Major Banks Scale Back DEI Initiatives Amid Pressure

In a dramatic reversal, large U.S. banks are quietly backing away from publicly touting their diversity, equity, and inclusion (DEI) efforts. The action comes as the White House raises the ante on private-sector DEI initiatives, leading banks to rethink their strategy on these initiatives. Top banks such as JPMorgan Chase, Citizens, and Huntington have significantly cut or dropped DEI mentions in their most recent annual reports, mirroring an industry-wide trend.

The biggest U.S. bank, JPMorgan Chase, made a dramatic alteration in its latest regulatory report, leaving out earlier mentions of its "global Diversity, Equity & Inclusion centers of excellence." The change comes as the perception builds that DEI programs are being targeted by political and economic pressures. In the report, the bank admitted that it "has been and anticipates that it will continue to be criticized by activists, politicians and other members of the public" for its business conduct, including DEI initiatives. Nevertheless, a spokesperson stressed that the bank is committed to creating an inclusive workplace, asserting that its long-term success hinges on its capacity to attract, develop, and retain top talent.

CEO Jamie Dimon has indicated a strategic withdrawal, though he points more to operational cost-cutting than political pressure. In talking during a company town hall, Dimon indicated irritation with some of the DEI-related expenses, saying, "A lot of companies did things I never would have done. I was never a firm believer in bias training.". I noticed that we were spending some of this idiotic sh-t money, and I got upset," as reported by Bloomberg. His comments indicate a move away from overall DEI initiatives toward more specialized, business-focused diversity initiatives.

It's not just smaller banks, either. Other big banks are doing the same thing. Citi, Morgan Stanley, Bank of America, and Wells Fargo are all said to be reconsidering their public commitments to DEI, according to The Wall Street Journal. This re-evaluation occurs as increasing political pushback against DEI programs has emerged, as some conservatives have claimed these programs foster ideological favoritism and unwarranted corporate expense. In anticipation, numerous banks seem to be dialing back their public involvement with DEI while continuing internal diversity practices in a behind-the-scenes fashion.

One of the most significant plays in this direction is Goldman Sachs' decision to abandon its IPO diversity requirement. In 2020, the bank introduced a policy mandating that firms interested in going public through Goldman's underwriting include at least one diverse board member, later extending the threshold to two. Yet as pressure surrounding DEI programs has intensified, the bank has quietly undone this policy, indicative of a more general industry realignment away from overt diversity mandates.

The retreat from DEI terminology is not exclusive to the banking industry. Berkshire Hathaway, controlled by billionaire investor Warren Buffett, recently deleted mentions of DEI from its annual report, further suggesting a shifting corporate mindset. Whereas companies previously viewed DEI as a key part of their corporate social responsibility and a means of attracting top talent, the political and economic climate has shifted. Increased legal challenges to DEI initiatives, especially after the Supreme Court ruling invalidating affirmative action in university admissions, have inclined companies to exercise greater vigilance regarding public commitments to diversity.

For banks, the shift away from DEI is also influenced by cost. As economic times become tougher, many banks are searching for areas to reduce expenses and concentrate on core business functions. DEI initiatives, typically through training programs, employee resource groups, and outside consulting expenses, have become a budget-cutting target. Executives acknowledge that diversity is still a key to business success, yet they are moving away from mass DEI spending and high-profile initiatives.

The wider implications of the trend are yet to be seen. For investors and executives, the turn away from DEI reflects changing priorities regarding corporate social responsibility and business efficiency. Though some corporations might still place importance on internal diversity initiatives, the days of much-hyped DEI promises seem to be numbered. As banks and other large corporations redefine their strategies, the place of diversity in corporate America will change with shifting political, economic, and legal circumstances.