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Trump's presidency sparks fears for future of diversity culture in UK firms
'More broadly, we will be looking to the UK government to ensure that employment law is adhered to and our own values relating to fairness in the workplace are respected'
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There are rising concerns for the state of diversity and inclusion in UK firms after Donald Trump's inauguration as US president,
Since taking office on Monday, Trump has been scrapping various policies from Joe Biden's era, such as rolling back transgender protections and halting federal DEI (diversity, equity, and inclusion) initiatives.
His win also seems to have nudged corporate America towards more conservative views â with companies downscaling DEI divisions, moderating so-called "woke" terminology, and stepping back from environmental commitments. While UK businesses are legally bound to adhere to the countryâs equality laws and Labour Government looks to beef up DEI measures, including mandatory ethnicity pay gap reporting, it's uncertain how American companies like Meta, Amazon, and McDonald's, reducing their DEI efforts, will impact their UK branches.
Industry bodies and experts within Britain warn that America's shift could trigger similar moves here. A recent study by recruitment company Spencer Stuart pointed out a slowdown in diversifying higher management in the UK, noticing a sharp dip in the appointment of ethnic minorities to boards and the continual challenges women face accessing senior positions.
Michelle Ovens, founder of Small Business Britain, expressed her concerns: "Any shift to dial back diversity, equity and inclusion initiatives at a US level could have a significant negative cultural impact on businesses large and small across the world â undoubtedly having a knock-on impact in the UK."
She further added that this is a regressive step that undermines years of progress, as diverse businesses are known to drive innovation, broaden skills and perform better, ultimately creating valuable economic opportunities that benefit the entire global economy. Ms Ovens emphasised that encouraging diversity and inclusion at all levels of the supply chain "is vital", arguing that female entrepreneurship can unlock billions for the UK economy.
"So maintaining these efforts is crucial, not just for individual businesses but also for fostering innovation and ensuring competitiveness in the global economy," she said. Rachel Curley, deputy general secretary of leading tech union Prospect, voiced her concerns about the political developments in the US and the reaction of large multinationals, which are "understandably causing deep concern amongst UK tech workers".
"Companies like Meta, Amazon and others need to engage with their workforces and their unions so that changes can be worked through together and staff can make their feelings known."
She added: "More broadly, we will be looking to the UK government to ensure that employment law is adhered to and our own values relating to fairness in the workplace are respected."
Peter Cheese, CEO of the Chartered Institute of Personnel and Development, voiced that despite DEI principles being vital for business needs, there is an increasing debate on their numerous workplace initiatives. "The news from the US will increase attention for some firms on re-evaluating their own position and what they prioritise," he pointed out.
"Organisations should see diversity and inclusion as integral to their HR practices, and their people and business strategies, but also focus on the evidence of what works and drives positive business outcomes in their own context."
Contrastingly, the investment world is experiencing a cultural shift, with ESG concerns getting less attention from shareholders.
Kohinoor Choudhury, DEI campaign manager at ShareAction, expressed concern over the US companies' direction, clarifying, however, that it shouldn't be seen as indicative of a global trend. "Diversity, equity and inclusion issues are material financial risks for companies and investors, and are critical to a responsible investment approach," she stated.
Choudhury urged investors to maintain influence over their holdings to uphold responsible investment standards, focusing on combating workplace inequalities â not just for profitability but because it's ethically sound.
Morningstar Sustainalytics' director of stewardship research and policy, Lindsey Stewart, highlighted an emerging trend despite the new administration's stated aim for a laissez-faire business approach. He remarked: "Although the incoming administration has touted its intention to take a less interventionist approach to business, DEI and ESG matters appear to be an exception â pressure on businesses to curtail their ambitions on environmental and social matters looks set to increase in the near future.
"We are already starting to see this shift in the shareholder proposals being filed by conservative activists ahead of this yearâs proxy season."
Mr Stewart said an increasing number of proposals are requesting the rollbacks of DEI programmes, compared with a previous trend of asking the firm to assess the cost-benefit balance of such programmes.
However, he noted that while these proposals catch attention, they garner minimal backing: "Although such proposals are poorly supported by shareholders â usually gaining no more than 2â3% support â the change of emphasis sends a clear message," he concluded.
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