- 3M agreed to settle $6 billion in lawsuits from US soldiers who said they experienced hearing loss by using faulty earplugs made by the company.
- Chinese investments in Brazil tanked 78 per cent in 2022, compared with the previous year.
- Terry Gou, billionaire founder of Foxconn, announced his candidacy for president of Taiwan.
Edward Blum, the conservative activist who forced Harvard to change its affirmative action policy, has a new target: business. He’s launched lawsuits against two law firms and a Black-led VC fund over their diversity and inclusion (D&I) initiatives.
So what? A “war on woke” that started by taking down colleges is having a ripple effect in boardrooms across America and beyond. After the Supreme Court ruled that race can no longer be considered a factor in college admissions because it violated a clause in the constitution, organisations like Blum’s American Alliance for Equal Rights have been warning, loudly, that corporate D&I is also open to legal attack.
At the same time, the drive for boardroom diversity that picked up after the murder of George Floyd is slowing. Out of 388 new directors added by firms in the S&P 500 last year, 36 per cent self-identified as Black, Hispanic or other ethnic minorities, down from 46 per cent the year before.
Even though the share of new directors from minorities has doubled since 2013, many companies are concerned the ruling will indirectly
- shrink the talent pool of graduates from diverse backgrounds; and
- provide a basis of legal reasoning which can be applied in ideologically-driven cases against corporate D&I initiatives.
“The days of racial discrimination in hiring, especially through these [D&I] programmes, are numbered,” conservative activist Will Hild of Consumers Research, tells the FT. “I’d expect we’re going to see a pretty large wave of litigation.”
Since the ruling on 29 July…
- 13 Republican state attorneys have sent a letter to large employers including Walmart and Microsoft warning them against race-based hiring and contracting.
- Gannett, the newspaper company, was sued by a group of journalists alleging “reverse race discrimination”.
- Amazon, Kelloggs and Activision Blizzard have been sued by the America First Legal Foundation, a group founded by ex-Trump officials, over their diversity programs.
Nordstrom, Unilever, Mars, BlackRock, AB InBev, Hershey, McDonalds and Starbucks have all faced similar claims in the last year.
The worry is that companies ditch diversity efforts altogether to avoid the legal risk. Janice Gassam Asare, author of Decentering Whiteness in the Workplace tells Bloomberg she’s seen some companies “completely gutting their DEI programs because they feel like they don’t know where to turn and they don’t want to cause any sort of controversy”.
D&I experts are often the first to go during periods of belt-tightening. Amazon, Twitter, and Nike all shed between 5 and 16 DEI professionals each between July and December last year, according to data collected by Revelio Labs.
Could the backlash spread? There is no affirmative action in the UK. Instead, under the Equality Act there is a lawful – but entirely voluntary – practice called “positive action”, which involves “removing barriers” for underrepresented groups.
But that doesn’t mean D&I initiatives in the UK are risk-free. An inquiry conducted by the Ministry of Defence into the RAF found an attempt to bring more women and people from ethnic minorities into the service had led to unlawful discrimination against white men.
The business case. In a submission to the US Supreme Court, 60 companies including Apple and Starbucks reiterated their support for affirmative action policies, saying: “Now more than ever, companies must attract, retain, and elevate a racially diverse workforce to better serve a diverse marketplace of consumers.”
They’ve listened to ample evidence which shows diverse teams make smarter decisions and better investments. A survey from Edelman found that when employees see their employer make progress addressing racism, they are 39 per cent more likely to want to stay working there for many years.
Conservative legal groups are finding ever more creative, long-shot ways to challenge “woke capitalism”. But many firms still feel the competitive edge offered by D&I is worth the risk.
