Corporate DEI Programs Face Backlash, Citigroup and PepsiCo Roll Back Initiatives

In the face of mounting scrutiny from the Biden administration, several prominent US corporations have retreated from corporate diversity programs (DEI). This week, Citigroup (C) and PepsiCo (PEP) announced changes to their policies amid legal challenges and political pressure.

Citigroup's Shift

Citigroup CEO Jane Fraser informed employees that the bank would no longer require diverse candidate pools for new hires. Additionally, the "diversity, equity, and inclusion and talent management" team will now be known as "talent management and engagement."

Fraser emphasized the changing political landscape, stating, "It is important to note that we’re living in an environment where things are changing quickly."

PepsiCo's Adjustments

PepsiCo CEO Ramon Laguarta announced that the company would eliminate its dedicated DEI officer, cease DEI workforce representation goals, and expand its supplier base. He also stated that PepsiCo would implement a new "inclusion for growth" strategy that aligns with its inclusive workplace culture.

"We will continue to hire and promote the best talent, ensuring we reflect the skills and perspectives needed to succeed in a competitive market," Laguarta said.

Legal and Political Context

The retreats follow a 2023 US Supreme Court ruling (Students for Fair Admissions v. President and Fellows of Harvard College) and an executive order by President Donald Trump prohibiting federal DEI programs.

In Students for Fair Admissions, the court ruled against race-conscious admissions programs, citing violations of the Equal Protection Clause.

Other Corporate Adjustments

Goldman Sachs (GS) has dropped its requirement for IPO clients to include women and minorities on their boards, while JPMorgan Chase (JPM) has significantly reduced mentions of DEI in its annual report.

JPM CEO Jamie Dimon has expressed skepticism about DEI programs, citing legal changes and concerns about bureaucracy. He stated, "I don’t like wasted money in bureaucracy."

Industry Trends

The announcements by Citigroup and PepsiCo reflect a broader trend away from corporate-backed DEI. Companies are reconsidering their approach to diversity and inclusion amid legal and political challenges.