The Case Against Corporate Cowardice

This is a 4,000 word article packed with links to external research and data. If you don’t have the time or the inclination to read the whole thing, here as some key takeaways:

• In addition to massive racial inequity, research suggests that companies continue to favor White applicants over people of color, whether because of conscious racism or unconscious bias;
• The PR industry, in particular, remains more than 70% White, with people of color—and Black people in particular—significantly underrepresented.
• A wealth of research makes the business case for diversity, from improved decision-making to enhanced relationships with stakeholders.
• Consumers have punished companies that abandoned DEI, and rewarded those who hold fast, with foot traffic at Target plummeting while Costco booms
• Shareholders understand the benefits of DEI, defeating racially-motivated attacks by an average of 98-2
• Employees like principled leadership: when Marriott’s CEO spoke out in support of DEI he received more than 40,000 emails thanking him for his courage
• The only reason to abandon DEI is the belief that the current attack on equal opportunity is permanent and irreversible—that America will never again reward fairness and justice.

During the first three months of the second Trump administration, we have witnessed many extraordinary examples of institutional cowardice. We have seen media organizations voluntarily surrendering their First Amendment rights. We have seen some of the nation’s largest law firms betraying the principles of their profession. We have seen leading universities turn their back on academic freedom. And of course, we have seen giant corporations betraying values that only a few months ago they described as “core” to their very identity.

It is easy to see why a government so willing to pervert the power of the state in order to pursue personal vendettas might inspire the kind of fear that makes people forget whatever principles they might have previously espoused. There is no doubt that the Trump administration is willing to punish institutions that do not demonstrate the requisite degree of deference.

Even so, I would argue that the extraordinary obsequiousness on display from many of these companies—leaving aside those few who genuinely share the administration’s racial animus, homophobia and misogyny—represents a significant error in judgment, opting for short-term expediency while sacrificing the stakeholder relationships upon which their past success has been built and upon which they will depend again in the future.

For those companies, the only context in which their capitulation makes sense is if they believe that the authoritarianism on display today is a permanent state and thus that only one stakeholder—Trump or the movement he represents—now matters.

If, on the other hand, they believe that American democracy is resilient enough to survive this moment, and that the American people will ultimately reward companies with real values and genuine integrity, they need to think long and hard before abandoning their principles.

This is true of all the issues identified above—free speech, academic freedom, the rule of law—all of which are under unprecedented attack and all of which are essential to the future of American democracy. But I am going to focus most of this article on issues related to diversity, equal opportunity and inclusion, first because it’s an issue that touches almost every company and second because I believe it is of critical importance to the public relations profession in particular.

DEI Is Essential for Greater Meritocracy

It is tempting, at this point, to simply point to former United States Defense Secretary Lloyd Austin—a four-star general with a distinguished record of military service—and his successor, Pete Hegseth—a Fox news commentator with an impressive record of alcohol abuse—and leave it to readers to infer the unrestrained racism that underpins the Trump administration’s attacks on DEI.

One of these individuals was hired based on no qualification other than the color of his skin, and it clearly was not the Black man.

Or maybe it would be more helpful to point to a range of incidents over the past three months—the purging of Navajo code talkers from government history sites; the deletion of Jackie Robinson’s military career; the erasure of Harriet Tubman from the story of the Underground Railroad; and (for added absurdity) the removal of LGBTQ-themed atom bomb plane Enola Gay—to suggest that the Trump administration’s agenda extends far beyond employment opportunity into something that resembles ethnic cleansing.

But let’s focus, amid all the ill-informed attacks on DEI, on the fundamental unfairness—a fact of American life for decades—that corporate diversity initiatives were designed to address.

That there are massive racial inequalities in the US is indisputable. According to Federal Reserve data, White households held 84.2% of all US wealth in 2023, while making up just 66% of households, while Black families accounted for 11.4% of households and held just 3.4% of wealth. The median Black family has a net worth of $44,100, just 15.5% of the $282,310 median White family.

Any progress toward greater equality has been incremental. As of the third quarter of 2023, the median white worker still made 24% more than the typical Black worker and around 28% more than the median Latino worker, according to Bureau of Labor Statistics data. Even when they hold management positions, Black men are paid less than their White counterparts. Executive-level Black men earned 97 cents for every dollar white men with the same qualifications took home, according to a study by data and software firm PayScale.

And recent studies have made it clear that racism and unconscious bias are still obstacles to Black candidates in particular. Last year, economists reported the results of an experiment using fictional résumés. Candidates with equivalent qualifications but different personal characteristics and names created to imply different ethnic backgrounds were often excluded. Employers contacted the presumed white applicants 9.5% more often than the presumed Black applicants.

Another study, reported in the Harvard Business Review, found that companies—even those claiming a commitment to DEI—are more than twice as likely to call minority applicants for interviews if they submit “whitened” résumés than when they reveal their race. And, in case you were hoping that technology would help to solve the problem, a study by law firm Fisher Phillips revealed that AI résumé screeners favored résumés with White-associated names over those with Black-associated names.

In other words, the evidence overwhelmingly suggests that even with DEI in full effect, American companies on average continued to provide preferential treatment to White applicants. The idea—promulgated by Trump administration apologists—that abandoning DEI will make hiring and advancement more meritocratic is contradicted by the empirical data and research in the field.

A more reasonable conclusion, based on the facts, is that a genuine commitment to DEI is necessary—but almost certainly not sufficient—if corporate America is to become more meritocratic. It is almost inevitable that when companies abandon DEI, they will revert—intentionally or not—to the discriminatory hiring practices of the past.

Sidebar: Diversity in the PR Business

It’s worth taking a moment here to consider how the public relations agency business stacks up in relation to corporate America in general. The data (spoiler alert) suggest that our profession has mirrored the broader business realm closely, both in terms of the progress that has been made in recent years and the mostly unsatisfactory pace of that progress.

We don’t have a definitive census report on the entire public relations profession that would provide the most compelling data, but we do have a wealth of information gathered from our Best Agencies to Work For survey, which provides us with a range of demographic data in addition to the individual agency rankings.

I’m not going to pretend that the demographics of the survey are a perfect reflection of the profession as a whole but I will offer a couple of observations: first, that firms that don’t have a robust commitment to diversity, equity and inclusion are unlikely to participate in a survey to find the “best agencies to work for,” so these firms are probably doing a better job than the industry as a whole; and second, that even if the raw data doesn’t reflect the profession as a whole, the trendline is probably significant.

So here’s the data from the past three years:

• In 2023, slightly more than three-quarters of respondents identified as White or Caucasian (75.5%); 18.6% identified as BIPOC, of whom 3.1% were Black or African American (those not included declined to answer the question).
• In 2024, 75.2% identified as White or Caucasian (down 0.3%); 18.6% identified as BIPOC and 3.4% identified as Black. (The number who declined to answer increased slightly).
• This year, 73.2% identified as White or Caucasian (down 2%); 18.8% identified as BIPOC, and 3.6% identified as Black.

Anyone looking for additional signs of progress needs to dive deeper into the numbers and look at the make up of the youngest cohort in the industry. Among employees 26 and under, the percentage identifying as White or Caucasian declined to 71.9%, while those identifying as BIPOC made up 19.4% of respondents, and those identifying as Black or African-American were 6.7%.

You might have to squint to see it, but the public relations industry has been becoming slightly less White over the past few years, although again, there is simply no evidence to justify any kind of “political correctness run amok” narrative—or indeed any significant over-indexing on diverse candidates.

As we noted in our analysis last year: “At this rate, it will take decades before the PR agency business can seriously claim to be representative of America as a whole.”

DEI is Good Business

The data presented above demolishes the case that DEI has somehow created an inverted system of racial preference and refutes the idea that there is any kind of moral case for rolling back diversity initiatives. Ending DEI will not eliminate injustice, it will exacerbate it.

But American business leaders tend to make decisions based on pragmatism rather than morality and for the vast majority of companies, the decision to invest in DEI has been made for bottom-line reasons, and not because of a commitment to any kind of “woke” ideology.

So why were an overwhelming majority of companies, until the recent right-wing backlash, investing in and talking about their diversity, equality and inclusion initiatives?

First, there is the simple common-sense argument that it is better to recruit from the entire available talent pool than from one (shrinking) segment of the population. If you only attract, retain and develop talent from a demographic that makes up less than two-thirds (61.6%) of the population, you are going to miss out on a lot of talent.

And your recruiting costs are going to go up—especially if other companies are also disproportionately focused on the same segment of the population.

Secondly, there is a significant body of compelling research showing a strong correlation between diversity and business performance. A 2015 McKinsey report on 366 public companies found that those in the top quartile for ethnic and racial diversity in management were 35% more likely to have financial returns above their industry mean, and those in the top quartile for gender diversity were 15% more likely to have returns above the industry mean.

A Boston Consulting Group article entitled “The Mix that Matters: Innovation through Diversity” reported on a study that found a statistically significant positive relationship between management diversity and innovation and found that companies with higher levels of diversity derive more revenue from new products and services.

And a Kellogg School of Management study found that diverse team members do more than simply introduce new viewpoints or approaches. In the study, diverse groups outperformed more homogeneous groups not only because of an influx of new ideas, but because diversity triggered more careful information processing that is absent in homogeneous groups.

And third—perhaps most important to public relations professionals—it is easier to build relationships with internal and external stakeholders when people can all see themselves reflected in your organization.

A Harvard Business Review report found that when at least one team member has traits in common with the end-user, the entire team is more likely to understand that user. In fact, a team with one member who shares a client’s ethnicity is 152% more likely to understand the client’s needs.

And there’s a body of research showing that DEI within the organization boosts external relationships in several ways: improved empathy for diverse customer and community experiences; improved access to new markets and demographics; enhanced trust in communities of color.

Finally—of particular relevance to companies in the marketing services sector who may be thinking about abandoning diversity—a reduced likelihood of the kind of racial insensitivity that has created a number of high-profile crises in recent years:

• The 2017 backlash to a tone-deaf Pepsi commercial that attempted to appropriate a social movement;
• A 2018 H&M ad featuring a Black child modelling a sweatshirt reading “coolest monkey in the jungle.”
• Last year’s Heinz campaign, which led to accusations that the company was perpetuating the harmful stereotype of absent Black fathers.

The outrage over these campaigns should serve as a warning to any marketing services or public relations group: the profession needs more diversity and more cultural sensitivity, not less.

A Question of “Values”

So there is a strong moral case for continuing to strive for (even if DEI efforts fell far short of) genuine meritocracy. And there’s a solid business case for increased diversity adding bottom-line value. But there’s a broader issue for corporate leaders wrestling with the political risk of embracing DEI: if inclusion, once a “core value” can be cast off the moment it becomes inconvenient, why bother with values at all?

Consider the remarkable 180-degree turn taken by retailer Target earlier this year.

In 2020, Target CEO Brian Cornell discussed the murder of George Floyd, which took place just 10 minutes from Target’s headquarters and was a catalyst for the Black Lives Matter movement. Cornell talked about the “personal impact” of the killing and later said that Floyd “could have been one of my Target team members.”

Target pledged to increase its Black workforce by 20%  over three years and the following year, Target pledged to spend more than $2 billion with Black-owned businesses by the end of 2025. The company was honored for its “outstanding commitment to equal opportunity by the Executive Leadership Council, a prominent organization of Black CEOs. Cornell accepted the award.

And as recently as 2023 Cornell was still expressing support for diversity initiatives: “I know that focus on diversity and inclusion and equity has fueled much of our growth over the last nine years,” he said. ““The things we’ve done from a DE&I standpoint—it’s adding value, it’s helping us drive sales, it’s building greater engagement with both our teams and our guests.”

Cornell appeared sincere in his belief that the company he led might make a positive contribution to making the world a better place. Which is perhaps why the backlash against the retail giant has been so pronounced. Once it became apparent that Cornell’s comments were empty words, merely performative rather than a reflection of any true “core values,” customers understandably felt that they had been lied to and betrayed.

Today, describing its culture, the company says: “We are a community of purpose-driven individuals who come together every day across our stores, supply chain facilities, corporate headquarters and global offices to delight our guests and the communities we serve….

“We do the right thing, win the right way and succeed as part of a team.”

Until, presumably, it becomes more politically expedient to do the wrong thing, at which point that pledge too will be cast aside.

Closer to home, in the marketing services sector, giant holding company WPP was claiming in 2019 that: “We believe greater inclusion, diversity and gender balance leads to more rewarding and successful workplaces.” As recently as 2023, the company was still proclaiming its commitment to inclusivity: “We aim to create a workplace that is reflective of the diverse communities in which we live and work. We believe diversity, in all forms, fuels creativity and business growth.”

A month ago, however, CEO Mark Read told shareholders that “much has changed over the last year” and offered this profile in principled leadership: “In today’s complex world, a pressing question for brands and organizations is whether to engage on social issues in a more contested public arena, and how to navigate the expectations of different audiences with competing views on sensitive topics.”

That might sound like a roundabout way of saying “we’ve abandoned our values because they became inconvenient,” but the company apparently can’t quite bring itself to say what is surely obvious to all intelligent observers. The Guardian reported that WPP had declined to comment on whether the new wording was a response to anti-DEI rhetoric and other thinly veiled racism coming out of the Trump administration.

Of course, some of the companies that have capitulated to the anti-diversity campaigners have insisted that they are merely “rebranding” their DEI efforts, or claim that they will find some way to avoid discriminating against people of color while feigning compliance with the Trump administration and its racist fellow-travelers.

Such claims are simply not credible. Conventional business wisdom suggests that “you can’t manage what you don’t measure.” All the evidence presented above suggests that even when companies do hold themselves to account, even when they do publish data on their progress, and even when they tie bonuses and performance reviews to diversity goals, unconscious bias (the most generous available interpretation) continues to create structural disadvantages for employees of color.

I would argue that if you are so easily intimidated that you can only live your core values in secret, you’re probably not going to have the courage to live them at all.

Destroying Stakeholder Trust is Expensive

And that brings us to the crux of the argument: that stakeholder trust still matters, and that appeasing a single stakeholder—no matter how powerful he may appear—represents a betrayal of every other group upon which a modern corporation depends for its success. And we have seen all of the critical stakeholder groups—employees, customers, and even shareholders—signaling their concern over the attacks on DEI.

Target provides an object lesson in how consumers react when they feel that a company has betrayed its values and its stakeholders: the retailer recently suffered its 11th consecutive week of declining foot-traffic, a trend that began the week after it announce the termination of its DEI initiatives.

The backlash came immediately, with civil rights activists and people across social media calling for a boycott. Black church leaders urged their congregations to participate in a “40-day fast from Target.” And on February 28, during a “24-Hour Economic Blackout,” Target saw its website visits fall from 5.2 million to 4.7 million, and its app traffic plummet by 14%.

By contrast, Costco—which took a principled stand and refused to abandon its own DEI commitment—has since experienced 11 consecutive weeks of foot-traffic increases. On February 28, Costco’s website traffic surged 22%, and its app traffic rose 3%.

The consumer backlash was entirely predictable: the Global Marketing Trends Executive Survey found that 57% of consumers are more loyal to brands committed to addressing social inequalities in their actions, and a recent Harris survey, published in Ad Age, found that one in five American adults say they’ve stopped supporting a brand because its approach to DEI either contradicted or reversed previous efforts.

Less predictable, perhaps, is the reaction of shareholders after white supremacist groups introduced shareholder resolutions calling on companies to abandon DEI initiatives. At Costco, 98% of shareholders voted against an anti-DEI proposal, and in recent weeks shareholders at companies including Apple and John Deere have voted against similar proposals in almost identical numbers.

It appears that the overwhelming majority of shareholders understand the business case for diversity, and are prepared to act to protect their investments: Target shareholders have filed a class action lawsuit, claiming Target defrauding them by failing to warn investors about the fact that abandoning DEI and ESG policies would negatively impact sales and stock prices.

(International companies—like WPP—should be even more concerned about their legal exposure. Companies that repudiate their commitment to equal opportunity may become more vulnerable to discrimination lawsuits in their domestic markets. According to the chair of the Employment Lawyers Association, defending a company against discriminatory acts made by an employee was already difficult but “would be hopeless” without DEI policies in place.)

And finally, there are employees themselves. A Harris Poll/Axios Vibes survey released earlier this year found that 61% of respondents said diverse employees have a positive impact on organizations, and 75% agreed that more needs to be done to guarantee everyone is advancing.

When Target made its decision, it was clear that many employees felt betrayed as managers swept through stores purging anything that addressed diversity and equality. The reaction is only exacerbated by fears about hours and positions being cut as foot traffic falls.

Meanwhile, just this week, there was evidence of how employees react when a company is led with courage rather than cowardice. At Marriott International—ranked number eight on Fortune’s 100 Best Companies to Work For list in 2025—CEO Anthony Capuano received more than 40,000 emails from employees after reiterating the company’s support for equal opportunity.

“The winds blow, but there are some fundamental truths for those 98 years,” Capuano said. “We welcome all to our hotels and we create opportunities for all—and fundamentally those will never change. The words might change, but that’s who we are as a company.”

After those remarks, he said: “Within 24 hours, I had 40,000 emails from Marriott associates around the world, saying ‘thank you,’”

All of this adds up to a critical difference in reputation resilience. A recent Bully Pulpit survey found that principled leadership—the idea that companies are led by people who care about values and look beyond short-term profit—makes companies more credible when faced with controversy, and better able to recover in times of crisis.

Short-term appeasement is likely to result in long-term damage to stakeholder relationships and organizational reputation—damage that will likely linger long after the political winds have shifted once again.

Conclusion

Or maybe not.

It is clear that a genuine and robust commitment to diversity, equity and inclusion makes companies makes companies more meritocratic and reduces—without eliminating—racial discrimination. DEI also delivers significant business benefits, ranging from enhanced problem-solving to enhanced external relationships.

And the evidence is overwhelming that stakeholders—employees, customers, shareholders, and the public at large—understand all this and are prepared to reward companies that are committed to doing the right thing. And to punish companies that repudiate their previous efforts to make the playing field a little more level.

So why did so many companies decide to capitulate, to abandon something that benefits them operationally and reputationally?

Essentially, those companies are betting that America is irredeemable. They are betting that American ideals—like the idea that “all men are created equal”—are not simply being tested by the current crisis, but have been consigned to the scrap heap of history, never to return. They are betting that last year’s election of Donald Trump—achieved with less than half of the popular vote—represents a permanent shift.

This is not entirely irrational. The president and his allies have made their contempt for the constitution and the rule of law clear. It would be foolish to dismiss the idea that they might find a pretext to cancel (or corrupt) future elections. Other countries have fallen into authoritarianism, and there is no reason to believe America might be immune from that fate.

But I would suggest that corporate America is far from impotent in the face of these challenging times, and that companies and their leaders have the ability to influence their own future. If companies truly value stability, freedom and the survival of democratic institutions, then this is a time to show leadership, a time for courage rather than cowardice.