"US Companies Move Away from Minority Preferences... The Disappearing 'Diversity'"

American companies that have been pursuing racial diversity within their organizations are recently showing signs of moving away from this approach, the Wall Street Journal reported on the 21st (local time).

According to the report, Kohl's, the largest department store chain in the U.S., had declared a goal of "discovering diverse leaders" over the past three years, but recently removed the term "diverse" from its annual report. Competitor Nordstrom also abandoned its goal of achieving $500 million in sales from brands owned, operated, and designed by Black and Latinx individuals, as well as allocating 50% of managerial positions to these racial groups.

[Image source=Yonhap News]

원본보기 아이콘

Additionally, cloud service provider Salesforce had announced plans to hire 50% of its employees from underrepresented groups and to have 40% of its workforce be women or non-binary individuals, but this vision disappeared from last year’s annual report. Other companies such as Uber, Wells Fargo, and Citibank have also revised or removed their goals to eliminate “racist practices.”

The Wall Street Journal pointed out that this phenomenon reflects the fatigue and backlash in American society toward DEI. DEI stands for Diversity, Equity, and Inclusion, a social framework that has been established to encourage governments, universities, and companies to pursue racial and gender diversity in hiring and compensation. However, in June last year, the U.S. Supreme Court ruled affirmative action policies that gave preferential treatment to minority races in university admissions and corporate hiring unconstitutional, sparking a backlash.

Recently, eight U.S. states including Utah, Texas, North Dakota, and North Carolina have enacted laws banning DEI, beginning to remove DEI policies from public educational institutions and state agencies. These laws prohibit the use of words like “diversity,” “equity,” and “inclusion” in various public programs and restrict labeling merit-based evaluations as racial or gender discrimination.

Lawsuits against companies that support pro-DEI policies have also continued. Starbucks was sued after setting a goal to have 30% of its employees be Black, Indigenous, or people of color by 2025 and considering compensation for executives who achieve this target. Comcast was also accused of violating anti-discrimination laws for providing subsidies only to small businesses with more than 51% ownership by Black, Indigenous, people of color, or women. According to data from the job site Indeed, DEI-related job postings in 2023 decreased by 44% compared to the previous year.

Tom CW Lin, a professor at Temple University Beasley School of Law, explained, “Companies are responding sensitively to the changing political environment regarding DEI,” adding, “If companies refuse to abolish DEI policies, lawsuits arise.” Jill Fish, a professor of business law at the University of Pennsylvania Law School, said, “Some American companies now view promoting their DEI credentials or taking public stances on social issues as risks no longer worth bearing,” diagnosing that “describing oneself as an ‘anti-racist company’ can be a political act with only downsides.”

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.