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The State of DEI: Companies Scaling Back vs. Those Staying the Course

Writer's picture: LaShana LewisLaShana Lewis

A group of people from different racial and ethnic backgrounds work together at a desk.

Diversity, Equity, and Inclusion (DEI) have been the talk of the corporate world for years. But recently, that talk seems to be turning into whispers — or worse, silence. Just this week, Target announced it is rolling back major DEI initiatives, citing shareholder pressure and a need to refocus its priorities. It’s not alone. Some Fortune 500 companies are retreating from their DEI commitments, blaming shifting political tides or economic uncertainty.

Others, however, are doubling down, refusing to let public opinion or internal dissent derail their progress. This crossroads for corporate DEI efforts raises a pressing question: Are we witnessing a shift in values or a return to business as usual?


Companies Scaling Back DEI Initiatives

Let’s start with the companies retreating from DEI.

Take Walmart, for instance. On January 20, 2025, the retail giant announced cuts to its DEI programs. Cue backlash. Shareholders representing $266 billion in assets voiced their discontent, and 13 Democratic attorneys general urged CEO Doug McMillon to reconsider. The critics weren’t just worried about ethics; they flagged the business risks of alienating diverse customers and employees. Walmart, however, stood firm.

Then there’s Ford Motor Company, which scaled back its DEI efforts in August 2024. The company stopped participating in certain LGBTQ advocacy rankings, citing a desire to "acknowledge diverse beliefs" within its workforce. CEO Jim Farley pointed to “external pressures” as part of the reasoning.

And let’s not forget McDonald's, which responded to the June 29, 2023, Supreme Court decision ending affirmative action by quietly stepping away from some DEI goals. Conservative activism and fears of lawsuits were undoubtedly factors, but the company’s pivot speaks volumes about the shifting winds in corporate America.


Companies Upholding DEI Commitments

On the flip side, there are companies refusing to back down.

Costco, for example, reaffirmed its commitment to DEI on January 12, 2025, despite facing growing criticism from certain shareholder groups. CEO Ron Vachris stated that Costco’s DEI efforts are not about quotas but about ensuring equal opportunities and fostering an environment that attracts top talent. Vachris also highlighted that the company continues to link executive bonuses to DEI performance metrics, emphasizing the tangible business value of its diversity initiatives. Even with boycotts and dissent, Costco’s leadership remains convinced that DEI plays a critical role in driving innovation and maintaining its competitive edge.

Meanwhile, Apple made headlines on January 14, 2025, when its board rejected a shareholder proposal to dismantle DEI programs. The company called the proposal "unnecessary" and defended its approach as integral to operational success.

JPMorgan Chase has also stood firm in its commitment to DEI. In April 2024, CEO Jamie Dimon publicly reaffirmed the bank’s dedication, stating, “Diversity, equity, and inclusion are not just the right things to do — they are business imperatives.” Dimon emphasized that fostering a diverse workforce drives better decision-making and helps the company remain competitive in a global economy. This statement comes at a time when many organizations are scaling back DEI initiatives, but JPMorgan continues to highlight its efforts as essential to its success


The Impact of Federal Policy on DEI

Of course, no conversation about DEI in 2025 can ignore the elephant in the room: the federal government.

On January 20, 2025, President Donald Trump signed an executive order that did more than just dismantle federal DEI programs. It also declared, for the entire nation, that there are "only two biological sexes." Let that sink in for a moment. Not only are we erasing decades of progress in creating inclusive work environments, but we’re also legislating narrow definitions of identity that fail to reflect the realities of millions of Americans.

The order forces federal agencies to abandon DEI efforts in favor of so-called "merit-based" practices. The logic? That these programs create division and unfair advantages. The reality? This undermines progress toward equity and disproportionately harms marginalized communities, particularly LGBTQ+ individuals.

For corporations, this move has created a ripple effect. Companies with federal contracts now have to navigate whether to adjust their practices to avoid scrutiny — or stand their ground and maintain their commitments. And honestly, this is where things get interesting. The companies that continue to value inclusivity understand something critical: DEI isn’t just a checkbox, and it’s not just about politics. It’s about understanding who your workforce and customers actually are.

Here’s the thing: the world — and the workforce — isn’t getting any less diverse. If your policies don’t reflect that reality, you’re not just failing ethically — you’re failing competitively. But it seems the government missed that memo.

The State of DEI: It Still Matters

While we are seeing a step back from DEI, it’s critical to understand that DEI is important, and even data-driven, especially now. 

The U.S. Census Bureau projects that by 2060, the U.S. will be a majority-minority nation, with non-Hispanic white populations comprising less than 50% of the population. Meanwhile, Pew Research Center reports that Millennials and Gen Z — the most racially and ethnically diverse generations in U.S. history — already make up a significant share of the workforce. This shifting demographic landscape isn’t just a trend; it’s the new normal, and organizations that ignore it risk becoming irrelevant to both talent and customers.

Businesses that adapt to this reality are better positioned to succeed. Research from McKinsey shows that companies with more gender and ethnic diversity on executive teams are more likely to outperform those with little representation by as much as 39%.  Why? Because diversity brings fresh ideas, challenges groupthink, and drives solutions that resonate across broader markets. In an interconnected global economy, the ability to connect with diverse audiences and harness a wide range of perspectives is no longer optional — it’s essential. This is why more organizations should embrace products created by people of diverse backgrounds rather than reduce their investment. 

Ignoring the increasing diversity of both consumers and the workforce isn’t just a missed opportunity — it’s a competitive disadvantage. Organizations that fail to prioritize DEI risk falling behind, not only in financial performance but also in their ability to attract and retain top talent. In today’s world, an inclusive approach is no longer a “nice-to-have”; it’s a strategic necessity.


Conclusion

Companies that abandon DEI today aren’t just walking away from progress; they’re walking into irrelevance. The future workforce and customer base aren’t becoming more homogenous — they’re becoming more diverse. And the companies that refuse to see this will find themselves out of touch and out of time.

But let’s be real — DEI isn’t just a business strategy; it’s a necessity. Without diverse leadership and inclusive practices, decision-makers are left making policies for people they don’t even understand. And that lack of awareness? It costs. It costs innovation, talent, and credibility.

For those ready to lead, now is the time to act. Whether you’re looking to assess your current DEI initiatives, build sustainable strategies, or already have leadership buy-in and just need help with the next steps, L. M. Lewis Consulting can help you bridge the gap between intention and action. 

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