Spending for corporate diversity efforts has fallen in the months since the U.S. Supreme Court’s June ruling on college race-based affirmative action policies, according to a new report on diversity, equity, and inclusion (DEI) efforts in the business sector.
A report published this month by San Francisco Bay Area-based DEI consultancy firm Paradigm Strategies Inc. identified a decline in corporate DEI budgets and a drop in the number of organizations with a set DEI strategy from 2022 to 2023. Specifically, the authors of the Paradigm Strategies report observed a four-point year-over-year drop in corporate DEI budgets and a nine-point drop in the percentage of organizations that have a DEI strategy.
The report’s authors specifically noted they gathered their data in September of this year, just three months after the Supreme Court’s ruling in Students for Fair Admissions (SFFA) v. Harvard. In that case, the high court ruled that policies that treat race as a specific factor in college admissions decisions violate the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution.
“2023 has undeniably shifted the DEI landscape for years to come,” the Paradigm Strategies report states. “External forces are no longer pushing companies to invest in DEI; instead, in some cases, external forces are pushing back on companies’ investment in DEI.”
The Supreme Court’s June decision SFFA v. Harvard applied to typical colleges and universities but did not address similar policies at military service academies. The Supreme Court decision also included no specific new guidance for corporate hiring and promotions policies. Nevertheless, several political leaders and activists opposed to race-based affirmative action policies have launched efforts to bring on similar court rulings on race-based affirmative action policies in the corporate world.
American Alliance For Equal Rights (AAFER)—a legal advocacy group opposed to race-based affirmative action—has brought multiple lawsuits in recent months challenging the race-exclusive grant and fellowship programs of specific business entities.
In recent months, multiple Republican state attorneys general have also prepared letters to leading U.S. law firms and corporations, warning them against race-based initiatives.
“Over the past several months, we’ve heard from a number of HR leaders who are de-emphasizing data and analytics as a part of their DEI efforts, in response to the changing legal landscape and increased scrutiny on DEI efforts,” the Paradigm Strategies report states.
The Future of Corporate DEI Programs
The authors of the new Paradigm Strategies report offered multiple strategies they believe can help corporate HR and DEI leaders preserve their corporate diversity programs but predicted challenges ahead.
“The Supreme Court’s affirmative action decision will make it harder for companies to hire a diverse workforce in the coming years,” the report says. “Specifically, by preventing colleges and universities from considering race in admissions, the Court’s decision will likely diminish the diversity of skilled entry-level professionals in the workforce.”
The Paradigm Strategies authors urged corporate DEI officers to keep tracking their DEI metrics, despite the declining emphasis on such diversity programs.
“Don’t be afraid to use data to guide DEI efforts. Regardless of the political climate, companies need data to understand their unique DEI challenges and opportunities and track progress,” the authors wrote.
Despite this year’s observed drop in corporate DEI spending and participation, about 54 percent of organizations studied by the report’s authors still maintained a DEI budget. The report also said most of Paradigm Strategies’ clients “intend to continue to prioritize DEI” going forward.
While Paradigm Strategies authors sought to prepare corporate DEI proponents to preserve such practices, SFFA and AAFER President Edward Blum welcomed the reported decline in corporate DEI spending.
“Most corporate DEI policies are polarizing, unpopular, and often illegal,” Mr. Blum wrote in an emailed statement to NTD News. “Moreover, the vast majority of Americans do not want their race to be a factor in any employment decisions. It is a positive development that these discriminatory corporate practices are diminishing.”