Meta Platforms Inc (NASDAQ: META), the parent company to both Facebook and Instagram, have joined an expanding list of companies that are backing out of diversity, equity and inclusion (DEI) initiatives.
The movement to push towards DEI initiatives gained momentum following the 2020 racial justice protests after George Floyd’s murder, which saw many corporations making significant commitments to diversity. However, by mid-2024, several companies began to reverse these commitments.
High-profile conservative activists and political figures have criticized these initiatives as “woke” policies. Legal challenges have also emerged, with some arguing that DEI programs could be seen as discriminatory. The 2023 Supreme Court decision against affirmative action in college admissions has further emboldened critics, leading to a reevaluation of similar practices in corporate America.
Furthermore, amid economic uncertainties, some companies have been scrutinizing the return on investment of DEI programs. The financial investment in these initiatives, which includes hiring DEI officers, training, and audits, is substantial. With pressures to cut costs, companies are questioning whether these programs yield sufficient tangible benefits.
The end of the DEI programs aligns with other significant changes at the company, which critics argue cater to the right following Donald Trump’s presidential election victory in November. Earlier this week, Meta announced the termination of its third-party fact-checking programs in the United States and revised its hateful conduct policies, allowing new types of content on Meta-owned platforms that were previously banned.
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Biden administration pushed Meta around post pandemic
Meta CEO Mark Zuckerberg appeared on the Joe Rogan podcast Friday and stated that he had been working on the announced changes “for a long time.”
At the start of the COVID-19 pandemic, Zuckerberg said the Biden administration heavily pressured Meta to remove content it identified as misinformation on the platform.
“Basically these people from the Biden administration would call up our team and like scream at them and curse, and it’s like, these are documented, it’s all kind of out there,” Zuckerberg said.
Also, there has been a significant backlash of late against these policies, which amounts to a rise in consumer activism against what some perceive as “woke capitalism.”
Companies like Walmart Inc (NYSE: WMT), Ford Corporation (NYSE: F), and Lowe’s Companies Inc (NYSE: LOW), which initially embraced DEI, have faced criticism from conservative consumers, leading to decisions to roll back these initiatives
On Friday, Joel Kaplan, Meta’s newly appointed global policy chief, that the move will ensure the company focuses on “building teams with the most talented people” rather than basing hiring decisions on protected characteristics.
“This is ultimately about doing what’s best for our company and ensuring that we are serving everyone and building teams with the most talented people,” Kaplan said.
“This means evaluating people as individuals, and sourcing people from a range of candidate pools, but never making hiring decisions based on protected characteristics like race or gender.”
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Backlash may include long term implications
However, alienating employees who value inclusivity and consumers who consider a company’s social stance in their purchasing decisions poses a significant risk.
Many consumers support companies with strong DEI commitments, though opposing views have also shown substantial influence. Some companies might gain short-term financial benefits by cutting DEI costs, but the long-term implications could harm their performance.
Research indicates that diverse companies often outperform their less diverse counterparts financially, making a retreat from DEI policies potentially unwise.
Additionally, companies risk facing legal challenges or reputational harm if perceived as regressive in their DEI efforts, particularly in an era where social media amplifies consumer and employee dissatisfaction.
Silicon Valley has long acknowledged its lack of race and gender diversity. According to the company’s most recent diversity report, Meta surpassed its goal of doubling the number of Black and Hispanic employees in the US two years early, increasing representation from 3.8 per cent and 5.2 per cent to 4.9 per cent and 6.7 per cent, respectively. With the new announcement, Meta will no longer implement specific diverse hiring practices.
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