President Trump calls for an end to DEI programs
President Donald Trump is calling for an end to federal diversity, equity, and inclusion (DEI) programs.
Fox – Seattle
In the wake of nationwide uprisings over the killing of George Floyd, companies sought more women and people of color to diversify their boards.
For a time, it appeared that the once-iron-clad dominance of men, especially white men, in corporate boardrooms was waning. Over the past five years, the racial and ethnic representation of companies in the Russell 3000 index has increased by 20%, and the representation of women has increased by 18%, according to data analysis firm ISS-Corporate. Today, the boardrooms of the nation’s largest companies are more diverse than ever.
But new data shows that a backlash against diversity, equity, and inclusion is shifting the demographics of the executive ranks once again, eroding gains made by women and people of color as companies hire white men at the fastest pace in years.
This year, women accounted for one-third of new executives at S&P 500 companies, down from a high of 44% in 2022, according to ISS-Corporate. Executives of color made up 19% of newly hired executives, down from 44% in 2021.
For the first time since 2017, a majority of new board members are white men. These supreme leadership positions come with prestige, power, and high pay.
“This seems to be part of a broader pendulum shift away from a focus on diversity that we’ve seen in corporate America over the past few years,” said Joel Emerson, CEO of Paradigm Strategy, a culture and inclusion platform.
This change will be brought about by President Donald Trump. The crackdown on DEI spills over into the private sector. Increased scrutiny of DEI efforts is spreading across the private sector. Companies are rolling back or eliminating diversity programs amid growing fears of losing federal contracts and being investigated.
Institutional investors have stopped promoting diversity. The court struck down a Nasdaq rule to increase board diversity and a California law requiring corporate boards to include more women and people from underrepresented communities.
Public pressure has also decreased. The latest Bentley University-Gallup Business in Society survey found that while most Americans still think diversity is important in business and associate it with greater innovation and higher profits, fewer Americans consider it a business priority.
About 69% of U.S. adults say it is important for companies to promote DEI, down from 84% in 2022, the lowest drop since tracking began.
“A lot of the reasons why boards have increased representation over the years was external pressure, but that doesn’t exist anymore,” Emerson said.
Fewer boards include women and people of color
Fewer boards are planning to add women or people of color to their boards this year amid political and economic challenges, accounting and advisory firm PwC said in a recent report.
The percentage of corporate directors who say their boards plan to add gender diversity has fallen from 21% to 9% in 2024. Directors who say their boards plan to add racial or ethnic diversity decreased from 13% to just 6%.
“There are early signs of an economic slowdown, with gender, racial and ethnic representation on boards increasing year over year,” PwC said.
The slowdown is putting the hard-fought gains that Black Americans have fought for in the workplace at risk as boards revert to a “narrow specification” when considering new directors, said Barry Lawson Williams, a corporate executive who has served on the boards of more than a dozen companies.
Narrowing the search to people with experience running a company or major business unit means limiting the search to a very small number of executives with decades of experience, a talent pool that is dominated by white men due to historical hiring patterns, Williams said.
“In my view, there are more than enough minority candidates, but they often go unnoticed, especially when it comes to nominations to boards.”
Taran Amin, chairman and CEO of Elf Beauty, is trying to buck that trend. He said the company is one of the few publicly traded companies with a board that is 67% female and 44% diverse.
“We’re clear: We believe that having a team that reflects the communities we serve is a competitive advantage. Having a diverse board of directors is critical to our decision-making,” he said in a recent CNN interview. “So we stand for what we stand for. We’ve been doing it for 21 years, and we’ll continue to do so.”
