Fights Over DEI Heat Up as Trump Takes Office

Making good on one of the key promises of his campaign for a second term in the White House, Republican President Donald Trump has waged war on diversity, equity and inclusion programs. It started with an effort to purge DEI from the federal government. Now, his administration is targeting corporate DEI policies.

Trump hasn’t made a secret of his disdain for DEI, labeling such programs “dangerous, demeaning and immoral.” Upon taking office last week, he immediately banned DEI policies within all arms of the federal government. Moreover, Trump’s anti-DEI executive order encouraged the private sector to follow to suit, adding that government agencies would use their influence to that end. The directive also mandates that government agencies single out as many as nine “potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of $500 million or more, state and local bar and medical associations, and institutions of higher education with endowments over $1 billion.”

Trump’s anti-DEI campaign is taking place against a backdrop in which conservative activists were already ramping up pressure on companies to eliminate the programs. Their latest target: the banking sector, where financial institutions such as Goldman Sachs and Bank of America are facing the prospect of proxy fights over DEI programs. A recent Wall Street Journal report detailed how a handful of conservative organizations that own shares in banks, including the Heritage Foundation, are submitting shareholder proposals arguing DEI programs put the companies at risk of litigation.

Some major corporations apparently read the electoral tea leaves in recent months and began pre-emptive rollbacks of their DEI efforts. They include McDonald’s Corp., Meta Platforms Inc. and Walmart Inc. Conversely, the board of directors of Costco issued a full-throated defense of its policies in response to a shareholder proposal from the conservative National Center for Public Policy Research to require the wholesale retailer to publish a report on the risks posed by its DEI program.

“Our board has considered this proposal and believes that our commitment to an enterprise rooted in respect and inclusion is appropriate and necessary,” wrote the Costco directors in unanimously recommending stockholders vote against the proposal. The board of directors’ position on DEI received a decisive mandate from shareholders during Costco’s annual meeting this month, with 98% voting against the proposal.

Perhaps the best evidence of corporate America’s DEI dilemma is the backlash to the backlash, as some companies that scaled back their DEI programs are now facing prompts from shareholders asking them to explain their actions. The liberal activist group As You Sow has put its own spin on the requests for reports on the risks of DEI programs by submitting shareholder proposals to companies such as Tractor Supply Co. and Harley-Davidson Inc. requesting information on the rationale that led to them curtailing their programs.

In what may be a sign of things to come, John Deere is being asked to consider one shareholder proposal from the conservative National Legal and Policy Center asking for evidence the farm equipment manufacturer is delivering on pledges to abandon its DEI practices. At the same time, As You Sow has submitted a proposal asking Deere to “report publicly on the effectiveness of its efforts to create a meritocratic workplace.” The proposal references the company’s decision to eliminate its DEI program in response to a public pressure campaign orchestrated by a Republican firebrand in Tennessee.

So which proposal is Deere’s board backing? Neither. Unfortunately for decisionmakers in their position around corporate America, the fervor on both sides of the DEI issue doesn’t leave much room for neutrality.