A coalition of state attorneys general sent a letter to a top business leaders group Tuesday warning its members that if they continue their Diversity, Equity and Inclusion practices, they are “often illegal.”
Missouri Attorney General Andrew Bailey led the letter with more than a dozen other state attorneys general which was sent to the Business Roundtable, a group comprised of top CEOs.
The attorneys general’s letter, not the first of its kind, says businesses that continue DEI could be liable for choosing social or political goals over doing what is best for the shareholders.
“By now it should be clear that attempts to reorient corporate policy to appease progressive activists are not only unworkable, but they are also often illegal,” the letter said. “Simply put, a corporation’s lawful purpose is to faithfully honor its fiduciary and contractual obligations to shareholders. Deviating from this fundamental duty, all to seek the applause of so-called ‘stakeholders’ pushing DEI goals, puts corporations at risk for legal action.”
Private businesses have faced a reckoning with their internal DEI policies in the last year, with many reducing or removing the policies altogether. The reasons for this vary from changing emphasis to fear of boycott from conservative customers.
A turning point in the DEI battle is when the U.S. Supreme Court ruled against university affirmative action policies in June 2023.
From the letter:
As corporate CEOs, pressured by far-left political activists, abandoned their fiduciary responsibilities in exchange for social cachet, state attorneys general stepped up to defend the legal rights of millions of their citizens. These efforts have included launching investigations of major corporations under state consumer protection laws. When a number of large banks—at the expense of shareholder value—signed on to the United Nation’s Net Zero Banking Alliance (NZBA), agreeing to reorient their investing and lending practices to achieve certain climate goals by 2050, 19 state attorneys general launched legal proceedings to determine if anti-trust or laws requiring fiduciary integrity had been violated. As of the writing of this letter, each of the banks targeted for investigation have publicly announced they are withdrawing from the NZBA.
In some instances, state attorneys general have brought legal actions under state human rights acts to push back against illegal corporate racial preference policies. When IBM created racial targets for its workforce and tied those targets to compensation, the Missouri Attorney General brought a lawsuit to enforce the state’s antidiscrimination laws.11 Likewise, in response to publicly acknowledged racial quotas by Starbucks,12 the Florida Attorney General brought a discrimination complaint regarding those goals to the state Commission on Human Relations, and the Missouri Attorney General filed suit on similar grounds.
