Chief executives at two giant Wall Street banks have spoken out firmly against shareholders aiming to choke back their diversity, equity and inclusion policies.
The CEOs have become unlikely defenders of diversity and inclusion at a time when corporate DEI policies are being treated as fodder by a militant White House under Donald Trump, as well as Republican-led states and conservative shareholder groups.
Speaking in a television interview with CNBC, Jamie Dimon, CEO of JPMorgan, the largest bank in the United States by assets, had one message for activist investors planning anti-DEI actions: “Bring them on.”
Dimon – who last year described himself as a “full-throated, red-blooded, patriotic, unwoke, capitalist CEO” – said the bank will continue to include marginalized groups in its business because they’re good for the bottom line. “We’re going to continue to reach out to the Black community, the Hispanic community, the LGBT community, the veterans’ community,” he said.
In a separate interview, David Solomon, CEO of Goldman Sachs, said DEI policies are important to keep the bank in sync with the diversity of its client base. “We continue to stay focused on talking to our clients and doing the things we’ve always done.”
That two pillars of American finance have emerged as defenders of DEI – which the U.S. right has blamed for everything from plane crashes to wildfires – seems at odds with the broad movement away from environmental, social and governance policies, which embrace action on climate and social justice issues.
On Feb. 11, proxy voting advisor Institutional Shareholder Services said it will stop considering gender, racial and ethnic diversity of U.S. company boards, a long-standing measure of good governance. Last month, JPMorgan and Goldman Sachs joined four other major U.S. banks to leave the Net-Zero Banking Alliance, the global coalition pushing banks on climate policies. And as recently as last summer, Trump mused about appointing Dimon as his Treasury secretary.
Yet, Dimon and Solomon appear to be speaking for a wider segment of the banking and investment industry. From their position as universal investors – institutions that invest in large swaths of the economy – there is a strong business case for major banks and asset managers to support DEI to expand their pool of qualified staff, borrowers and investee companies.
Costco slaps down anti-DEI shareholder activism
In a further sign of the gap between politics and good business practice, Costco shareholders voted a near-unanimous 98% against an investor resolution condemning the retail giant’s DEI policies. The resolution was from the National Center for Public Policy Research (NCPPR), a conservative think tank and activist investor. It argued that DEI holds litigation, reputational and financial threats to the company and is a risk to its investors.
Costco’s board issued a vigorous and direct response to the motion. It expressed confidence that the company’s DEI policies are not only fully lawful, but are good for its relationships with customers, suppliers and employees and have helped to boost investor returns. Conservative shareholder groups like NCPPR are “inflicting burdens on companies with their challenges to longstanding diversity programs,” the board wrote.
It’s not known how large asset managers such as BlackRock, State Street and Vanguard, which collectively hold about 20% of Costco’s stock, voted on the resolution. However analysts say it’s safe to assume that these companies, the three largest asset managers in the world, voted with the Costco board against NCPPR.
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Costco’s staunch defence of diversity and inclusion stands in contrast with many other companies that are rolling back portions of their DEI programs or cancelling them completely, including Walmart, Amazon, Meta, McDonald’s, Boeing, Molson Coors, Lowes and Ford. Many of these retreats have been in response to a campaign by conservative social media activist Robby Starbuck, who has amassed a large following based on corporate anti-DEI activity.
Trump has tapped into this movement and last month signed three anti-DEI executive orders covering the federal public service and private companies. The private company order ominously instructs federal agencies to compile a list of the “most egregious and discriminatory DEI practitioners.” As well, 10 Republican state attorneys general have recently threatened regulatory action against major U.S. banks for “unlawful race- and sex-based quotas” and green energy investments.
While some DEI actions such as hiring quotas could be seen as a form of illegal discrimination, a recent article in the highly respected National Law Review argues strongly that corporate DEI programs are lawful under the 1964 Civil Rights Act. “[DEI] programs operate to create a more fulsome collection of qualified job candidates and to build professional communities focused on collective success and individual opportunity,” the article states. “As long as an employer does that, it may continue its DEI efforts.”
Alison Taylor, professor at New York University’s Stern School of Business, told the industry publication Retail Dive that Costco’s defence of its DEI policies provides support for other companies to stand up to conservative attacks. “Other companies may follow through because Costco gives them a bit of top cover,” she said. “I think it gives a license and opens up a space to say there’s a different way to handle this.”
Anti-DEI resolutions will be on the agenda at a number of company annual meetings this spring, including tech giant Apple (February 25), Goldman Sachs (April 24) and JPMorgan (May 19).
If these resolutions and others are overwhelmingly voted down, similar to the result at Costco, it will send a strong message that the financial industry won’t support DEI attacks on U.S. corporations, a major source of its loan and investment profit.
Eugene Ellmen writes on sustainable business and finance. He is a former executive director of the Canadian Social Investment Organization (now the Responsible Investment Association).
