Companies would be smart to liberate themselves from the diversity, equity, and inclusion straitjacket.
Companies would be smart to liberate themselves from the diversity, equity, and inclusion straitjacket.
W hether it is major American businesses like Apple, Microsoft, and Amazon donating substantial sums to Black Lives Matter (BLM) in 2020, Bud Light’s foray into the gender debates in April 2023, or Britain’s NatWest bank defenestrating prominent Brexiteer Nigel Farage in July 2023, many corporations across the world are choosing to associate themselves with progressive causes. They are also paying a price.
A recent example concerns the decision of 13 of the top 20 Australian companies listed on the Australian Stock Exchange to back aggressively — with words and money — a proposed amendment to the Australian constitution to add a racially based “Voice” for indigenous Australians to the Australian Parliament to advise the government on indigenous matters.
The referendum was defeated by a massive 61–39 margin. That’s partly because Australia’s center-left government couldn’t — or wouldn’t — provide details on how the scheme would work.
But it was also predictable that millions of Australians (including many indigenous Australians and even some progressive voters) would oppose a constitutional change that accorded a special legal status to particular people based solely on their race. That easy-to-forecast opposition, however, didn’t stop major Australian corporations from giving millions of dollars from shareholder funds to the “Yes” campaign that went down in flames so spectacularly on October 14.
The subsequent backlash against corporate Australia has been considerable. It has come not just from center-right politicians, but also from major investors and shareholder advocates. How is it, they ask, that so many major publicly traded corporations could be so out of touch with the sentiments — and quite reasonable sentiments at that — of 61 percent of voters?
Therein lies the generic question that corporations everywhere should be asking themselves. Why do some CEOs consider themselves compelled to take publicly traded companies into the firestorm of social debates in ways that are likely to estrange huge numbers of consumers?
It’s easy to assume that such decisions reflect particular CEOs’ personal sympathies for progressive causes. I’d suggest, however, that other factors often carry more weight.
One is the desire to curry favor with center-left parties that have given themselves over to the identity politics of race and sex. Whether we like it or not, the argument goes, center-left politicians hold or will hold the levers of political power. Ergo, corporations need to placate such parties by playing the identity-politics game.
There are two problems with this rationale. The first is that the Left in many countries has a deeply ingrained animus against business. This isn’t ever likely to be appeased by CEOs flashing lefty credentials. For many progressives, private enterprise will always and everywhere be Public Enemy No. 1. In their view, such CEOs are at best useful idiots.
The second problem is that the moment a corporation wanders into highly charged social debates, it necessarily identifies itself with one of two sides. That is bound to produce an angry — and potentially expensive — response from the other side. Just ask the board of Anheuser-Busch, owners of the ill-fated Bud Light brand, as it struggles to stem massive declines in sales.
More generally, business interventions into these debates can’t help but infuriate many conservatives, some of whom are in power or will be at some point in the future. In what world can actively alienating the center-right en masse be considered good for businesses whose goal is to realize profit over the long term, regardless of who is in power?
Overshadowing this, however, is another dynamic that has captured many corporations. That concerns the Diversity-Equity-Inclusion (DEI) agenda that has crept into business schools, management consultancies, many corporations’ human-resource departments, and even some corporate boardrooms.
A cursory look at the websites of major management-consultancy firms illustrates how much they stress DEI as a sine qua non for modern business practice. That not only includes buying into ideologically loaded ideas like “intersectionality” whose origins lie in critical race theory. It also means promoting schemes which prioritize group identity over the individual.
Consider, for example, the “diversity” part of DEI. On planet DEI, diversity involves viewing the world in terms of identity — meaning, overwhelmingly, in terms of race and sex — and re-ordering it accordingly.
Such re-ordering involves setting rules about how people should think and act as a member of a given group. In this scenario, your membership in a group and your subsequent connection to its history (however real or imaginary) is more significant than, for example, your work ethic, talents, qualifications, or history as an individual.
Diversity-by-identity also maintains that your membership in particular groups means either that you can’t help but be “privileged” and an “oppressor,” or, alternatively, that you are inherently subject to certain systemic burdens. Corporations, it follows, must take action to redress such imbalances, whether through their hiring choices or the people they elect to their board of directors.
It’s not hard to see how such ideas bleed over into businesses’ thinking that they must align themselves with assorted progressive causes.
After all, if the DEI view of the world is true, it is difficult for businesses to limit its implications to their hiring practices or internal governance. For if a corporation really believes in the group-identity imperative that drives DEI, why shouldn’t the corporation align itself with the same causes in the public square? Put another way: If you’re utterly committed to fighting alleged structural injustices internally, why wouldn’t you fight the same supposed injustices externally?
This logic will only be reinforced if a corporation’s HR department is dominated by DEI true believers, or if a business is being advised by management consultants for whom DEI is an article of faith. In such an echo chamber, it becomes harder for CEOs to resist being aligned with progressive agendas, some of which are likely to turn thousands of potential customers against the corporations they lead.
Solving this mess does not mean that corporations should align themselves with every single cause deemed “conservative.” Indeed, if the CEOs of publicly traded corporations want to personally support progressive causes, they should be free to do so. But they should do so as Joe Citizen rather than Joe CEO, and use their own money rather than that of shareholders.
Ultimately, it’s a matter of recognizing just how much DEI stands to distract corporations from their defining goal of realizing shareholder value by producing and selling quality goods and services to consumers.
With the ongoing politicization of absolutely everything, it is getting harder for corporations to avoid involvement in political fights that are not central to their core purpose, and that can prove costly for them, especially in terms of reputational capital. If companies want to minimize their risks in this area, they would be well-advised to liberate themselves from the DEI straitjacket.
Such a move won’t solve all their problems in this area. But corporations courageous enough to exorcise DEI from their business culture would certainly achieve one thing: freedom from the influence of an insidious idea that has helped turn many corporations into their own worst enemies.