Walmart’s DEI rollback signals profound shifts in the wake of Trump’s victory

NEW YORK (AP) – Walmart’s sweeping rollback of its diversity policies is the strongest indication yet of a profound shift gripping American companies, which are reassessing the legal and political risks associated with bold programs to empower historically underrepresented groups.

The changes announced by the world’s largest retailer Monday followed a series of legal victories by conservative groups that have filed a flurry of lawsuits challenging corporate and federal programs aimed at boosting minority- and women-owned businesses and employees.

The retreat from such programs crystallized with the election of former President Donald Trump, whose administration is certain to make dismantling diversity, equity and inclusion programs a priority. Trump’s incoming deputy director of policy will be his former adviser Stephen Millerwho heads a group called America First Legal that has aggressively challenged the company’s DEI policies.

“There’s been a lot of reassessment of risk in looking at programs that could be considered to constitute reverse discrimination,” said Allan Schweyer, principal researcher at the Human Capital Center at the Conference Board.

“This is another domino that’s going to fall, and it’s a pretty big domino,” he added.

Among other changes, Walmart said it will no longer prioritize suppliers owned by women or minorities. The company also will not renew a five-year commitment to a center for racial equality that was created in 2020 after the police killing of George Floyd. And it pulled out of one prominent gay rights index.

Schweyer said the biggest trigger for companies making such changes is simply a reassessment of their legal risk exposure, which began after US Supreme Court ruling in June 2023 it ended up with affirmative action in college admissions. Since then, conservative groups using similar arguments have secured court victories over various diversity programs, particularly those governing contracts for minority- or women-owned businesses.

Most recently, the conservative Wisconsin Institute for Law & Liberty won a case against the U.S. Department of Transportation over its use of a program that prioritizes minority-owned businesses when awarding contracts.

Companies see a big legal risk in continuing with the DEI effort, said Dan Lennington, a deputy general counsel at the institute. His organization says it has identified more than 60 programs in the federal government that it considers discriminatory, he said.

“We have a legal landscape throughout the federal government, all three branches—the U.S. Supreme Court, Congress, and the President—now all point firmly in the direction of equality of individuals and individualized treatment of all Americans, rather than diversity, equality, and inclusion , that treat people as members of racial groups,” Lennington said.

The Trump administration is also likely to take direct aim at DEI initiatives through executive orders and other policies that affect private companies, particularly federal contractors.

“The influence of the election on DEI policies is enormous. That cannot be overstated,” said Jason Schwartz, co-chair of the Labor & Employment Practice Group at the law firm Gibson Dunn.

When Miller returns to the White House, rolling back DEI initiatives will likely be a priority, Schwartz said.

“Companies are trying to find the right balance to make it clear that they have an inclusive workplace where everyone is welcome and they want to get the best talent, while trying not to alienate different parts of their employees and customer base . who might feel one way or the other. It’s a pretty much impossible dilemma,” Schwartz said.

Marc Morial, executive director of the National Urban League, a civil rights group that has previously worked with Walmart on diversity and inclusion, called the company’s withdrawal from DEI “amazing” and “unexpected.”

“This is inconsistent with the Walmart I know,” said Morial, who argued that DEI policies are how organizations ensure compliance with federal anti-discrimination laws like the Civil Rights Act of 1964, and any suggestion of favoritism or preferential treatment “is really defamatory of what DEI represents.”

He said Walmart would see “a strong message” for the decision, but that civil rights leaders are “very interested in dialogue first” with Walmart leaders.

A recent survey by the Pew Research Center found that workers disagree about the merits of DEI policies. While still widely popular, the share of workers who said focusing on diversity in the workplace was mostly a good thing fell to 52% in the October survey, compared to 56% in a similar survey in February 2023. Rachel Minkin, research fellow at Pew, called it a small but significant shift in a short period of time.

There will be more companies pulling back on their DEI policies, but it likely won’t be a retreat across the board, said David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion and Belonging at New York University.

“There are far more companies sticking with DEI,” Glasgow said. “The only reason you don’t hear about it is that most of them do it stealthily. They put their heads down and do DEI work and hope not to attract attention.”

Glasgow advises organizations to stick to their own core values ​​because attitudes on the subject can change rapidly over four years.

“It will make them look a little weak if there’s a kind of flip-flopping depending on which way the political winds are blowing,” he said.

One reason DEI programs exist is that without these programs, companies may be vulnerable to traditional discrimination lawsuits. “Think really carefully about the risks in all directions on this issue,” Glasgow said.

Walmart confirms it will no longer consider race and gender as a litmus test to improve diversity when offering supplier contracts. Walmart says its U.S. businesses sourced more than $13 billion in goods and services from diverse suppliers in fiscal year 2024, including businesses owned by minorities, women and veterans.

It was unclear how its relationship with such a company would change going forward. Organizations that have partnered with Walmart on its diversity initiatives offered a cautious response.

The Women’s Business Enterprise National Council, a non-profit that last year named Walmart one of America’s top companies for women-owned businesses, said it was still evaluating the impact of Walmart’s announcement.

Pamela Prince-Eason, the president and CEO of the organization, said she hoped Walmart’s need to meet its diverse customer base will continue to drive contracts for women-owned suppliers, although the company has no explicit dollar targets.

“I suspect Walmart will continue to have one of the most inclusive supply chains in the world,” Prince-Eason wrote. “Any retailer’s ability to serve the communities in which they operate will continue to value understanding their customers, (many of whom are women), in order to better deliver the desired products and services, and no one understands customers better than Walmart.”

Walmart’s announcement came after the company spoke directly to conservative political commentator and activist Robby Starbuck, who has come after the company’s DEI policies, and called out individual companies on the social media platform X. Several of those companies have subsequently announced they are withdrawing their back initiatives, including FordHarley-Davidson, Lowe’s and Tractor supply.

Walmart confirmed to The Associated Press that it will better monitor its third-party marketplaces to ensure they do not contain sexual and transgender products aimed at minors. The company will also stop participating in the Human Rights Campaign’s annual benchmark index that measures workplace inclusion for LGBTQ+ employees.

A Walmart spokesman added that some of the changes were already underway and not as a result of conversations it had with Starbuck.

RaShawn “Shawnie” Hawkins, senior director of the HRC Foundation’s Workplace Equality Program, said that companies that “abandon” their commitments to workplace inclusion “abdicate their responsibility to their employees, consumers and shareholders.” She said the purchasing power of LGBTQ customers is strong and noted that the index will have record participation of more than 1,400 companies by 2025.

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Associated Press Staff Writer Matt Brown in Washington contributed to this report.