As a new Trump administration is set to take office in less than two weeks, buttressed with a Republican control of Congress and largely unencumbered by a Democratic party in shambles, DEI policies are showing many signs of being on the outs. A new report from Reuters finds that boardroom diversity, which had become an increasingly important priority thanks to the Black Lives Matter movement in 2020, has slowed down in the face of a changing political climate.
The report draws from data collected by the Conference Board, a business research group which found that over the last two years the number of new Black directors fell from 26% to 12% among Russell 3000 companies, with the number of new White directors seeing steady growth after a historic low over the same period. They remain underrepresented overall, as 8% of the directors in those companies are Black, lagging behind the 14% Black contingent of working-age adults in the country.
The changing political climate evinced in the last presidential election and the waning influence of the BLM movement have left companies feeling “less pressure on this issue” according to Mellody Hobson, an investor and board member of Starbucks who spoke to Reuters. However, the issue is not just an easing of pressure on the issue from the left, but an increase of it from the right as well, as front-groups have brought lawsuits challenging DEI policies at a legal level. Chief among these was a Supreme Court decision from last year that struck down race-conscious admissions policies at Harvard and the University of North Carolina, pushing the countless colleges that held similar policies to change them as well. Another Reuters report from 2023 found that large blue-chip companies, including J.P. Morgan and Starbucks, had modified their DEI policies over the previous years in response to letters from conservative groups threatening to sue them.
For all the political backlash that such policies have garnered from conservative groups, diversity has been found to have a beneficial effect on businesses. A report from McKinsey found that organizations in the top quartile for diversity – both sex and race – were more likely to outperform those in the bottom quartile. An academic study from 2011 comparing the size and gender composition firms’ top management with their financial performance found that “female representation in top management leads to an increase of $42 million in firm value.”
Nonetheless, Donald Trump appears poised to have large sections of the corporate sector backing him as he takes office on January 20th, as a number or large companies, from Ford to OpenAI, have donated to his inauguration fund.
