THE DEEPENING DEI DILEMMA
In recent years, US public companies have faced increasing pressure to reconsider their diversity, equity and inclusion (DEI) policies and initiatives. Under both the first and second Trump administrations, there has been a marked backlash against the historical push for more representation and inclusion in boardrooms, C-suites and workplaces. Politically motivated activists have also been emboldened by the shifting landscape to target companies’ DEI programmes through a variety of mechanisms, from shareholder proposals to targeted boycotts. In this volatile environment, many companies are left grappling with how to balance political and regulatory pressures against corporate values, as well as how to handle competing investor priorities with respect to DEI.
Political and regulatory pressure on DEI
On 21 January 2025, President Trump issued an executive order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity”, which revoked affirmative action requirements for federal contractors and mandated, among other things, that federal agencies enforce “longstanding civil-rights laws...to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities”. The executive order set the tone for the Trump administration’s regulatory priorities, and multiple government agencies followed suit.
On 30 July 2025, the Department of Justice (DOJ) published guidance from the attorney general on the application of anti-discrimination laws to entities receiving federal funds. The guidance provided examples of unlawful preferential treatment, including preferential hiring or promotion, access to facilities or resources based on race or ethnicity, race-based training sessions, DEI-focused workshops and sex-based programme participation.
Apr-Jun 2026 Issue
Wachtell, Lipton, Rosen & Katz