August 30, 2024
Businesses face heightened scrutiny and increased expectations when considering how to respond to social issues. Racial justice and LGBTIQ+ inclusion are part of social justice, both of which are being scapegoated by a small organized group seeking to dictate how companies conduct their business. Currently, companies are wrestling with how to navigate a fraught landscape when it comes to their Diversity, Equity, and Inclusion (DEI) programs in name and in practice.
There was a boom in corporate activity in the US on DEI in response to the global protests of the murder of George Floyd in 2020. By the end of that year, US DEI job postings increased by 55 percent, the US was projected to be the largest market for DEI, and by May 2021, companies had earmarked close to US$200 billion toward racial equity, according to the McKinsey Institute for Black Economic Mobility, with DEI roles and budgets being cut from company agendas and Chief Diversity Officers leaving their roles citing obstruction and exhaustion.
Meanwhile, legal scrutiny of diversity initiatives, including the recent US Supreme Court ruling on the use of affirmative action in higher education, had a chilling effect on corporate willingness to champion progress. However, companies that are more mature in their DEI approaches and recognize the bottom-line impact are doubling down on their investment to ensure that they are future-fit for the next generation of talent and sophisticated stakeholders who expect and demand authentic and consistent corporate commitment to social justice.
Additionally, new attacks on LGBTIQ+ rights in the states, particularly around transgender care and equality, have gone mostly unchecked despite national gains when it comes to the rights of same-sex couples to marry.
So, how should business leaders respond in this challenging environment? Here are four tips that can help:
1) Be Prepared and Consider the Source of the Blowback
It’s important to recognize that DEI blowback may not actually come from a company’s stakeholders such as current or prospective workers and consumers, but from organized, vocal opposition groups. Understanding the source of the opposition allows businesses to prepare and respond effectively, while remaining true to their values.
Companies may be tempted to take an off-ramp to end or diminish DEI programs as well as participation in meaningful external benchmarks, such as HRC’s Corporate Equality Index, because of detractors who perceive the business as an opportune target for political purposes. It’s easy to get caught up in the moment when the social media pressure and emails to executives’ inboxes seem to demand a reaction—don’t take the bait. As Axios reported recently, the internal policy reversals by companies saw 77 percent more media mentions and roughly 40 percent more social media interactions than the initial attacks targeting the company.
However, this does call upon companies to go beyond short-term thinking, which can be hard when the politics of the moment makes everything seem divisive and urgent.
2) Ensure Your DEI Program is on Firm Ground
Recently, some companies have been retreating from DEI initiatives with external pressure playing a role. This isn’t just a step backward for workplaces—it’s a retreat from the normalization of practices that actually remove barriers and impediments in society for everyone. It's essential for existing DEI programs to evolve and that stakeholders—including employees, consumers, investors, and communities—understand how these initiatives can benefit everyone. Recent data underscore this reality. More than six in 10 Americans view DEI positively, with even stronger resonance among younger generations of workers and consumers.
3) Frame DEI in a Broader Context
DEI is not an isolated function effort—it is an integral part of a broader business commitment to social justice and other equity-driven imperatives. This perspective is not a trend; it’s the new normal. DEI is a part of social justice, which encompasses climate justice and democracy to economic inclusion, racial and gender equity, caregiving, worker rights, LGBTQI+ inclusion, and beyond. Acting on social justice principles, regardless of how they’re labeled, is crucial for responsible business leadership. The racial wealth gap, how women often face outsized caregiving demands, and other unmet structural deficits facing stakeholders—especially workers—call upon business to exert influence in meaningful ways through public policy, regulation, and beyond.
4) Get Business Associations Off the Sidelines
Your company likely belongs to multiple business advocacy groups, including the US Chamber of Commerce, Business Roundtable, and industry-specific associations, that talk publicly about the value of DEI to their members. There is strength in numbers when it comes to consistent messaging with the business press on where these attacks are coming from, why DEI makes business sense, and acknowledging there’s been a gap between commitments and implementation. Just because it’s a work in progress doesn’t mean DEI should become the scapegoat for activists seeking to turn back the clock on an inclusive society that includes and rewards contributions from all workers.
How BSR Can Support You
BSR’s Center for Business and Social Justice’s free, downloadable The Social Justice Guide for Business to offer actionable insights for companies to navigate these complex expectations and avoid the pitfalls of short-term thinking. Section III offers a tool that spotlights barriers companies face as they build their social engagement strategies. The tool includes high-impact, actionable recommendations for overcoming those barriers and supporting a more equitable society while minimizing risks to business.
BSR’s Equity, Inclusion, and Justice team also offers consulting services for companies, providing assessments and strategies from experts working at the nexus of business and next-generation approaches to social impact.
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