Shareholders Expected to Reject Anti-DEI Backlash
While steps taken by some US companies have unsettled investors, “substantiative” changes to DEI policies remain few and far between.
Despite intensifying media attention on diversity, equity and inclusion (DEI) rollbacks at US-based companies, shareholder support for programmes is unlikely to change during the 2025 proxy season.
Last week, Apple advised investors to vote against a proposal from the National Center for Public Policy Research (NCPPR) which requests the company ceases its DEI efforts. The proposal will be voted on during the tech giant’s AGM on 25 February.
This followed the rejection from Costco of a separate NCPPR shareholder proposal requesting a report on the risks of maintaining DEI efforts ahead of the global retail chain’s AGM on Thursday.
Such shareholder activity has since been followed by US President Donald Trump issuing an executive order targeting DEI on his first day in office.
The number of anti-DEI shareholder proposals has tripled since 2020, reaching a new high of 13 in 2024. There were almost three times as many pro-DEI proposals at 38 – although this marks a sharp fall from the roughly 90 filed in 2021.
There has also been a change of tone from the proposals filed during the 2024 proxy season, with proposals filed for this upcoming season by NCPPR explicitly requesting the rollback of DEI programmes at companies for the first time.
However, anti-ESG proposals (which includes those with anti-DEI objectives), have historically received around 2% shareholder support, on average, compared to 23% across all types of proposals. Lindsey Stewart, Director of Stewardship Research and Policy at Morningstar Sustainalytics, expects a similar trend to be seen during the 2025 proxy season.
“The anti-ESG and anti-DEI proposals certainly have occasionally been good at capturing headlines, but it’s important to remember that there hasn’t been evidence of broad shareholder support behind them,” Stewart told ESG Investor. “Anti-ESG and anti-DEI proposals are not well supported by any particular group of shareholders, and I don’t expect this proxy season to be any different.”
Mixed picture
Last year, around three quarters of anti-ESG proposals were filed by one of two conservative US think tanks: the NCPPR and the National Legal and Policy Center (NLPC). The NCPPR filed shareholder proposals requesting a report on risks created by the company’s DEI efforts at seven companies, including Boeing, Citigroup, Coca Cola, and PepsiCo, while the NLPC did not file any DEI-linked proposals.
Data provided to ESG Investor by SaaS and advisory services provider ISS-Corporate identified seven anti-DEI proposals that have been filed ahead of the 2025 proxy season so far, all of which were submitted by the NCPPR or NLPC. Besides Apple, NCPPR also filed proposals to cease DEI efforts at Bristol-Myers Squibb, Levi Strauss, and Pfizer requesting the companies, all of which have challenged the proposals at the US Securities and Exchange Commission.
NCPPR had also filed a proposal on DEI at AT&T but withdrew it following what the organisation called a “successful negotiation.”
Meanwhile, the NLPC has filed proposals at American Express and Coca Cola, asking the companies to revisit DEI goals in executive pay incentives. It has also filed a DEI-related proposal at agricultural machinery manufacturer John Deere requesting racial and gender hiring statistics and at additional companies, which are not yet public.
“The vibe has shifted,” said Luke Perlot, Associate Director at NLPC’s Corporate Integrity Project. “The public is fed up with DEI [and] companies are already in retreat. We expect shareholders to continue raising concerns with DEI, and we expect companies to continue walking back their DEI policies to appease customers. No one wants to be identified with DEI anymore.”
He added that NLPC plans to increase the number of proposals on this topic in future years and expects other organisations to start filing more proposals on the same theme.
Earlier this month, social network Meta said it was terminating its DEI programmes immediately, while several others have made changes to their DEI practices and policies. Meredith Benton, a Consultant with US shareholder advocacy NGO As You Sow, said that she is “quite concerned” about these developments – although the organisation has not yet engaged with Meta about the stance the company is taking.
She added that investors working with As You Sow were also concerned about the direction being taken by portfolio companies Harley Davidson and Tractor Supply on their DEI direction, where it has filed shareholder resolutions requesting information on their strategic choice.
Separately, 30 shareholders signed a letter to the CEO of Walmart last week, expressing concerns on the firm walking back its DEI commitments. “As investors, we want companies to be prudent in their risk management approach,” said Caroline Boden, Director of Shareholder Advocacy of Mercy Investment Services, who co-ordinated the letter. “However, regarding the rollback of DEI programs and commitments, there’s been insufficient disclosure from companies, including Walmart, as to the potential and actual material risks of these actions.”
It had been reported by some media outlets that McDonalds has rowed back on DEI, but its Chief Legal Officer criticised the reports and described the company’s commitment to inclusion as “steadfast”.
“We’re disappointed with some of these companies that have been caught in this misinformation cycle didn’t speak up more actively,” said Benton. “These companies are showing a signal within a hyper-politicised landscape and at a time where diverse employees are quite worried about where society and their employers are going. Speaking up is very important.”
Apple and Costco have been joined by organisations including American Airlines, Southwest Airlines, United Airlines and Delta in publicly defending their DEI policies.
“The rowing back on DEI seems to be a creative myth at this point,” said Benton. “There are fewer than five companies where I think we’ve seen substantive changes.”
Morningstar’s Stewart said he expects further rebuttals on anti-DEI proposals in the same vein as at Costco and Apple as the 2025 proxy season progresses.
“Shareholders’ views on the relationship between a company and their employees have had a good half-decade to develop since this topic came into focus,” he added. “I don’t expect there will be great modification in the ways that investors view those issues.”
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