Even before November, the once trendy concepts of DEI (Diversity, Equity and Inclusion) and ESG (Environmental, Social and Governance) were already sinking. Now the election of Donald Trump all but guarantees their accelerated decline.
The DEI push gained momentum during the 2020 George Floyd riots, after being nurtured for years on most college campuses. Many companies, including Walmart, adopted its associated practices. But new research from The Conference Board indicates that over half of executives anticipate continuing the pushback of DEI initiatives. Among the firms stepping back from DEI include Boeing, John Deere, Harley-Davidson, and Black & Decker, and the biggest of all, Walmart itself.
Like DEI, corporate types saw in ESG a means of expiating the sins of the past. Both draw support from cultural arbiters as well as corporate human resources departments and Left-wing non-profits like the Ford Foundation, the Rockefeller Brothers Fund, the Open Society Foundations, and from “progressive” billionaires.
Economics was sinking ESG even before the election, as its one-time promoter, BlackRock’s Larry Fink, has acknowledged. A recent analysis of major funds found that BlackRock and others who had binged on ESG have underperformed those funds not so encumbered. US sustainability funds faced their worst year on record in 2023, according to a Morningstar. The GOP takeover is sure to make things worse. Republican state legislatures – Florida, Kansas and Idaho among them – have passed laws that ban or limit the consideration of ESG, providing direct opposition to these green investment pledges.
DEI is, if anything, even less favoured. The recipe of racial quotas and the systemic destruction of merit was already unpopular before Trump’s victory. Over the last two years, corporate DEI departments were slashed. One third of DEI professionals lost their jobs in 2022.
The idea of racial quotas in hiring and college admissions is rejected by the vast majority of Americans and minorities. Trump is aware of this and, under the influence of activists like the Manhattan Institute’s Christopher Rufo, could ban aid to schools that adopt DEI and quota policies. Given the extreme dependence on Washington, bloated universities will either have to cut staff or change direction.
To be sure, both the green and the diversity industries will fight back. Like the “climate industrial complex”, DEI has become a business that, according to McKinsey, was worth over $7.5 billion globally in 2020. DEI’s advocates, universities in particular, will look for ways to get around new directives and court rulings.
ESG is similarly threatened by the ascension of a president seeking to expand energy production, continuing the US’s profitable role as the world leader in oil and gas. Given the inevitability and continued growth of hydrocarbons, eliminating them post-haste would largely deliver the economic future to China, the world’s largest greenhouse gas emitter, and hand more power to all those lovely liberal democracies of the Middle East. Worst still, some of these policies seem to have little apparent impact on the actual climate.
For its part, DEI fails because it is based on a largely false notion of the nature of America. The US is far from the “apartheid state” portrayed in schools. Instead, it is an increasingly integrated country where minorities do not automatically back their self-appointed tribunes. Nearly half of all Latinos voted for Trump, as did growing numbers of Muslims, Asians and even Black males. The whole idea that people should be judged on their degree of victimhood – gender, race, national origin – strikes most as manifestly unfair.
Critically, minorities no longer cluster mostly in ghettos and barrios. In the 53 metropolitan areas with more than 1,000,000 residents, more than three-quarters of black and Hispanic residents live in racially and ethnically diverse suburbs, ranging from 20 per cent to 60 per cent non-white. Minorities are also moving away from big cities like New York, San Francisco, Los Angeles, Seattle, and Portland (whose city council is demanding reparations for the very people who are exiting the inner city). In contrast, their numbers are rising in many red state metros like Houston, Dallas, Phoenix, Salt Lake City, Boise, and Las Vegas.
Racial identity itself is changing. Elements of the Left favour segregating students, but the damned kids keep insisting on doing the opposite. Gallup has found that approval for interracial unions has risen from 4 per cent in 1958 and 50 per cent in the mid-1990s to 94 per cent today. The fastest growing race in America is mixed-race; one in ten babies born in the US have one white and one non-white parent, and 12 per cent of black Americans are now immigrants from Africa, the Caribbean, and elsewhere.
The abandonment of DEI could actually improve race relations. There is a growing literature, including a recent report from Network Contagion, that shows that DEI policies increase racial tensions rather than soothe them. Luckily for the DEI mavens, much of the establishment media refuses to cover such analyses, responding to the ideological predilections of staff at places like The New York Times and Bloomberg.
The demise of DEI and ESG marks a landmark shift away from a decade of incessant virtue-signalling. The debate should now focus not on some abstract notion of “justice” but on how to make life better for working people of all ages. We can expect hysteria from eco and social justice warriors about the imminent climate catastrophes or the return to Jim Crow, slavery and anti-miscegenation laws. Yet at least for the next four years, the promoters of both ESG and DEI will be on the defensive, as Americans continue to build – on their own – the world’s most prosperous, and dynamic, multi-racial society.
This piece first appeared at Telegraph.
Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. He is Senior Research Fellow at the Civitas Institute at the University of Texas in Austin. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.
Photo: Open Institute via Flickr under CC 2.0 License.
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