The Death of DEI? Not So Fast
As DEI efforts meet resistance, new studies show that many brands continue pushing onward
It may not qualify as a total reversal of attitude, but it's awfully close. Diversity, equity, and inclusion (DEI) — heralded not long ago as the core to corporate America's future — is in retreat, as companies reduce and/or eliminate their DEI programs altogether. In late June, for example, rural lifestyle distributor Tractor Supply Co. shut down its DEI initiatives after receiving backlash from some of its customers and right-wing commentators regarding the company's inclusion policies and support for the LGBTQ+ community. Industry rival John Deere followed suit in July, saying it would no longer sponsor diversity events following similar complaints. Indeed, companies are "reassessing decades-old anti-discrimination strategies and rewriting policies that once emphasized race and gender to prioritize inclusion for all," according to the Washington Post. Such developments stand in stark contrast to the bandied efforts among many brands to foster DEI following George Floyd's murder in 2020, which sparked a racial reckoning throughout the country.
"The initial excitement for DEI might have cooled a bit, but it's definitely not dead," says Michele Heyward, founder of PositiveHire, which helps brands such as Bay Area Rapid Transit, Greeley and Hansen, and Toole Design recruit and hire Black, Latina, and Indigenous women in STEM (science, technology, engineering, and math) careers. "The need for diverse talent and a more inclusive workplace isn't going anywhere, so DEI is still very much on the table."
Jeremy Fain, CEO and co-founder of ANA member Cognitiv, whose clients include Adam and Eve, Bufferin, and Lola, adds: "It is still essential to integrate DEI goals into the core business strategy, ensuring consistent and genuine representation across all [marketing] campaigns. The briefs we are receiving are beginning to target broader demographics, with specific mentions of what would traditionally be considered DEI audiences."
From Theory to Practice
Despite the less-than-encouraging signs regarding the long-term prospects of corporate diversity programs as of late, marketers that have embraced diversity are forging ahead.
— Phil Cowdell, chief strategy officer at Channel Factory
Since the U.S. Supreme Court's ruling in June 2023 that struck down affirmative action programs in higher education and race-conscious admissions, 80 percent of companies responding to a W.K. Kellogg Foundation Expanding Equity retrospective report reiterated their commitment to DEI.
According to a separate survey of more than 300 C-suite executives by employment law firm Littler, 69 percent of the respondents said the Supreme Court's decision regarding affirmative action has not changed their approach to DEI programs in any way.
"The work of transitioning from [DEI] theory to practice has only just begun," Heyward says. "We're seeing a shift toward getting real results and using data to make sure these changes stick."
However, significant differences of opinion about DEI programs remain. In May, Coca-Cola, the Home Depot, and UPS shareholders made detailed arguments both for and against corporate diversity initiatives.
Other brands are pushing back on anti-DEI sentiments, such as e.l.f. Cosmetics, which launched an ad campaign in early May that features tennis legend Billie Jean King talking about the lack of diversity among corporate boardrooms.
Meanwhile, Amazon, McDonald's, PepsiCo, Procter & Gamble, and Walmart are among the major companies that boosted spending on Black-owned media companies last year, according to Ad Age. This helped offset some sharp declines from advertisers at places like AT&T, General Motors, and Target.
While DEI has gotten caught up in the political maelstrom, it's important that marketers take a long-term and more nuanced view of their approach toward diversity.
"Politics aside, inflation and other economic realities have turned consumers' heads to more practical issues, and higher-order social priorities may not resonate with as many consumers right now," says Phil Cowdell, chief strategy officer at Channel Factory, whose clients include Finnair, Jack-in-the-Box, and Nissan. "But brands can and should continue to pursue DEI priorities outside the spotlight without the performative, soap-box bravado of so much mission-driven advertising."
Marketers seem cautiously optimistic about the state of DEI in the marketing industry, but there's a disconnect in the air. Seventy-three percent of marketers say that their companies are making progress in eliminating bias from ads and content, while just 69 percent see the same progress across the industry overall, according to a recent survey of 82 marketers conducted by the ANA's Alliance for Inclusive and Multicultural Marketing (AIMM). The report, "The State and Outlook of Inclusive Marketing 2024," found that the gap is particularly significant in areas such as making supply chains fairer, with 60 percent of respondents seeing progress within their organization and only 31 percent seeing progress within the industry.
"This disconnect suggests that individual companies are making strides, but these efforts are not translating into systemic industrywide change," says Carlos Santiago, co-founder of AIMM. "To push inclusive marketing forward despite the fear of getting it wrong, marketers must focus on data-driven decision-making and emphasize the business reality of showing results. They should prioritize creating a process for cultivating a truly inclusive culture."
Younger Demos Want Diversity
Patty White, pursuit strategy team co-lead and senior manager at ANA member Plante Moran, an audit, tax, consulting, and wealth management firm that works with companies in sectors such as construction, financial services, and healthcare, says interest in DEI among her clients and prospects hasn't let up. In fact she says it's on the upswing. She points to several studies that show gen Z strongly supports diversity.
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Take "Cracking the Code: How Multicultural & Gen Z Reshape Mainstream Marketing," a whitepaper by Direct Digital Holdings based on the responses from more than 2,300 U.S. consumers polled last November. It found that 81 percent of gen Zers — the most diverse generation in history — say that diverse voices have some or a great amount of influence on their brand decisions.
"Data shows that younger generations care more about DEI, and it will be necessary for brands to genuinely embrace the full spectrum," White says. "We expect that brands' DEI efforts will continue to be important to consumers and will play into where they choose to spend their money. DEI as a spectrum takes into account not only how brands represent their DEI efforts in the marketplace but also how they support their staff and their clients."
The benefits of DEI programs can go beyond garnering consumer dollars and emerging talent. According to a McKinsey & Co. report, diverse organizations are more successful at making high-quality decisions and pursuing successful innovation.
Channel Factory's Cowdell says brands should not capitulate to political pressure in ways that affect their long-term goals.
He stresses that "brands that bend to every dark political headwind will find they've fallen behind with the consumers who will decide their future."
Initial Expectations Unchanged
In some respects, ad agencies are on the front line for DEI, as understanding different viewpoints and consumer behaviors will drive their accounts won, retained, and lost.
"Brands still expect their agencies to have diverse teams and for the work to represent their diverse audiences and employees," says Christy Hiler, owner and CEO of ad agency Cornett, whose clients include A&W, Busch Light, and LEGOLAND. "Diversity has been listed in the agency selection criteria for nearly every new business pitch we've participated in this year."
DEI will most likely become even more pronounced in the years ahead as the U.S. undergoes profound demographic change. Brands that invest in DEI — and can tune out the naysayers — will be positioned to drive engagement and expand their aperture.
"What I hope is that the internal work Tractor Supply and others have done to get on the list of 'America's Best Large Employers' is lasting," Hiler says, "and what they are pulling away from is the external, performative, and divisive elements of DEI that don't serve the company, brand, or products."
