Why giving in to diversity shaming is bad for business

Companies that cave to far-right pressures to drop their DEI efforts are making a critical error that could undermine their future success (and their bottom line)

by Diana van Maasdijk , CEO of?Equileap

Motorbikes, bourbon, and pick-up trucks — the products of the latest companies that have fallen victim to hostile far-right activism in the United States. These companies have bowed down to a campaign in the likes of aggressive social media trolling aimed to shame and discredit diversity, equity, and inclusion (DEI) efforts. Are these companies afraid to harm their customer base? Maybe. But is this the smart thing to do? No, it’s not. This shortsighted decision not only harms the development of the best possible workforce but also fails to recognize the changing demographics of investors and consumers.??

In a world where companies seek for the best talent and where opportunities are unequally present, hoping meritocracy alone will work its magic is a bad strategy. DEI programs help companies create a more inclusive workplace and allow companies to find the best people from all demographic groups. These initiatives are crucial for breaking down barriers and providing opportunities for underrepresented groups and individuals from disadvantaged backgrounds. According to the?latest US census estimates , about 60% of the population in the USA is white, meaning that the rest are people of other ethnicities and races. Talent is spread equally among people, but, unfortunately, opportunities are not. This is why it is important for companies to pro-actively embrace society's full diversity.

And now, let’s look at female employees specifically. According to the?National Center for Education Statistics , more women are now graduating from university than men —female students earned the majority of degrees at bachelor's (59%), master's (63%) and doctor's (57%) degree levels in 2021-22. This means that companies that overlook the importance of gender diversity in their workforce and leadership are missing out on a significant talent pool and limiting their potential for innovation and success. And cutting down on DEI programs that promote training and acquiring female talent, paid maternity and paternity leave, closing the gender pay gap and stopping sexual harassment at work will lead to a “brain drain” where women (and many men) will look for work elsewhere.

My company,?Equileap, researches and scores close to 6,000 public companies on their diversity and inclusion performance. This data is being used by investors. Yes, you read that right, investors are starting to add a diversity and inclusion lens to their decisions. Whether it’s for shareholder engagement, values-based investing, or pure common sense, they have realized it’s a smart thing to do.?Research from Glenmede Investment Management, ?using our proprietary data, found that when rated on diversity and inclusion, the top 20% of the Russell 1000 companies outperformed the bottom 20% by 2.6% and showed lower volatility.?Research by the Women’s World Banking ?has also found positive correlations between gender diversity among workforce and customer bases and growth and profitability. And when we follow the money, we see that today, USD 9 billion is invested globally into companies performing better on?Equileap’s indices and ratings.?

Moreover, the investor demographic is also changing. Women are not only entering the investment world in greater numbers but are also bringing new perspectives and priorities that could fundamentally change how we think about wealth and its distribution. The rise of women as investors is an unfolding reality that promises to reshape the financial landscape. Currently,?women control about 32% of the world's wealth , a figure that is steadily climbing as more women enter the workforce, pursue higher education, and achieve financial independence. In the United States, women now make up approximately 25-30% of all investors, a notable increase from previous decades. This shift is particularly pronounced among younger generations. A?2021 study by Fidelity Investment highlighted ?that 71% of millennial women are investing outside of retirement accounts, compared to just 67% of Generation X women and 62% of baby boomer women.

Lastly, if you’re a company thinking about sunsetting your DEI efforts, you should consider that today, most consumer choices are made by women, whether buying alcohol, drills, cars, or anything else. Women have the power of the purse, and according to a?report by Nielsen , in just four years time, women will own 75% of the discretionary spend, making them the world’s greatest influencers. This means that companies that do not prioritize gender diversity in their workforce and leadership positions are overlooking the perspectives and preferences of their largest consumer base. And there are tools for consumers to use their economic power to choose companies with more gender equality. Just download the?Gender Fair ?app on your phone and you will see how to purchase with gender equality power.

Employees, investors and consumers - three reasons why succumbing to the fear of online trolls with their diversity shaming is a bad idea. Failing to embrace diversity and inclusion could lead companies to not only miss out on valuable insights and perspectives but also risk alienating their target stakeholders.??

In times of difficulty and societal questioning, companies should not scale back their commitment to diversity, equity, and inclusion; instead, they should rethink, innovate, and strengthen DEI with renewed creativity and commitment. It is precisely during challenging moments that bold ideas and inclusive cultures can drive resilience, unlock new opportunities, and build a stronger foundation for long-term success. It is now time for bold leadership and brave leaders.

Learn more about Equileap and our mission to close the equality gap in the workplace: https://equileap.com/our-story/