Trump’s DEI order causes ‘chaos’ among business leaders

More than 200 diversity officers, some from Fortune 500 companies and some from nonprofits, gathered last summer at the NYU School of Law and by video to talk about the future of their diversity, equity and inclusion, or DEI, programs, which had become a legal and social goal. Anxious, they wondered how to do it protect yourself. Did they need to rethink internship programs for underrepresented workers or drop certain diversity language from their websites?

Those concerns increased sharply this week. In his first days in office, with a series of sweeping actions, President Trump took aim at diversity efforts.

Mr. Trump ordered federal officials overseeing the government’s DEI efforts on leave. His efforts did not stop with government jobs. He revoked an executive order signed in 1965 that banned discriminatory hiring and employment practices for private government contractors. Perhaps most alarming to business leaders was the order’s focus on private companies, whether or not they do business with the government. “We can already see that this flurry of orders has created fear and confusion,” said David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion and Belonging at NYU Law.

The executive order directs the federal government to look at DEI initiatives from the private sector: Each federal agency, it says, will identify “up to nine potential civilian compliance investigations,” which could include publicly traded companies, nonprofits and large foundations, among others.

“The discrete number is a way to strike fear into the hearts of organizations,” said Kenji Yoshino, a constitutional lawyer at NYU who advises some Fortune 500 companies on DEI. “They just don’t want to be one of the nine. Until the nine is announced, it will cause others to be risk-averse.”

Civil rights advocates believe that the DEI programs most legally vulnerable are those that provide employment benefits, such as jobs or promotions, to specific groups based on their race. In 2023, a Supreme Court ruling struck down race-conscious preferences in college admissions and was followed by a wave of lawsuits against the company’s diversity efforts.

With the executive order, Mr. Yoshino: “Trump puts executive muscle” behind 2023 Supreme Court ruling.

Plenty of companies, reading the writing on the wall, had begun to change their approach to DEI before Mr. Trump took office. Meta told employees earlier this month that it would end its DEI work, including eliminating the role of chief diversity officer and dropping diversity hiring goals. Tractor Supply, John Deere and Harley Davidson also pulled back on DEI. Amazon has also recently scaled back some of its diversity programming, with a vice president, Candi Castleberry, writing in a memo to staff in December: “We have phased out outdated programs and materials.”

Some companies, including Walmart, said they would stop sharing data with the Human Rights Campaign, a nonprofit that tracks corporate LGBTQ policies.

Mr. Yoshino said he doesn’t think sharing data with the Human Rights Campaign poses any legal risk, and he believes companies that withdraw that commitment are doing so to avoid social backlash. He considers many other DEI programs legally safe as well, including unconscious bias training and fellowships or retreats dedicated to advancing employees of color but open to anyone.

Nearly a dozen companies did not respond to requests for comment about the future of their DEI programming, and some declined to comment, citing fears of drawing attention to their work.

A managing partner of the law firm Jenner & Block, Ishan Bhabha, said since the order came down, he has received “tons” of calls from clients concerned about whether their DEI programs are in compliance. He said it’s early days and there could be legal challenges to the executive order or to administrative actions following it, but “an executive order like this gives a good idea of ​​what this administration’s priorities will be.”

The White House did not respond to a request for comment, but the text of the executive order condemned “illegal DEI” policies, saying they “deny, discredit, and undermine the traditional American values ​​of hard work, excellence, and individual achievement in favor of an illegal , corrosive and harmful identity-based spoofing system.”

Some companies have been steadfast in their support of DEI, including Costco, Patagonia and Microsoft. For those chief diversity officers doubling down on their work, there is a new sense of isolation, as well as whiplash. Less than five years ago, after the killing of George Floyd in May 2020, dozens of companies began announcing new commitments to fight racial injustice. Walmart created a Center for Racial Equity. Consulting firm Bain started a new DEI practice. Glass door reported a 54 percent increase in job postings for DEI roles in 2020 compared to pre-pandemic levels.

Some diversity leaders have begun brainstorming ways companies can continue their efforts without attracting legal scrutiny. Mr. Glasgow said he’s starting to wonder if it’s time to drop the term “DEI” now that those three letters have become politically charged.

“If you had asked me a year ago, I probably would have said don’t change it,” Mr. Glasgow. “Over time, I’ve become a bit more convinced that the acronym may be inappropriate because empty terms make easy targets.”

Those trying to save the goals behind the DEI programs said they are trying to remain optimistic despite the cold in their field.

“The backlash has been against a very narrow band of activities,” said Bo Young Lee, who was formerly responsible for diversity at Uber and is now president of research and consulting at AnitaB.org, which supports women and non-binary people in technology . The “tight bond,” she said, included sharing data with the Human Rights Campaign’s index as well as offering internships for racial and LGBTQ minorities. For example, she sees paid parental leave as a diversity policy that is now deeply rooted in company culture and secured against attack.

Denise Young, former worldwide head of human resources at Apple said corporate diversity leaders face a more complex environment for their work, but she believes most will find ways to continue bringing in diverse talent because they know it’s good for business.

“That’s the political environment we live in now, but that doesn’t change the needs of business,” Ms. Young. “Talent comes in every form of human existence.”