Where Does DEI Go From Here?

Diversity, equity and inclusion (DEI) is currently on trial.

President Donald Trump has ordered the end of all DEI programs in U.S. federal government departments (a move currently being challenged in courts). Activist investors and online agitators are overtly demanding that companies cease their diversity efforts. Corporate leaders are splitting into two factions: those who are publicly dropping DEI initiatives (such as Google, Toyota and Walmart) and those who are doubling down on them (such as Apple, Costco and JPMorgan Chase).

In the past year, DEI has gone from a central part of many organizational strategies to a weighted, politically charged elephant in the room. Facing a range of pressures from a variety of sources, leaders in all industries are re-evaluating what they’ve done to advance DEI, whether it’s worked and how to move forward. And while many are holding firm in their commitment to the cause, tensions are undeniably running high.

It’s certainly not a dull time to be researching the subject.

Eddy Ng, Smith Professor of Equity and Inclusion at Smith School of Business, has been studying how organizations manage diversity for organizational competitiveness for years, teaching and publishing extensively on the matter. In this conversation with Smith Business Insight contributor Deborah Aarts, he shares his thoughts on how DEI became such a fraught issue, what’s on the line and where the corporate world can go from here.

As someone who lives and breathes DEI, did you see the current situation coming?

There were plenty of signs that things were ramping up to this. Even prior to the November U.S. election, those of us who work in the space have been discussing what a second Trump administration might mean, what to do about ideologies like the Project 2025 manifesto and how we can stay focused and united. Because it’s clear the agenda has changed.

Can you sum up how we got here?

After the murder of George Floyd [in 2020], we saw corporations pledge $50 billion to DEI initiatives. We had CEOs pledging to change things within their organizations. Whether that was altruistic, or whether it was done for purely business reasons, that is a debate for another day.

But in the past year or so, a lot of businesses started rolling back DEI efforts. This started prior to the election of Trump. Part of the reason was that many didn’t want to fall out of favour with an incoming administration. But we’re also seeing the effects of a conservative-leaning U.S. Supreme Court, which has made some decisions that have been pivotal in reversing affirmative action or race-based admissions in U.S. colleges. That is all setting the tone. It’s creating a sense that ‘We no longer need to do this because the Supreme Court says that that is not necessary, or that it’s illegal.’

The tone has very quickly changed from being supportive of DEI, to ‘Well, we don’t have to do anything,’ to what we see now, which is outright hostility. It’s now politically toxic to engage in DEI within a lot of organizations and corporations.

What’s at stake?

The concern right now is that the next four years will not just involve a rollback or a pause—they could set us back 60 years, to the days before Title VII of the Civil Rights Act, [which prohibits employment discrimination in the U.S. based on race, colour, religion, sex and national origin]. We may have to start from scratch. And that’s very concerning. Because I don’t see DEI as a nice thing to do. I see it as a matter of human rights.

Are we seeing the same type of anti-DEI sentiments creep into Canada?

There has been clearly an undercurrent of backlash and resistance. Our political leaders tend to be a lot more sensible in terms of setting the tone, but there is a lot of uncertainty about where we’re headed here too, depending on the outcome of our next federal election.

Canadian businesses often take a page out of the American playbook. We have already seen some organizations suggest they may walk back some of the investments that they had pledged. And we’re seeing many adopting a ‘wait and see’ approach, depending on Canada’s next governing administration. There’s a wind of change here too, and I think we should be concerned about it.

Some criticism of DEI has little to do with politics or ideology, and more the uncomfortable reality that a lot of corporate diversity initiatives—some of them very expensive and high-profile—have underdelivered on their promise. Is this a fair point?

Many corporations began investing in DEI at least in part because it set a positive public image. There was a time, after George Floyd, when one of the most advertised jobs on LinkedIn was Chief Diversity Officer. We saw organizations jump on the bandwagon and hire the first person they could without necessarily knowing what kind of vision they had, or how to implement it.

That’s a big part of the problem. Many organizations have spent a lot of money on DEI without a lot of thinking around the goal. It’s a bit like going grocery shopping without a list: You might end up with a lot of things you don’t need and none of the things you do.

Is it a matter of DEI leaders, or teams, not being set up to succeed?

Oftentimes organizations don’t have the know-how, the expertise or the lived experience to be able to implement diversity initiatives effectively. And very few people with the experience to do that have access to the upper echelons of the organization. So it’s a challenge to make DEI part of the DNA of the company.

What about the often-touted argument that DEI is good for business? Shouldn’t that make this issue a non-starter for companies?

The research on that is pretty clear. We know diversity does contribute to innovation and creativity, for example. And people who are multicultural and multilingual tend to have greater cognitive flexibility, enabling organizations to be more agile, which helps them survive better during uncertain times.

But saying DEI is good for business can be a tenuous argument to make at best, because it’s difficult to measure. And a business’s bottom line can be affected by a lot of things: economic conditions, interest rates, having a superior product, employee productivity. It’s hard to attribute success directly to DEI.

So, there’s an accounting issue at play?

To me, this is part of the problem we’re seeing. Very few organizations are able to accurately capture the value of the investments they make in DEI. It takes time and effort, and, above all, it’s costly.

What needs to happen to change the narrative about DEI?

We need to combat the misinformation about what DEI is. It is not quotas. It is not hiring someone who’s not qualified. It is not a threat to white people—they are not being replaced or displaced, no matter what the conspiracy theories might say. So, we need to engage in constructive conversations and dialogs to set the record straight.

The framing is really important. Let’s use the example of med school or law school admissions. If I had 100 spots available, and I were to say 98 of them will be open to merit-based competition and the other two reserved for Indigenous students, potential students might be up in arms: ‘What if I’m the 99th candidate? You’d be taking the spot away from me.’ But if I were to decide to keep choosing those 100 spots based on merit-based competition and then add two more for Indigenous students, people would be much more willing to buy into it—and the outcome would be roughly the same. We’d just be adding two chairs. Nothing would be taken away. That kind of framing can make a difference.

What is giving you hope?

I co-authored a forthcoming paper in which we investigated—using Canadian data—what motivates CEOs to speak out on diversity and equity issues that aren’t directly related to their roles. We found that these leaders are typically not motivated to speak out for business reasons, nor by the desire to leave a legacy. They’re strictly motivated by moral reasons. They are human, and they want to do the right thing.

So, I’m hoping we’ll see fewer CEOs influenced by the political winds and more actions that are guided by the moral case. That, to me, is something that we can hang on for the next four years.