’re starting to look at these policies and examine them more deeply,” she said. “Companies that see the value of this are not going to change their policies based on a few news stories.”

--With assistance from Keith Naughton.

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