The real effects of a DEI rollback

Walmart's broad backtracking on its diversity, equity and inclusion (DEI) initiatives is indicative of a broader trend across corporate America. The underlying reasons, it seems, have to do with the national political context, especially now, with the trouncing of Donald Trump and the more conservative line.

Diversity, equity and inclusion policies are - increasingly - subject to legal challenges, political scrutiny and evolving public opinion. The world's largest retailer announced that it would stop prioritising race and gender in supplier contracts, reduce funding for programmes such as its Center for Racial Equity, and stop participating in prominent benchmarks such as the Human Rights Campaign's Corporate Equality Index.

These moves reflect more than internal strategy adjustments: they reflect a profound shift in the way US companies are dealing with the pressures of social responsibility, legal risk and the political landscape. Walmart's decision, justified as a bid to encourage inclusion of all employees and customers, may be one more piece in the dominoes falling as a result of recent political and social movements in the US.

Why Walmart cut back its DEI efforts? 

Walmart’s decision to scale back its DEI initiatives comes in the wake of significant external pressures. In June 2023, the U.S. Supreme Court struck down affirmative action in college admissions, a landmark ruling that inspired conservative legal groups to target corporate DEI programmes. These groups have argued that practices such as supplier diversity and demographic-specific training constitute reverse discrimination.

Walmart’s actions also align with broader cultural and political shifts. Right-wing campaigns, including those led by activists like Robby Starbuck, have aggressively challenged DEI initiatives as excessive or discriminatory. The incoming administration of Donald Trump, whose policy priorities include dismantling federal DEI programmes, further amplifies this climate of scrutiny. Conservative pressure has similarly led companies like Harley-Davidson, Lowe’s, and Tractor Supply to roll back or reframe their DEI commitments.

Despite Walmart’s insistence that many of these changes were planned well in advance, the timing reflects the growing risks companies face in maintaining robust DEI programs. Many corporations are reassessing legal vulnerabilities, particularly those tied to contracts favoring minority - or women-owned businesses. Recent victories by conservative groups challenging such programs highlight the growing potential for litigation.

Is the Middle East planning a DEI rollback as well?

Unlike this global shift, the Middle East views rapid growth as being driven by equal contributions from its diverse workforce, including women and expatriate workers. Leaders see DEI policies as a positive and significant factor in enhancing organisational sustainability.  

The DEI agenda is gaining strength across industries, particularly in the technology sector, where women and workers from diverse ethnic backgrounds are being welcomed as part of a transformative shift. The region is attracting a global workforce with better compensation, inclusive benefits, and opportunities for growth in a supportive and nurturing environment.  

In our recent conversation, Dr. Muhammad Laghari emphasised the uniqueness of the region's diverse workforce, which largely comprises a mix of expatriate and local workers. He noted that this diversity also presents challenges in the workplace, particularly regarding cultural values, work ethics, and expectations. However, organisations investing in cultural intelligence training and developing inclusive HR policies can effectively embrace diversity while fostering collaboration and mutual respect.  

He also underscored diversity and representation, equity and fairness, and inclusive leadership as key pillars of the human capital agenda for organisations to succeed sustainably. He said, "By embedding these pillars into Human Capital Management, organisations can create an environment that values diversity, promotes fairness, and supports the personal and professional growth of all employees."

"DEI will remain a priority, with companies aiming to build more inclusive workplaces and addressing inequities through measurable action plans," commented Muhammad when asked about what future trends will reshape workplaces across industries in 2025. 

Similarly, Tarik Chebib outlined how the Middle East, particularly the UAE, is attracting global tech talent with its unique and competitive offerings. He said, " the UAE is emerging as a diverse and inclusive destination with a highly international mix of people. This naturally brings a certain level of diversity and inclusion due to the variety of clients and cultures we cater to, whether they are Europeans, Arabs, or the South Asian diaspora. We often align our teams to reflect this diversity. However, there is still progress to be made, particularly in areas like female representation. Both the UAE and Saudi Arabia are making significant efforts to promote diversity, inclusion, and women's empowerment, which is attracting talent to the region. They are actively identifying and removing barriers to make these places more appealing to global talent. The quality of life here also plays a major role in this attraction. People work hard, but they also value the balance they can achieve."

Recent surveys also reveal the increasing efforts of leadership and organisations towards DEI in the workplace. 

What are the potential consequences of a DEI rollback?

As Walmart cuts back focus on DEI, it raises questions about how similar shifts might affect workplace equity, employee morale, and talent retention across industries.

While diversity initiatives remain broadly popular, there are signs of waning enthusiasm among the public. A Pew Research Center survey in October 2023 revealed that 52 per cent of workers viewed DEI policies positively, down from 56 per cent earlier in the year. This subtle but significant decline reflects a polarised landscape, where businesses must balance inclusivity with potential backlash from various stakeholders.

Walmart’s decision also sends ripples through its supplier network. The company’s U.S. operations sourced over $13 billion in goods and services from diverse suppliers in fiscal year 2024, including businesses owned by minorities, women, and veterans. While Walmart insists it will continue to engage with diverse suppliers, removing demographic-specific priorities could reshape these relationships.

Some of the consequences of rolling back DEI include:

• The primary and most significant impact of a DEI rollback is on PEOPLE, especially the employees of an organisation. Companies scaling back their DEI efforts would offer fewer opportunities for persons from underrepresented groups. This would have a negative impact on the company's innovation, creativity, and sustainability, as diverse talent brings more creativity and provides different perspectives. 
• The next impact is disengagement in the workplace. The rollback will act as a demotivator for employees, and the organisation will appear to place less value on an inclusive and equitable workplace. This could result in higher turnover, especially among underrepresented groups.
• The direct impact of such a rollback is on the employer's image in the job market. Companies that strategically cut back on their DEI budgets may suffer reputational damage. This could affect their ability to hire new talent, especially Gen Z workers that prioritises these values in the workplace.
• Companies may also face legal challenges, as the lack of DEI can lead to workplace discrimination or unequal treatment.
• Organisations cutting back on DEI efforts would find it difficult to plan their global expansion, as without a diverse workforce, they would lack the ability to tap into new markets or adapt to changing consumer demands.
• Lastly, scaling back on DEI efforts also affects training for global and multicultural work environments, without which organisations will find it challenging to manage cross-cultural teams or enter international markets.

While the DEI rollback is not solely driven by political pressure, economic factors, including layoffs and financial restructuring, are also at play. However, just as the Middle East has remained largely unaffected by global layoffs, it is similarly not driven by this DEI rollback. Instead, the Middle East is emerging as a great example for the world, standing strong while valuing its people and their diversity.