What’s happening to DEI in the US? Navigating backlash, reform, and the road ahead

The unravelling of diversity, equity, and inclusion (DEI) in the U.S. has set off alarm bells around the world. The trigger? A series of executive orders by President Trump aimed at removing DEI programmes across the federal government. While the new administration’s views on diversity and inclusion are no secret, what surprised me the most was the speed at which many large U.S. corporations scaled back their own diversity, equity, and inclusion initiatives and pledges. 

Google, Amazon, Meta, and Target are some of the many companies that were quick to cancel these DEI-focused programs following President Trump’s executive orders. Clearly, this is a moment of reckoning for DEI not only in the U.S. but around the globe.

In this article, I examine the weakening state of DEI in corporate America and why the most effective response is not to retreat, but to adapt. 

Fear, politics, and legal pressure are reshaping corporate responses

The origins of DEI in the United States can be traced back to the 1960s, when the Civil Rights Act of 1964 led to a series of affirmative action and equal opportunity policies. While the initial goal was to eliminate race-based discrimination, the DEI movement widened to include gender equality and recognising and addressing the needs of various ethnic, religious, and LGBTQ+ communities.

Social movements such as #MeToo and #BlackLivesMatter further pushed DEI into the spotlight, prompting companies to modify their hiring practices, increase diversity training, and create more inclusive environments.

So, what led to the backlash? According to the critics, DEI practices are discriminatory against individuals from majority groups and focus on identity over merit. Companies with strong DEI policies were accused of being “woke” and threatened with lawsuits. Many yielded to the legal and political pressure. 

For example, Amazon removed diversity-related references from its website and annual report. Meanwhile, Google scrapped DEI hiring goals and began reviewing its initiatives. Meta swiftly dissolved its DEI team, ended representation goals, and cut back on efforts to prioritise diversity-owned businesses in its supply chain.

However, some, such as Apple, Costco, and Goldman Sachs, defended or even doubled down on their DEI efforts. They understand that DEI is not just about ideology; it also enhances an organisation’s ability to identify and manage risks, as well as improve brand perception.

The business case for inclusion still stands

As Solange Márquez Espinoza points out in her article (Redefining DEI: How Corporate America is Reshaping Diversity Initiatives in a New Political Era), despite all the backlash, the business case for DEI remains as strong as ever. According to a McKinsey study, companies in the top quartile for ethnic and cultural diversity outperform those in the bottom quartile by 36% in profitability. 

Diversity and inclusion correlate strongly with innovation and productivity. A Diversity Council Australia report found that inclusive teams are 8 times more likely to work effectively together, 4 times more likely to provide excellent customer service, and 10 times more likely to be innovative. When teams include people from various identity groups with different backgrounds and experiences, they’re better positioned to innovate and analyse problems from multiple angles than homogeneous teams. This makes organisations with an inclusive culture more resilient and profitable than their peers.

Yet corporate mentions of terms like “DEI” and “racial diversity” have seen a staggering 72% drop between 2024 and 2025. As shocking as it may seem, it’s highly unlikely that these companies have abandoned DEI efforts altogether. In her article, Espinoza explains how many forward-thinking companies are reframing narratives to fulfil their DEI commitments without ruffling feathers. The controversial terms are being replaced by business-focused language such as “talent optimisation” and “market responsiveness.” This helps companies stay committed to inclusion and diversity without becoming political targets. 

Lessons for Australian leaders

The ripples of the DEI backlash in the United States are being felt across the globe. A survey by the Diversity Council Australia (DCA) revealed that while Australian workplaces have doubled their efforts in diversity and inclusion, 7% of Australian employees oppose or strongly oppose DEI initiatives. So, should leaders and founders of DEI-focused companies be worried? I don’t think so. 

A big reason why the DEI policies in the US are facing considerable pushback is its perceived performative nature. Shortly after the social movements of 2020, companies began making DEI investments and pledges in droves. Suddenly, every organisation had a Chief Diversity Officer, although without the necessary resources and budget. Bias trainings and Employee Resource Groups (ERGs) became commonplace, despite not being able to deliver a meaningful impact. 

The most significant lesson for Australian leaders to avoid performative DEI is to focus on outcomes, rather than just inputs. We can do this by designing programs that are evidence-based and aligned with core business objectives. 

Adopt a pragmatic DEI approach: When rooted in business fundamentals, DEI initiatives can become a critical driver of innovation, market growth, and employee engagement. Instead of treating them as programs as check-box activities, leaders should align DEI efforts with the organisation's goals and measure success through key business metrics and not just track demographic data. Review DEI programs regularly and make changes to reflect your company’s evolving needs.

Embed DEI in leadership development and accountability: A McKinsey study found that companies with gender-diverse leadership are 25% more likely to outperform peers. A surefire way to make diversity and inclusion an organisational priority is by holding leaders accountable for their ability to mentor diverse teams, cultivate an inclusive culture, and close equity gaps. You can do this by investing in development programs and integrating DEI goals into performance metrics and incentive structure. 

Create a culture of inclusion: The responsibility for driving DEI shouldn’t rest on one role, one team or one department. Organisations must actively work towards integrating inclusion principles into their culture by investing in training and engagement programs, and communicating the tangible benefits of DEI to employees and stakeholders. Remember to use neutral, business-focused language instead of terms that have now become controversial.  

Inclusion is evolving, not disappearing

While DEI as an acronym may have become a politically charged term, diversity, equity, and inclusion as values are here to stay. Companies like Apple, Costco, and Levi’s are proof that inclusion and diversity still have strong support among shareholders. It’s time for us to reflect on and evaluate our own approach to DEI. Are we doing enough to embed these values throughout operations, including product design, marketing, and communications? Are we creating opportunities for employees to shape the DEI strategy so it doesn’t feel like an imposition? 

The shifting political winds have brought DEI to a pivotal point. Adapting these values into resilient, holistic, and outcome-focused strategic interventions is the only way to keep DEI alive and thriving.