In recent years, Diversity, Equity, and Inclusion (DEI) has become a key focus for global corporations.
However, as societal and political pressures intensify under President Donald Trump, companies including Walmart, McDonald’s, and others are reevaluating their DEI strategies. While some, such as Costco, are holding firm, Google, Meta, and Zoom (ZM-0.04%), for example, are scaling back. This presents both challenges and opportunities as Corporate America tries to adapt to evolving market and regulatory realities.
“DEI is in the crosshairs because of poor execution and identity politics,” said TaChelle Lawson, founder of Fig Strategy & Consulting. “However, it is evolving.” Lawson believes that companies are either overcommitting or retreating altogether – both of which are problematic.
After the murder of George Floyd in 2020, many companies made sweeping DEI commitments. For example, Target (TGT+1.65%) promised a 20% increase in its Black workforce over three years. However, Target recently scrapped its DEI goals and stopped reporting to external groups such as the Human Rights Campaign’s Corporate Equality Index. The company also ended its program to stock more products from Black or minority-owned businesses. Earlier this month, Target’s shareholders sued the company, accusing it of deceiving investors by not disclosing risks associated with its diversity program.
This undoing of DEI programs comes amid broader corporate and political shifts, particularly following the Supreme Court’s ruling against affirmative action and increased scrutiny of corporate diversity efforts. The pressure increased with Trump’s executive order to challenge federal-level DEI programs.
It seems the legal battle over DEI has begun. In a recent lawsuit filed by Missouri Attorney General Andrew Bailey against Starbucks, the company is accused of prioritizing the hiring of women and people of color over qualifications. “Starbucks (SBUX+0.32%)’ U.S. workforce was 70.9% women and 28.4% men […] In other words, since 2020, Starbucks’ [workforce] has become more female and less white,” reads page 29 of the lawsuit.
Noa Gafni, a faculty member at Columbia University, told Quartz in an interview that, while these efforts were well-intentioned, companies lacked the strategies needed to create lasting change. “DEI [became] a priority over night,” she said. “But the lack of comprehensive plans led to frustration.”
Five years later, Gafni suggests companies now have an opportunity to re-think their DEI efforts in a more sustainable way. She recommends aligning DEI initiatives with core business goals, driving cultural change through middle management, and building cross-country partnerships to tackle systemic issues. “A diverse workforce that is engaged and heard will lead to innovation and growth,” Gafni added.
As companies upend their DEI programs, Lawson from Fig believes metrics will shift to avoid legal and reputational risks. “Hiring quotas will be eliminated, ERGs will be scaled back, and diversity training will become less mandatory,” she predicted. The focus will move way from visible diversity metrics toward internal assessments of culture and inclusion.
Despite these shifts, DEI remains a top priority for many employees and consumers. According to data from market research firm Reputation Leaders, 63% of Americans consider DEI policies important for U.S. companies in 2025, reinforcing its continued significance.
“The key is always planning ahead and thinking about how changes will be received,” said Gafni. She stresses the importance of anticipating backlash from stakeholders, whether that’s shareholders, employees, or external political groups.
“Transparent communications are key to a healthy, diverse corporate culture,” Gafni explained.” Companies that thoughtfully approach DEI will be better positioned to lead in the years ahead.
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