Reports of the Demise of DEI Greatly Exaggerated

Despite a multitude of media reports to the contrary, two-thirds of S&P 500 companies still use DEI metrics in executive pay plans in 2024, according to a new study. 

What it says: The ESGAUGE report found that while use of DEI metrics is down from its 2023 high of 75%, it is still a majority practice – and among the largest companies, the dip is much less pronounced. Of $25 billion + companies, about 73% use DEI metrics (compared to only 21% of companies under $100 million in revenue). 

Facts of the case: The authors further studied a subset of 315 companies using DEI metrics in 2024. 

• Two-thirds of the sample used the same or very similar language to describe their plans this year vs last year. This contradicts a major narrative in the press that even among companies using DEI metrics, “most” are softening their language (diversity-hushing) or reducing precision.  
  
  
• 44 companies increased precision of language around DEI targets, either by adding quantitative goals or more detailed actions. 23 companies did the reverse (used vaguer language or reduced target difficulty). 
  
  
• 38 companies included DEI metrics in incentive plans for the first time in 2024. 

Meanwhile, a 2024 Edelman Trust Barometer Special Report on business and racial justice found that 76% of employees trust their company to address racism (39 points ahead of government) and 38% say their attitude toward DEI programs has improved, not declined.  

• Don’t believe the hype: Employee demand for diversity programs is higher than last year, with 60% saying a good diversity program is key to attracting and retaining them. 
  
  
• But address criticism: 76% of respondents said companies should respond when DEI initiatives are attacked, especially by demonstrating positive impacts and incorporating critiques. In fact, the top indication that an organization is sincere in its efforts (vs pushing a political agenda) is letting people voice concerns about them. 

The bottom line: Although the specific metrics and initiatives that companies pursue to achieve their diversity and inclusion goals may differ from year to year, it does not appear that the "pull back" from DEI is as significant as current headlines make it out to be. One common theme: the more closely tied DEI initiatives are to company business or people strategy, the simpler the explanation for why they are necessary for that company.