[Ed. note: No blogs will be published Monday in recognition of the Labor Day holiday in the US. We will return Tuesday September 5.]
With corporations facing increasing litigation in the wake of the Supreme Court’s decision in SFFA v. Harvard, the pressure is intense for DEI programs to make an impact while avoiding legal controversies. Recently, Starbucks came under fire for its DEI programs. The National Center for Public Policy Research (NCPPR) filed a lawsuit claiming that the company’s hiring practices are anti-white discrimination and not representative of shareholder and business interests. While the Federal Court of the Eastern District of Washington ultimately dismissed the lawsuit, it is another example of increasing hostility to DEI and those working toward progress.
Companies committed to diversity need to partner with their legal teams to ensure their practices are legal and, most importantly, they are prepared for potential litigation. Martin Lipton of Wachtell Lipton Rosen & Katz said the following in an article published in the Harvard Law School Forum on Corporate Governance:
“As we have noted previously, boards and management may consider and determine – as part of an informed and deliberate exercise of business judgement – that certain DEI initiatives and strategies advance the company’s mission and operational success. Such strategies may include the adoption of policies and initiatives that aim to eliminate bias across the workforce and supply chain. Setting DEI goals is not per se illegal, provided that the means by which such objectives are pursued do not utilize protected categories such as race, gender or religion to determine employment outcomes. Programs that cultivate diverse talent and promote equal employment opportunities for underrepresented groups, including outreach efforts, remain legal and should not be conflated with ‘affirmative action.’
While the law with respect to DEI programs has not changed, scrutiny will likely continue. Companies need to be prepared to face potential claims, in the court of law and in other public arenas, regardless of the merits of the claims. The recent Starbucks decision is an important and helpful reminder of the need to ground assessments of DEI programs in an informed and deliberate exercise of business judgment.”
Now is the time to critically review your company’s DEI programs to ensure they clearly “advance the company’s mission and operational success” while also preparing to face more questions, scrutiny and legal claims even though they may be counterfactual and meritless. Yesterday’s joint podcast with TheCorporateCounsel.net, “Corporate DEI Programs After Students for Fair Admissions v. Harvard” offered insights about how to navigate the increasingly complex surroundings in which corporate DEI programs operate. The audio replay of the webcast is available for members of PracticalESG.com and TheCorporateCounsel.net.
If you aren’t already, subscribe to our complimentary ESG blog at https://practicalesg.com/subscribe/ for daily updates delivered right to you each morning.