Will Supreme Court’s affirmative action ruling lead to a decline in DEI initiatives?
BY JIM WILSON
An Ohio-based asset management firm has cautioned McDonald’s about its pursuit of diversity, equity and inclusion in the workplace – claiming that these policies could lead to legal actions against the company, especially after a recent Supreme Court ruling.
In a letter addressed to McDonald’s CEO and Chairman of the Board, Strive noted three key issues:
- The substantial legal and business risks associated with McDonald’s adoption of race- and gender-based targets for its board of directors, management, and employee ranks, and corresponding mandates for suppliers and vendors.
- The need for McDonald’s to revisit these policies to avoid the potential lawsuits, investigations, and regulatory actions that are likely to follow the Supreme Court’s ruling that declared all racial discrimination, including affirmative action, illegal under the Fourteenth Amendment’s Equal Protection Clause and the Civil Rights Act.
- McDonald’s possible breach of fiduciary duty through its embrace of its stakeholder capitalism.
DEI strategies are struggling to make an impact for many organizations in the tech sector — and continuing economic uncertainties are forcing employers to cut back on their DEI initiatives, according to a previous report
Supreme Court ruling on affirmative action
Just before June ended, the U.S. Supreme Court, in two separate decisions, held that college admission policies at Harvard College and the University of North Carolina (UNC) that included race as a factor were unconstitutional and unlawful under the Equal Protection Clause of the Fourteenth Amendment, according to Investopedia.
The decisions effectively ended the practice of affirmative action – a policy aimed at increasing workplace and educational opportunities for people who are underrepresented in various areas of our society.
“Prior to the Fair Admissions decision, many workplace DEI (Diversity, Equity, and Inclusion) programs were legally dubious. The ruling now confirms that those programs run afoul of the Constitution as well as discrete state and federal laws,” said Justin Danhof, Strive head of corporate governance, in the letter.
“McDonald’s internal hiring quotas and diversity proscriptions for suppliers exemplifies how the fast-food giant impermissibly divides people by race in precisely the way that the Supreme Court just struck down. To comply with the law and safeguard shareholders from costly litigation, McDonald’s should swiftly eliminate these programs.”