Despite some organizations eliminating or downsizing their Diversity, Equity, and Inclusion efforts earlier this year, and the potential anti-DE&I positions of the incoming administration, many businesses remain committed to these important programs. In this blog post, Affirmity DE&I & ESG Consultant Joe Valenzuela looks at five reasons organizations won’t be abandoning DE&I any time soon.
In the last decade, we’ve grown used to Diversity, Equity, and Inclusion (DE&I) initiatives being a central focus for many organizations, especially in light of the increasing pressure from stakeholders, legal frameworks, and societal shifts toward social justice. However, within the last year, we’ve seen companies grabbing headlines for dropping some or all of their DE&I initiatives—Harley-Davidson, John Deere, and Tractor Supply among them. A larger list of companies, particularly in tech, have been reported to be downsizing their DE&I teams (alongside a wider pattern of layoffs).
In September 2024, the current rhetoric around DE&I prompted the U.S.’s leading civil rights organizations to issue an open call to action to Fortune 1000 executives and board members to “remain steadfast in their commitments to workplace inclusion.”
However, there’s still plenty of evidence that most companies are remaining stalwart in their support of DE&I. The open call to action points to recent statements from a number of Fortune 500 executives restating their commitment to their DE&I initiatives. Furthermore, a 2024 study by Bridge Partners found that 72% of business leaders expected to expand their DE&I programs in the next 24 months.
So why are most companies maintaining their DE&I programs while others are scaling back? Here are five reasons why DE&I programs are here to stay.
1) Access to a More Diverse and Engaged Talent Pool
A recent survey from Ernst & Young found that 63% of respondents would choose employment at a company that prioritizes DE&I over one that does not. Furthermore, 74% said they factor their company’s prioritization of DE&I into their choice of where to work. The survey also found that this preference is more pronounced among the two youngest generations polled. 73% of Gen Z, 68% of Millennials, 53% of Gen X, and 46% of Baby Boomers would choose DE&I-prioritizing organizations.
These figures suggest that a strong, externally promoted DE&I program will enhance your ability to attract a larger talent pool, especially among the younger generations your business can focus on developing over time. Studies specifically considering the job-searching habits of minority groups have made similar discoveries. An Indeed survey of Black workers in the U.S. found that more than half (58%) of respondents said they hadn’t applied for a job they’d otherwise be interested in because they had the impression that the company was neither inclusive nor diverse.
DE&I programs also have the power to make people stay. LinkedIn’s 2023 Workplace Learning Report found that 41% of organizations use DE&I programs to improve employee retention.
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2) Greater Innovation and Business Performance
McKinsey & Company has considered the business case for diversity in a series of reports since 2015. The most recent edition, 2023’s “Diversity Matters Even More”, surveyed 1,265 companies across 23 countries. The report leads with the finding that diverse leadership teams continue to be associated with higher financial returns. Companies in the first quartile for both women and ethnic diversity representation on executive teams were found to be 39% more likely to outperform companies in the fourth quartile.
One of the ways in which DE&I programs drive business performance is by creating a space for innovation. Great Place To Work asserts that “Regardless of industry, field, or domain, organizations that seek diverse viewpoints—across ethnicity, gender, age, educational background, etc.—experience higher rates of innovation.”
Older, but still illuminating research from the Boston Consulting Group found that companies with above-average diversity scores could attribute 45% of their revenue to innovation, whereas companies with below-average diversity scores could attribute only 26%.
3) The Ability to Withstand Regulatory and Legal Pressures
Your organization’s DE&I initiatives are critical to adhering to equal employment opportunity and anti-discrimination regulations. Furthermore, DE&I expertise is needed to transform these processes from simple compliance exercises into results-orientated programs. This makes it easier for you to avoid the financial and reputational risks that your company faces if it fails to comply with mandates at federal, state, and local levels.
Investors too are increasingly interested in DE&I as a component of their Environmental, Social, and Governance (ESG) metrics. Investment firms emphasize DE&I in their investment criteria. For example, BlackRock states in its Global Principles that “We ask boards to disclose how diversity is considered in board composition, including […] demographic characteristics such as gender, race/ethnicity, and age.” Similarly, looking at the 10-year outlook for sustainable investing, Morgan Stanley names racial, gender, and LGBTQ+ diversity among likely future investment strategies.
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4) Cultivating Brand Reputation and Social Responsibility
Despite the pushback on DE&I from certain quarters, a large section of the consumer market remains socially conscious. According to one 2024 study of brand inclusion by a marketing data and analytics business, 75% of consumers globally say that DE&I (or the lack thereof) influences their purchase decisions. Related research found that “progressive, inclusive advertising drives a significant sales uplift of over 16%.”
DE&I efforts are part of many organizations’ wider corporate social responsibility (CSR) efforts, and maintaining DE&I furthers these goals while building goodwill among customers, employees, and communities.
5) Avoiding the Risk of Backlash From Internal and External Stakeholders
Consumers and employees expect companies to have a position on social issues, and those that scale back their efforts may be at greater risk of boycotts and public criticism. Eliminating an established DE&I program is likely to meet with internal resistance from employees who belong to underrepresented groups and their allies. You can expect employee dissatisfaction to grow and morale to reduce, and employees may protest the move.
Consumers, meanwhile, rarely see the brands they choose as purely apolitical. According to a 2024 Edelman Trust Barometer Special Report, 60% of consumers worldwide buy specific brands to express their politics, and 71% believe brands must take a position on controversial or political issues. The report also found that 42% believe that brands need to do more on fair pay, and 29% need to do more on diversity.
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Conclusion
Though we may be seeing the beginning of a rocky period for DE&I in the United States and globally, we do not anticipate a wholesale abandonment of DE&I programs. These initiatives remain integral to attracting and retaining talent, driving innovation, complying with regulations, safeguarding brands, and meeting the expectations of internal and external audiences. No matter how societal and market dynamics continue to evolve, DE&I programs will remain a priority for forward-thinking companies.
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About the Author
Joe Valenzuela is a Certified Diversity Professional and joined Affirmity as a product visionary and advocate for its DE&I software platform and consulting services. He has successfully helped develop, launch, and manage DE&I journeys within the insurance, legal, tech, and financial services industries using DE&I analytics. He also helps clients map DE&I data points to ESG “Social” questions to increase their ESG Index Score.