Trending Topic: Corporate DEI Strategies Shift Amid Legal and Political Pressures
New York, NY – August 22, 2025 – A growing number of U.S. companies, particularly those in the S&P 500, are scaling back public disclosures of Diversity, Equity, and Inclusion (DEI) initiatives to mitigate legal, regulatory, and reputational risks, according to a Law.com report published on August 20, 2025. This “recalibration” follows intensified scrutiny sparked by the Trump administration’s Executive Order 14173, issued on January 21, 2025, which targets “illegal” DEI practices, alongside judicial rulings and shareholder pressures that have reshaped corporate approaches to DEI.
The Shift in DEI Disclosures
The Law.com report, citing a Conference Board study, notes that companies are increasingly cautious about publishing sensitive demographic data due to legal and political challenges. Many are replacing explicit DEI terminology with neutral phrases like “talent development,” “employee engagement,” or “belonging” to minimize litigation risks. For example, JPMorgan Chase transitioned from “Diversity, Equity & Inclusion” to “Workforce Composition” in its 2025 SEC 10-K filing, while Walmart adopted “belonging” in 2024. Microsoft reduced its DEI section by 76% between 2023 and 2024, and Citigroup cut DEI mentions by 30%. Despite these changes, 78% of S&P 500 companies still discuss diversity-related initiatives, though only 34% used the term “DEI” in 2025 filings, down from 90% in 2024.
A 2024 study by Columbia University and the London School of Business found that companies with less favorable diversity metrics, particularly at managerial levels, are less likely to disclose EEO-1 reports, suggesting strategic withholding to avoid scrutiny. Women hold 35% of middle managerial roles despite comprising 39% of the workforce, and people of color occupy 71% of these roles compared to 63% overall, highlighting persistent gaps.
Regulatory and Legal Pressures
The recalibration is driven by significant legal and regulatory shifts. Executive Order 14173, titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” encourages private companies to eliminate DEI programs deemed discriminatory, directing federal agencies to identify “egregious” practitioners for potential civil compliance investigations. The order, issued on January 21, 2025, has prompted companies like IBM, Constellation Brands, and UnitedHealth Group to reframe DEI goals, with actions like renaming DEI teams to “inclusive culture” or removing diversity data from public reports.
The 2023 Supreme Court ruling in Students for Fair Admissions v. Harvard, which ended race-based affirmative action in college admissions, has further influenced corporate DEI strategies, prompting firms to adopt race-neutral language to align with the decision. The SEC’s withdrawal of climate disclosure rules and challenges to Nasdaq’s board diversity rule, effective from 2023, have added to the uncertainty, with companies like Apple maintaining minimal DEI mentions to avoid legal risks.
Litigation risks are also mounting. A 2024 case in the 4th U.S. Circuit Court of Appeals found an employer liable for discrimination after firing a white executive to meet diversity goals, reducing a $10 million punitive damages award to $300,000. Another case in Colorado raised concerns about mandatory DEI training creating a hostile work environment, though the claim failed. These rulings have pushed companies to tread carefully.
Balancing Shareholder and Stakeholder Expectations
Despite the retreat, shareholder support for DEI remains strong. Apple’s 2025 8-K filing reported a 97.7% rejection of an anti-DEI proposal, indicating robust investor backing. However, companies face pressure from both pro- and anti-DEI groups, with proxy advisors like ISS halting DEI-based voting recommendations while Glass Lewis takes a more cautious approach. This inconsistency complicates corporate strategies, as firms navigate investor expectations alongside regulatory risks.
A coalition of 16 state attorneys general, led by Massachusetts AG Andrea Joy Campbell, issued guidance on February 13, 2025, affirming the legality of DEI initiatives that focus on inclusive hiring and retention without discriminatory preferences. The guidance counters the Trump administration’s narrative, emphasizing that DEI programs can reduce discrimination complaints and enhance business outcomes.
Industry Sentiment and Future Outlook
Sentiment on X reflects the polarized debate, with users like @SwipeWright criticizing DEI as a tool for racial discrimination, while others highlight its benefits for workplace culture. The legal and political landscape suggests that companies will continue to refine DEI disclosures, prioritizing compliance and risk mitigation. A 2025 Harvard Corporate Governance report predicts that the trend toward neutral language will accelerate, with firms focusing on measurable outcomes like pay equity and workforce diversity without explicit DEI labels.
As businesses adapt, the challenge lies in maintaining DEI commitments while avoiding regulatory and legal pitfalls. The evolving approach underscores the need for strategic communication and robust legal counsel to navigate this complex terrain.
Sources: Law.com, Harvard Corporate Governance, Fisher Phillips, The New York Times, Mass.gov