Corporate Race-Based Programs Challenged In Court

Written by Jack Elbaum

What’s happening: Corporate diversity, equity, and inclusion (DEI) programs are being challenged by conservative legal activists in the form of “lawsuits, shareholder letters, and petitions to the Equal Employment Opportunity Commission.” They allege some such programs violate prohibitions on race and sex discrimination.

• Zoom in: The Wall Street Journal reports that Amazon and Starbucks are both being sued for certain diversity-related programs and policies, such as offering extra compensation for Hispanic or black contractors.

• Last year: Comcast settled a lawsuit that claimed it “illegally favor[ed] minority-owned small-business customers with grants and marketing advice.”

Why it matters: The outcomes of the legal action can provide a window into just how far-reaching the Supreme Court’s recent ruling on affirmative action in college admissions will be and the future of diversity initiatives in the corporate world.

Looking ahead: These legal battles may accelerate the pre-existing retreat from so-called “woke” business practices. Data show that corporations have reduced mentions of DEI, ESG, and “sustainability” in earnings calls by nearly 40 percent since the first quarter of 2022.

• The trend: There has also been a significant decline in demand for chief diversity officers, with many being fired. These trends will likely continue as DEI initiatives become more controversial and less profitable.