Backlash - DEI?

Are We Witnessing a Paradigm Shift in the Employment Landscape?

In recent months, a number of high-profile U.S. companies have scaled back or entirely dismantled their Diversity, Equity, and Inclusion (DEI) initiatives. This trend has sparked widespread debate over whether we are witnessing a broader backlash against so-called 'woke-ism' in corporate culture. As this shift gains momentum, it’s worth examining the potential ripple effects on the UK employment landscape and exploring the reasons driving these decisions.

Which Companies Have Dismantled Their DEI Programmes?

Several U.S.-based global brands have made headlines for reevaluating their DEI efforts. Notable examples include:

• McDonald's: Announced on January 6, 2025, that it would abandon specific diversity targets, cease participation in external surveys measuring company demographics, and rename its diversity team to the "Global Inclusion Team."

• Walmart: In November 2024, Walmart stated it would phase out several DEI initiatives, including staff training on racial equity and prioritising minority-owned suppliers. The company also plans to end funding for its $100 million Center for Racial Equity by mid-2025.

• Meta: Internal communications revealed that Meta is scaling back its DEI programmes, discontinuing its diverse-slate hiring approach, and dissolving DEI teams in favour of bias mitigation training for all employees.

• Ford Motor Company: In August 2024, Ford informed employees it would stop participating in external diversity surveys and evolve its employee resource groups to focus on networking and mentorship for all employees, citing the evolving "external and legal environment related to political and social issues."

• Harley-Davidson: The company reduced its DEI initiatives, particularly those involving supplier diversity and equity training, and stated it would no longer participate in certain external diversity surveys.

• Boeing: Disbanded its global DEI department in November 2024, redirecting staff to focus on talent acquisition and employee experience.

• Lowe's: Announced in August 2024 that it would combine its employee resource groups into one umbrella organization, cease participating in certain external diversity surveys, and stop participating in external events like Pride parades.

• Twitter/X - Following their change of ownership, Twitter significantly reduced its DEI team as part of broader layoffs aimed at cutting costs.

• Walt Disney Company - Disney recently scaled back some of its diversity initiatives, reportedly in response to political pressure and financial challenges.

• Netflix - While not completely dismantled, Netflix has reportedly refocused its DEI budget and reshuffled priorities in this area.

• KPMG U.S. - The firm reduced its DEI team as part of restructuring measures, though it maintains a commitment to broader diversity goals.

These companies are among others that have either publicly reduced or internally reprioritised their DEI strategies.

But, why the shift in approach?

Well, several factors are contributing to this trend:

1. Economic Pressures: Many companies are reducing costs due to inflation, rising interest rates, and fears of an economic downturn. DEI programmes, often seen as non-revenue-generating, have been easy targets for cuts.

2. Political Backlash: The term 'woke' has become a flashpoint in political debates, particularly in the U.S., where some critics view DEI initiatives as overly politicised or ineffective. It is believed, in some quarters that many of these moves have been made to curry favour with the incoming Administration.

3. ROI Concerns: Some boards and shareholders question the tangible business impact of DEI programmes, arguing that resources might be better allocated elsewhere.

4. Cultural Pushback: A growing segment of the workforce and public perceives these programmes as overly focused on identity politics, leading to division rather than inclusion.

So, what are the potential impacts on the UK employment landscape?

While the UK’s socio-political context differs from that of the U.S., similar shifts could occur here, influenced by both global corporate trends and domestic factors.

1. Reduced DEI funding and staffing - UK-based subsidiaries of multinational companies could follow their U.S. counterparts in scaling back DEI efforts. This could mean fewer dedicated roles and reduced budgets for initiatives aimed at fostering workplace inclusivity.

2. Financial pressures – many UK-based employers are bracing themselves for the forthcoming increase in Employers National Insurance Contributions on top of the impact of high inflation of recent years.  Whilst the rate of inflation has slowed in the last 12 months – costs are significantly higher than those of 3 or 4 years ago.  Employers seeking to mitigate these costs could use the US-led zeitgeist to scale back on DEI initiatives.

Repercussions of ditching or scaling back DEI programmes.

UK employers be warned!  The rollback of DEI initiatives could have far-reaching consequences. In the short term, companies may save costs, but the long-term implications could include:

• Reduced Innovation: Diverse teams have been shown to drive innovation, and a lack of diversity could hinder problem-solving and creativity.

• Widening Inequality: Scaling back these programmes risks exacerbating existing disparities in opportunities and outcomes for underrepresented groups.

• Employee Disengagement: Employees who value inclusivity may feel alienated, leading to lower morale, lower productivity and higher turnover – increasing costs.

However, there are factors that could mean the impact is lessened in the UK, among them:

1. Impact on recruitment and retention

   Scaling back DEI initiatives could affect companies' ability to attract and retain diverse talent. A 2022 McKinsey report found that inclusive workplaces are strongly linked to better employee satisfaction and performance.

2. Reputation Risks

   In the UK, where consumers and employees increasingly expect companies to champion social causes, cutting DEI programmes could result in reputational damage and alienation of key stakeholders.

3. Legal and Regulatory Implications

   The UK’s Equality Act 2010 mandates employers to promote equality and prevent discrimination. Scaling back on DEI initiatives might expose companies to legal risks if they fail to meet these obligations. With the current government due to implement the Employment Rights Bill, it is seeking to further protect the rights of workers and enhance the obligations on employers.

So, where does that leave us?

The apparent backlash against DEI and 'woke-ism' raises critical questions about the role of corporations in fostering inclusive workplaces. While some companies may view these initiatives as expendable, their long-term success might hinge on their ability to balance financial objectives with their social responsibilities. The UK employment landscape will likely feel the ripple effects of these decisions, but the extent will depend on how companies navigate the fine line between cost-cutting, legal obligations and their commitment to inclusivity.

Sources

• McKinsey & Company. (2022). Diversity Wins: How Inclusion Matters.

• BBC News. (2023). "Twitter Cuts Diversity Staff Amid Restructuring."

• Financial Times. (2023). "Disney Scales Back DE&I Initiatives."

• Harvard Business Review. (2022). "The Business Case for Diversity in the Workplace."

• Them (2025). “12 Companies That Caved to the Right's Anti-Woke Agenda and Rolled Back DEI Programs”

• WSJ (2024). “Corporate America Drew Back From DEI. The Upheaval Isn't Over.”

• MarketWatch (2025). “Meta cuts DEI, marking another cultural shift ahead of Trump's White House return”