The Deepening DEI Dilemma

In recent years, U.S. public companies have faced increasing pressure to reconsider their Diversity, Equity, and Inclusion (DEI) policies and initiatives. Under both the first and second
Trump administrations, there has been a marked backlash against the historical push for more representation and inclusion in boardrooms, C-suites, and workplaces. Politically motivated
activists have also been emboldened by the shifting landscape to target companies’ DEI programs through a variety of mechanisms, from shareholder proposals to targeted boycotts. In
this volatile environment, many companies are left grappling with how to balance political and regulatory pressures against corporate values, as well as how to handle competing investor priorities with respect to DEI.

Political and Regulatory Pressure on DEI

On January 21, 2025, President Trump issued an Executive Order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” which revoked affirmative action requirements for federal contractors and mandated, among other things, that federal agencies enforce “longstanding civil-rights laws . . . to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.” The Executive Order set the tone for the Trump administration’s regulatory priorities, and multiple government agencies followed suit.

On July 30, 2025, the Department of Justice (DOJ) published guidance from the Attorney General on the application of anti-discrimination laws to entities receiving federal funds. The guidance provided examples of unlawful preferential treatment, including preferential hiring or promotion, access to facilities or resources based on race or ethnicity, race-based training sessions, DEI-focused workshops and sex-based program participation. As recently as February 19, 2026, Deputy Assistant Attorney General Brenna Jenny reiterated the DOJ’s position at a public conference in Washington, D.C., stating that the DOJ is committed to investigating, and pursuing False Claims Act cases against, programs and practices that encourage hiring, promotion or other employment decisions to be made on the basis of protected characteristics. Similarly, the Equal Employment Opportunity Commission (EEOC) created a webpage titled “What You Should Know About DEI-Related Discrimination at Work,” which informs employees that federal law bans “DEI-related disparate treatment” and that “[d]epending on the facts, an employee may be able to plausibly allege or prove that a diversity or other DEI-related training created a hostile work environment.” On the state level, on January 19, 2026, the attorneys general of Florida and Texas both published legal opinions asserting that certain DEI and affirmative action measures in the private and public sectors constitute unlawful race-based discrimination and are unconstitutional.

Although the Executive Order and DOJ guidance only directly impacted companies that receive federal funds, the implications were clear and had immediate effects across corporate America. For example, the top proxy advisory firm, Institutional Shareholder Services (ISS) promptly issued a “Statement Regarding Consideration of Diversity Factors in U.S. Director Election Assessments” in which ISS announced it would “indefinitely halt consideration of certain diversity factors in making vote recommendations with respect to directors at U.S. companies.” Its primary competitor, Glass Lewis, followed by announcing that it would “flag all director election proposals at U.S. companies in which [Glass Lewis’] recommendation is based, at least in part, on considerations of gender or underrepresented community diversity” and offer two different voting recommendations in such instances.

Activists Further Drive the Anti-DEI Agenda

Emboldened by the political landscape, certain investors and activists—particularly conservative advocacy groups—also began exerting pressure on companies to curtail their DEI initiatives. Last proxy season saw a rise in anti-DEI shareholder proposals aimed at (i) opposing the use of DEI in setting executive compensation, (ii) requesting that companies consider eliminating DEI policies and programs or (iii) asking for reports on DEI practices. For example, the National Legal and Policy Center submitted shareholder proposals requesting that companies eliminate any DEI- and ESG- related goals from executive pay incentives, while the National Center for Public Policy Research and American Conservative Values ETF submitted shareholder proposals requesting the issuance of reports about how DEI initiatives would impact a company’s risks related to discrimination.

While most of these shareholder proposals received low shareholder support (less than 5% on average), there is evidence that anti-DEI pressure from investors can nonetheless bring about change. On February 16, 2026, the Wall Street Journal reported that Goldman Sachs plans to remove race, gender identity, sexual orientation and all other DEI factors from its criteria for identifying director candidates, as the result of a proposal submitted by the National Legal and Policy Center in September. This reporting follows Goldman Sachs’ prior decisions to retool its diversity program, One Million Black Women, and end diversity requirements for the boards of its IPO clients. The anti-DEI movement is primarily a U.S. phenomenon, but European companies have felt the impacts as well. In April 2024, Unilever, a U.K. company, pared back several of its sustainability and equity initiatives, including a pledge to spend £1.7 billion a year with diverse businesses globally by 2025, and a commitment that 5% of its workforce will be made up of people with disabilities, in response to investor backlash against its “woke” policies. Many public companies have reconsidered their existing policies related to DEI in the boardroom, including in many cases, eliminating or softening “Rooney Rules” that require the consideration of women and people of color for vacant board seats.

Activists have also led several highly publicized consumer boycotts against companies that have openly embraced diversity and inclusivity. A prominent example is the backlash that Target faced when the company introduced a collection of LGBTQ+ Pride-themed merchandise, leading conservative groups to organize boycotts. Similarly, Bud Light’s marketing partnership with a transgender influencer sparked a nationwide boycott led by right-wing organizers. These actions have led some companies to pull back their public statements or gestures of support for DEI, even while retaining their actual practices in many cases.

Tangible Impacts of Anti-DEI Pressure

The increasing pushback against DEI programs has already had measurable effects on companies, both on paper (i.e., in disclosures and governance documents) and in practice (i.e., in boardroom demographics). A recent review of 2025 Form 10-Ks filed by the 100 largest U.S. public companies indicated that more than half (53%) made material adjustments to DEI-related messaging, structure, or terminology compared to the prior year. The most common adjustments included removal of the word “equity,” narrowed scope of pay equity disclosure and reduction or removal of DEI metrics and targets. The disclosure of gender and racial/ethnic diversity on boards also fell significantly between 2024 and 2025. Many companies that chose to continue reporting this demographic data did so on an aggregate, rather than individual, basis. As noted above, companies have also reconsidered the existing DEI-related policies in their corporate governance guidelines, codes of conduct, and other governance documents. In fact, in 2025, it was reported that just a quarter of S&P 500 companies retained any policy regarding consideration of gender, racial and ethnic diversity when adding directors, which fell drastically from about half in 2024.

Notably, these changes are being reflected in the reality inside the boardroom. Approximately three-quarters of new director appointments at S&P 500 companies in 2025 were men, and approximately four out of five were white, which represents the lowest percentages of new women and people of color in a decade. The 2025 Gender Diversity Index indicates that only 58% of boards in the Russell 3000 (a mere 1% increase since 2024) have at least three women, with certain industries, including technology, industrials, communications, financial services and energy, having even lesser gender representation.

However, there are significant public companies that have determined to maintain their DEI policies and practices in the face of mounting pressure, including by publicly affirming their pro-DEI stance in earnings call and interviews, and by releasing consumer products or marketing with pro-DEI messages.

Maintaining Corporate Values

Boards and management teams are faced with the difficult task of staying true to a company’s core values and maintaining a strong “tone at the top” that fosters a positive work environment, while simultaneously being responsive to external pressures that may call for a reduction in DEI commitments. For many companies, the challenge lies in determining how to reframe their policies and practices in a way that resonates with investors without alienating customers and does not create undue risk.

As a result, we expect to see companies focusing more on the business case for DEI rather than thinking about it as purely a social or political issue. By emphasizing the positive effects of DEI on innovation, decision-making, employee productivity and retention, and overall corporate performance, companies can make the case that DEI is not just a moral imperative but a strategic advantage. Proactive engagement with investors, and other relevant stakeholders, on these issues is also key to ensuring that potential criticism is timely identified and addressed. For companies that do pull back in light of the anti-DEI movement, it is important that such changes are not a knee-jerk reaction, but rather a well-measured and intentional strategic decision that can be articulated accordingly. Companies are well advised to keep in mind that the DEI pendulum may swing back again.