Investors Show Support for DEI Programs Amid Conservative Pushback
Diversity, equity, and inclusion (DEI) efforts may be facing setbacks in some corners of corporate America, but not among the investors who own these companies. This year, shareholders at several major corporations — including Costco, Apple, Levi’s, John Deere, and Goldman Sachs — have overwhelmingly voted against proposals aimed at dismantling DEI initiatives.
These proposals, largely brought by conservative groups such as the National Center for Public Policy Research and the National Legal and Policy Center, call for the removal of diversity goals from executive compensation packages, the abandonment of DEI programs, and audits to evaluate the legal risks of maintaining such initiatives. However, the near-unanimous rejection of these proposals sends a clear message: investors believe DEI programs are beneficial for business.
Why Shareholders are Defending DEI Efforts
The overwhelming support for DEI in shareholder votes reflects investors’ belief that such programs drive positive outcomes for companies. Matteo Gatti, a corporate governance professor at Rutgers University, explains, “Investors don’t want ideological shareholders driving business decisions, and they view DEI as good for business in the long run.”
Notably, institutional investors like BlackRock, Vanguard, and State Street, who are the largest shareholders in many major companies, consistently side with company management, rejecting shareholder resolutions around 90% of the time. This trend is evident in the votes against anti-DEI proposals.
The Strategic Importance of DEI for Major Corporations
DEI programs focus on fostering workplace diversity through employee training, resource networks, and recruiting practices that promote the representation of various racial, gender, and socioeconomic groups. Proponents argue that these programs not only improve internal company culture but also make businesses more competitive by appealing to a wider range of customers and employees.
For example, Costco’s shareholders voted overwhelmingly (more than 98%) against a proposal that would have required the company to assess the financial risks of maintaining its diversity and inclusion goals. The company’s management opposed the proposal, explaining that its DEI efforts help it attract and retain talent while improving services and merchandise. Costco pointed out that having a diverse workforce enhances creativity and originality, which boosts the company’s product offerings and customer satisfaction.
The Conservative Backlash Against DEI
Despite the clear support from institutional investors, DEI faces mounting opposition from conservative groups and activists, including figures like Elon Musk and organizations such as the National Legal and Policy Center. These groups argue that DEI represents a form of “reverse racism” and that companies should focus on merit rather than social justice initiatives.
The conservative push against DEI has gained momentum, but it’s been met with limited support in shareholder votes. While the number of anti-DEI shareholder proposals has increased from 7% of DEI-related proposals in 2022 to 23% in 2024, these resolutions continue to garner minimal support — often receiving less than 2% approval from shareholders.
The Broader Impact of Anti-DEI Proposals
While anti-DEI proposals may not be winning shareholder votes, they still play a strategic role in driving the political conversation around corporate social responsibility. Activist groups use these resolutions as a tool to raise awareness, build political support, and apply pressure on companies. For instance, after the National Legal and Policy Center withdrew its anti-DEI proposal at PepsiCo, the company agreed to end its goals for minority representation in managerial roles, showcasing how shareholder activism can shape corporate policy.
Outlook for DEI in Corporate America
While pressure from the right may continue to challenge DEI policies, large institutional investors remain steadfast in their belief that DEI efforts contribute to a company’s long-term success. At the same time, some companies may choose to walk a fine line, balancing DEI commitments with increasing political and public scrutiny.
As the debate over corporate social responsibility continues, the recent votes indicate that the corporate world’s commitment to DEI remains largely unaffected by political pressure.
