Growing evidence makes this clearer by the day: Diversity, equity and inclusion (DEI) does not help American institutions attain progress or profit.
It’s time for all institutions to get back to their basic duties and stop pushing extreme agendas on the American people. This is especially important for American corporations that have a fiduciary obligation to make decisions in the best financial interests of their shareholders.
A growing chorus of Americans recognizes the acute challenges of DEI. Even the co-founder and CEO of a prominent DEI consulting firm laments assuming the role of “moral authority” on the subject and regrets labeling people who disagree with DEI as “bad” people.
The controversy over DEI has also captured the attention of two well-known businessmen, Mark Cuban and Bill Ackman, both of whom have engaged in a tense exchange on X, formerly Twitter.
Cuban, the Dallas Mavericks owner and star of “Shark Tank,” wrote, “Diversity—means you expand the possible pool of candidates as widely as you can. Once you have identified the candidates, you hire the person you believe is the best.”
“That’s exactly what I thought until I did the work,” said Ackman, the founder of Pershing Square Capital Management and Democrat mega-donor. “I encourage you to do the same and revert. DEI is not about diversity, equity or inclusion. Trust me. I fell for the same trap you did.”
In the same post, Ackman explained that DEI is “a political advocacy movement on behalf of certain groups that are deemed oppressed under DEI’s own methodology.”
In simplest terms, what Ackman and others critical of DEI have identified is the inherently flawed nature of the ideology. By insisting that our institutions are irredeemable and cannot escape past wrongs or that people groups should be divided into two camps — oppressed and oppressor — the adherents of DEI are compelled to use the levers of those very same institutions to manipulate outcomes based on identity rather than merit.
This conduct is dangerous when you consider its effects on our economy and our public corporations.
Good business is ultimately about producing a good product, not pushing an agenda. DEI unnecessarily complicates that winning American formula. Rather than focus on improving production and goods, companies are now choosing to divert resources and attention to internal race and identity-based policies that neither improve return on investment to shareholders nor result in better products for consumers.
Corporations adopting policies that prioritize social engineering over corporate responsibility do not serve the interests of all Americans. Instead, they appease the extreme desires of a few, thereby eroding confidence in the ability and competency of our institutions.
It is neither profitable for businesses nor sustainable for the American people.
Along the same lines, those in the financial services industry must understand that fiduciaries must have a single-minded purpose in the returns on their beneficiaries’ investments.
State and federal law have long recognized fiduciary duties for those who manage other people’s money. The Employee Retirement Income Security Act, for example, demands that a fiduciary “discharge that person’s duties with respect to the plan solely in the interests of the participants and beneficiaries, for the exclusive purpose of providing benefits to participants and their beneficiaries …”
As attorney general of Kentucky, I was one of 22 state attorneys general who signed a letter warning financial services companies that they may be violating their fiduciary responsibility to shareholders by agreeing to radical activism in their environmental proposals. I also issued a legal opinion outlining why government-sponsored racial discrimination and so-called “stakeholder capitalism” was unlawful.
We’ve collectively witnessed some of the consequences of extreme ideology taking priority over responsible corporate governance. After Bud Light’s infamous foray into the culture wars, its sales collapsed, forcing one of its executives to step down. We’ve also seen prominent fund managers like Vanguard drop ESG-driven investments — another ideological blunder at the corporate level — because they have not been profitable and have exposed their investors to greater losses.
DEI objectives have moved some of our business so far from their purpose that even those on the left like Ackman are compelled to speak out, underscoring that the adverse reaction to DEI is not a partisan issue.
Most Americans want our corporate institutions to move away from extreme ideologies. It’s time to return to the American formula of producing great products and services, not pushing agendas.
Daniel Cameron is the former attorney general of Kentucky and the current CEO of the 1792 Exchange.