DEI support remains strong despite attacks by President Trump and officials in several states. Many states have issued guidance on how to stay legally compliant. As Timothy Smith of the Center on Corporate Responsibility (ICCR) points out, “this proxy season, approximately 98% of the shares voted to maintain current corporate diversity, equity, and inclusion programs.” (Corporate Support for DEI Continues Among Investors and Companies)
DEI Support Remains Strong: Opposition
Executive Order 14173 (Jan 21, 2025): Signed by President Trump, this sweeping order directs all federal agencies to terminate DEI-related positions and cancel grants/contracts relating to equity. It asks agencies to identify “egregious and discriminatory DEI practitioners,” and to end any DEI-related efforts in both public and private sectors. Federal guidance encouraging diversity among asset managers (such as with pension fund managers) has also been eliminated.
Litigation: Lawsuits have been filed against major asset managers (Vanguard, BlackRock, State Street) by state attorneys general, challenging their DEI and ESG practices. Some court decisions, such as a federal judge’s ruling against American Airlines’ environmentally focused pension investments, have further restricted such strategies.
However, I’m compelled to note that in this case, the Employee Benefits Committee of American Airlines failed to maintain independent oversight. As I noted almost 30 years ago in a 1995 post, the Pension Welfare Benefits Administration (PWBA) had never taken an enforcement action against a fiduciary for failing to monitor or for voting a proxy contrary to the best interests of plan participants, even though PWBA found the voting of outside managers was tainted by conflict of interest. As far as I know, that is still the case.
One positive development that could come from this decision is that funds may pay more attention to how their shares are voted and may demand more differentiated voting policies to better align with their values. That could lead Vanguard, BlackRock, State Street, and others to offer more differentiated hard stop voting policies, such as those in use by Iconicapp.com.
Multistate Letter to Financial Institutions
In January 2025, a coalition of ten state Attorneys General (led by Texas AG Ken Paxton and including states such as Alabama, Nebraska, Idaho, South Carolina, Indiana, Utah, Iowa, Virginia, and Montana) issued a letter to six major financial institutions — BlackRock, Goldman Sachs, JPMorgan Chase, Bank of America, Citigroup, and Morgan Stanley. The AGs raised concerns that these institutions had implemented:
- Race‑ and sex‑based quotas
- Supplier diversity programs
- Board diversity targets
- DEI-linked employee evaluations and bonuses
The letter warned these policies might breach state or federal laws, including fiduciary duties of loyalty and prudence, and invited responses within 45 days with the possibility of enforcement action if violations were confirmed.
Florida’s Investigation of Proxy Advisors
In March 2025, the Florida Attorney General announced an investigation into whether proxy advisors — key influencers in shareholder votes — were engaging in unfair or anticompetitive behavior by embedding ESG and DEI factors into their advice, potentially violating the state’s Deceptive and Unfair Trade Practices Act or its antitrust laws. (advisory)
DEI Support Remains Strong: Defense
Guidance Issued by Other State Attorneys General
In February 2025, Attorneys General from sixteen states — including California, New York, Illinois, New Jersey, and others — published guidance on how private sector DEI initiatives can remain legally compliant. The guidance emphasized that race‑ and gender‑based preferences have long been prohibited under Title VII, and offered best practices for lawful DEI programs.
Corporate Support Continues
As noted by Timothy Smith many companies under attack remain committed to longstanding DEI programs.
Corporations like Costco, JPMorganChase, Delta Air Lines, American Airlines, Southwest Airlines, and Apple continue to view diversity as a cornerstone of their workforce strategies, refusing to back down despite mounting pressure from conservatives and the White House.
These companies fully understand the benefits of having diverse teams and leadership. For example, a review by As You Sow and Whistle Stop Capital of over 1,600 companies found that manager diversity is positively associated with key financial performance indicators, including return on equity and invested capital, revenue growth, and share price performance. [4] Similarly, a recent investor brief by the Canadian organization SHARE found that diversity, equity and inclusion add to company performance and, therefore, shareholder value. [5] If a company eliminates or dilutes efforts to promote diversity, they are neglecting that benefit and adding risk for investors. Simply stated, the data shows that diversity is good for business.
Smith’s post to the Harvard Law School Forum on Corporate Governance includes an informative series of excerpted quotes from public statements, 2025 proxy statements, and senior corporate executives on DEI.
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