Another loss for corporate DEI

Four years ago, on the heels of the tumultuous summer of 2020, activists launched a crusade to co-opt corporate America. One of their central aims was urging corporations to adopt “diversity, equity, and inclusion” (DEI) policies, which promised to usher in a new era of social justice. To appease the activists, companies signed up in droves.

By 2023, some 52% of American workers reported having DEI meetings or training sessions in the workplace. Yet, after just four years, this once-ascendant DEI regime is fast losing steam as more companies, facing cultural and legal pressure, ditch this experiment in modern-day discrimination.

The latest domino to fall was Nasdaq, the second-largest U.S. stock exchange. In late 2020, Nasdaq announced a new rule aimed at imposing diversity quotas on all Nasdaq-listed company boards. Specifically, it required companies to have at least one female board member and one “underrepresented minority or LGBTQ+” board member. If companies didn’t reach that benchmark, they had to explain why. This rule, which the Securities and Exchange Commission greenlit in 2021, affected nearly 3,000 companies, including Apple, Microsoft, and Google’s parent company, Alphabet.

Like many corporations, Nasdaq justified this DEI push by relying on studies by McKinsey & Company, which purported to link DEI policies with higher profit margins. Those findings have since been thoroughly debunked. Yet, even if they were sound and DEI initiatives were profitable, that would hardly resolve the moral and legal questions raised by discriminating against people just because they are white, male, Christian—or all three.

Thankfully, the U.S. Court of Appeals for the 5th Circuit recently threw out Nasdaq’s discriminatory rule. Writing for the 9-8 majority, U.S. Circuit Judge Andrew Oldham made clear that the SEC had “intruded into territory far outside its ordinary domain” in approving the rule, which he described as a “public-shaming penalty” for corporations not living up to the SEC-approved quotas. After the ruling, Nasdaq said it did not intend to seek further review. This is a major win for freedom and meritocracy over identity politics in the workplace.

The ruling caps off more than a year of setbacks for DEI. Ever since the Supreme Court struck down racial discrimination in college admissions policies in 2023, companies have been systematically winding down DEI programs for fear of running afoul of the law. Household brands like Walmart, Tractor Supply, John Deere, Harley-Davidson, Ford, and Toyota have ended their DEI policies and commitments to the far-left Human Rights Campaign, which has long tried to publicly shame companies into adopting its extreme social agenda.

Beneath this legal shift, however, is the shifting tide of public opinion. Americans are turning hard on DEI. Officially touted for inclusion, DEI has been found to do the opposite, creating climates of fear and division. At the University of Michigan, for instance, a $250 million DEI investment resulted in the school becoming “less inclusive,” according to a survey of students and faculty. A study that Rutgers University and the Network Contagion Research Institute conducted found that DEI can “induce hostility, increase authoritarian tendencies, and foster agreement with extreme rhetoric.” Likewise, a poll of more than 6,200 faculty members at 55 elite universities found that half of those professors reject mandatory DEI pledges as conditions for hiring, promotion, and tenure.

What’s behind this shift in public opinion? Perhaps it’s that people simply resent being treated and judged based on the color of their skin.

That is, after all, precisely what DEI’s chief advocates demand. In his bestselling book, How to Be an Anti-Racist, which fueled the DEI movement, Ibram X. Kendi wrote, “The only remedy to past discrimination is present discrimination. The only remedy to present discrimination is future discrimination.” That is a potent recipe for perpetual grievance and division. Sanity would dictate a more rational approach, one articulated by Chief Justice John Roberts: “The way to stop discrimination on the basis of race is to stop discriminating on the basis of race.”

With Congress and the executive branch coming under full Republican control, DEI policies will likely face continued headwinds across the public and private sectors. Lawmakers have vowed to root out DEI from the federal government, as has President-elect Donald Trump and many of his Cabinet nominees.

Christians should welcome this shift toward seeing and treating people based on their shared humanity in the imago Dei. As God’s image-bearers, there is far more that unites us than divides us, and people should never face discrimination because of artificial race or gender quotas.

Now is a golden opportunity to recover a true vision of equality, one that affords equal dignity to all and allows individuals to rise or fall based on merit, not melanin—to be judged, at long last, by the content of their character.