DEI programs are under attack. Here’s how investors who value diversity can fight back

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Recently, DEI (diversity, equity, inclusion) practices have become controversial in some conservative circles, especially on college campuses. Now, a number of companies are getting involved. For example, Tractor Supply Company, a retailer that caters mostly to rural American shoppers, abandoned all of its diversity programs. 

Tractor Supply Company bowed to pressure from its customers who felt the company disappointed them by having diversity programs. Tractor Supply took a number of actions to eliminate those programs. For example, they no longer track ESG (environmental, social, governance), and DEI criteria, or submit data to the Human Rights Campaign. 

In addition, Tractor Supply will no longer sponsor “nonbusiness activities” such as pride festivals or voting campaigns. Finally, they intend to “withdraw their carbon emission goals and focus on land and water conservation efforts.” 

According to CNN, they took these actions less than a month after a right-wing commentator, Robby Starbuck, attacked the company on X (i.e., Twitter) for its LGBTQ stance and DEI hiring proposals. Starbuck asked customers to boycott the company and complain to corporate leadership. 

The backlash against DEI is real

It’s not just Tractor Supply that eliminated its DEI programs. Dozens of other companies reduced or eliminated their DEI teams, while others changed the descriptions of DEI initiatives in their annual reports. This occurred as a result of threats from some conservative politicians and activist shareholders. 

Some companies watered-down the language (one company changed the term, “diverse leaders,” to “leaders), while another cut the words, “diversity and inclusion.” A few corporations, because of potential legal ramifications, no longer mention the word, “race,” in their annual report, or in their programs.

The backlash against DEI is a more recent phenomenon. After George Floyd was murdered in May 2020, “the chief diversity officer role “was the hottest position in America,” Kevin Clayton, senior vice president, head of social impact and equity for the Cleveland Cavaliers, told Axios. “Companies were hiring these positions out of guilt.”

Now some companies are cutting back DEI staff and programs, and even cut programs designed to support women or people of color. It’s not only online attacks that resulted in these companies to pull back their DEI initiatives, but also a flood of lawsuits. 

Vote with your pocketbooks

In the face of some companies pulling back or cutting their DEI teams, many others have maintained or even strengthened their policies. For readers who want to invest in companies and mutual funds with strong DEI initiatives, there are ways to help change corporate culture.  

One of the most effective ways for investors to make a difference is to vote with their pocketbooks. Typically, that means directing investments to asset managers who reflect their values, which may include diversity, equity, and inclusion policies, as well as environmental, social, and governance programs, and how a corporation treats its workers. 

In addition, when voting to approve board members, you can invest with asset managers and corporations with strict rules about board diversity. 

Tesla CEO Elon Musk, as well as Pershing Square Capital Management CEO and billionaire Bill Ackman, have publicly criticized DEI programs. However, at a closed-door meeting in May, 2024, several executives, including those at the Wall Street Journal, pushed back against Ackman’s DEI comments.

Nevertheless, some large companies cut or eliminated their DEI teams, including…

Major corporations who continue to support DEI initiatives

Many, if not most, companies have not made any changes to their DEI initiatives. You can find out how your company or fund is doing by reading a corporation’s annual report, or by looking at their Diversity and Inclusive Index (D&I Index), which measures the diversity of a company’s workforce. The D&I Index can be found by doing an internet search.                           

For investors who want to support DEI efforts, there are companies who are fully committed to making sure DEI efforts are represented in the workplace. Forbes Magazine, for the 7th consecutive year, has ranked “America’s Best Employers for Diversity 2024.” 

Forbes partnered with the market research firm, Statista, to survey over 170,000 people working for corporations with at least 1,000 U.S. employees. Those who were surveyed were asked to anonymously rate their own employers. 

Notable companies in the top five of the Forbes list include…If interested, you can view the full list and report or download it on the Forbes website. 

Mutual funds and ETFs that support DEI

A number of mutual funds and ETFs invest specifically in companies that have good practices for women and minorities. Here is a brief list: 

·       Impax Ellevate Global Women’s Leadership Fund , which invests specifically in companies that have good practices for women. 

·       Impact Shares NAACP Minority Empowerment ETF, an ETF aimed at empowering minorities.

·       Calvert US Large-Cap Diversity, Equity and Inclusion Index.

 Note: For more information about these funds, or any other mutual fund or ETF, an excellent source is Morningstar, which also strongly supports DEI initiatives. 

Conclusion

Many investors want to see diversity reflected in their investments, and they can do so through mutual funds, ETFs, or individual stocks. This is one way to help to change corporate culture, while also investing in financial products that reflect your values and beliefs.