DEI is dead. Long live DEI.
Current 18 - Insights:
It has been a fascinating, disorienting, distressing, complicated and testing past two months, at least for those of us who care about things like diversity, equality and inclusion. Almost regardless of one’s political orientation, the chaos emanating from the White House belies the relentless assault on behavioral norms, the rule of law and, almost as an after-thought, the constitutional structure that we have fought to build and protect for a quarter of a millennium. It is an extraordinary moment to be a functioning, cognizant adult.
And yet it also offers an unexpected sense of clarity. This moment requires that we understand the DEI excesses that have punctuated so much of the roiling cultural and political conversation with grievance. It offers a chance to crack open difficult conversations - both with those who disagree with the things we believe, and more importantly with those who agree - and to pursue them wherever they lead.
This moment also demands that we accept a form of reality that in the stormy days of #MeToo, #BlackLivesMatter and #TakeAKnee, many of us imagined had been consigned to the dustbin of history. One stark fact dominates this reality: the political winds have shifted, violently. As The Atlantic recently wrote:
“With Donald Trump’s return to the White House, the long-held conservative grudge against affirmative action and programs designed to upend the effects of racial discrimination has transformed into a witch hunt. In the past decade, conservatives have cycled through attacks on “wokeness”, affirmative action, critical race theory, and the diversity-equity-and-inclusion initiatives known, now pejoratively, as D.E.I. The target has moved, but the message is the same: anti-racism is divisive and discriminatory and should end at all costs.”
This is our reality, and we must measure our response with thoughtfulness, perhaps with caution, yet most critically with integrity. For just as surely as the DEI wave that swept the nation after the murder of George Floyd was going to recede, there will be a time for reflection once this anti-DEI hysteria ebbs. There will be a recalibration of what it means to support the philosophical and moral underpinnings of DEI. Hard questions will be asked.
Who will have stood firm in the view that justice matters? Who will have bent before the storm that rages in DC and across America? Who will have tempered their stance to de-risk their business, their reputation or their investments? Who will have strengthened their commitment and found a deeper sense of purpose and resilience?
A Sense of History
Historically, if it were not for a steady sense of moral imperative - that peculiar sense of resilience and shared purpose that urges people to stand firm against injustice - many of the defining events in the history of the United States would never have occurred. Religious tolerance would never have taken root in the colonies. Slavery would never have been questioned, and the Civil War would never have been fought. The Jim Crow laws - and the debilitating segregation they codified - would remain in force today. Chinese immigrants would still be barred from citizenship. The military would still be segregated. Brown vs. Board of Education would have survived subsequent challenges. Black Americans would be subject to the laws of the land without the right to vote for the lawmakers behind them. Every woman in America would live and die without ever having the chance to vote, much less own property or have a personal bank account.
Some of the most inspiring moments of our history - from the signing of the Declaration of Independence, to Lincoln’s Gettysburg Address, to the laws permitting interracial and same-sex marriages - would have been inconceivable had the people involved, flawed and myopic and hypocritical though they were, not felt compelled by that curious moral imperative.
I think that what gets lost in the intensity of this political moment, however, is that the broad support for today’s social justice campaigns was born in response to real problems. And, of course, many of the deepest stains in our history would still have happened. The defense of slavery by the Confederacy. The policy of extermination focused on Native Americans. The ferocity with which segregation was enforced as the Civil Rights movement gained momentum. The shameful treatment of gay men during the early days of the AIDS epidemic.
Bigotry dwells uncomfortably deep in the hearts of many.
As Martin Luther King so memorably observed, “The arc of history is long, but it bends towards justice.” The implication? That the path to justice is neither straight nor swiftly travelled. The poignancy of that implication is revealed in this moment’s grappling with Diversity, Equity and Inclusion. While we can be confident that the moral imperative for equality has not died in America, it is inarguable that we have no real idea what the coming years will bring.
The Future of DEI
Over the past decade, Diversity, Equity, and Inclusion (DEI) became a darling of the corporate world, as businesses competed to outdo each other in their commitment to social justice. As an investor committed to impact for over two decades, I admit that I watched this trend with skepticism. The sudden conversion from so many in the aftermath of the Me Too and Black Lives Matter movements seemed… convenient. Now, it seems that DEI is at a crossroads, facing increasing skepticism from various corners of the business and investment world. Some have even (enthusiastically) declared it “dead.” But rather than viewing this as the end of DEI, I would argue that this moment marks the beginning of a new and, possibly, less performative era.
To understand this paradox, we must first acknowledge the complexities of the DEI movement. The original intent behind DEI initiatives was noble: create more inclusive workplaces, remove systemic barriers, and ensure that opportunities and resources were equally distributed. Many organizations adopted DEI programs with this goal in mind, and to some extent, progress has been made. We’ve seen more women, people of color, and underrepresented groups moving into leadership positions, and we’ve seen more corporate policies designed to ensure equity in hiring, promotions, and pay.
But the story hasn’t been without its challenges. For many, DEI initiatives have become a box to check—a superficial set of policies and quotas designed to satisfy stakeholders rather than foster genuine inclusion. We’ve seen companies hire diversity officers, implement unconscious bias training, and commit to diversity goals, only to fall short of real cultural change. At its worst, DEI can feel like an exercise in corporate Kabuki rather than a meaningful shift in how businesses operate and how they engage with their employees, customers, and communities.
The pushback against DEI, especially in recent years, stems from this disillusionment. Critics argue that DEI is too focused on quotas, race, and gender identity, often overshadowing merit, talent, and the core objectives of a business. Others claim that the emphasis on diversity has led to division, rather than unity, within organizations. From a financial perspective, investors are becoming increasingly wary of whether DEI initiatives translate into long-term value or just short-term optics. Some are even calling for the abandonment of DEI as a priority.
So, is DEI truly dead? I don’t think so. It’s merely evolving. The core principles of DEI—diversity of thought, equity in opportunity, and inclusion—remain as relevant, and as investable, as ever. What’s changing is the way these principles are being implemented and measured. This new era of DEI will be about moving beyond symbolic gestures, focusing instead on creating genuine systemic change. It’s about building an organization that is truly diverse, not just in numbers or colors, but in ideas and perspectives. It’s about ensuring that all employees have an equal opportunity to succeed based on their abilities, not their background.
Moreover, it’s about acknowledging that inclusion isn’t just a checkbox—it’s a continuous effort. Inclusion means fostering a culture where people from all walks of life can bring their authentic selves to work and feel empowered to contribute. And for businesses, this isn’t just a moral imperative—it’s a competitive investment thesis. Companies that embrace diversity of thought and a truly inclusive environment are better positioned to innovate, adapt, and thrive in an increasingly complex world.
Which, in a sense, is the raison d’etre for Align, seeing impact not simply as an expression of a set of values, but rather as a toolbox to create enterprise, in addition to social, environmental and financial value.
In the investment world, the new DEI isn’t about quotas; it’s about long-term value. Investors should be looking at how well companies integrate DEI principles into their strategies, operations, and cultures, and how those principles drive sustainable growth and competitive advantage. DEI isn’t just an ethical investment—it’s an economic one.
Because here’s the thing: it doesn’t really matter what you call it. We believe in a form of capitalism that understands climate science is reality, that internalizes the fact that communities are strengthened when more people thrive, that historical injustices can be addressed through investments and policy, and because, fundamentally, capitalism needn’t be an extractive, winner-take-all, zero-sum calculus. It can be a form of economic organization that works for all 8 billion of us.
So, yes—DEI as we’ve come to know it may be “dead.” But DEI, in its most authentic and powerful form, is very much alive. And in the maelstrom of uncertainty in which we all find ourselves, I believe it is critical for the future of business and investment.
Long live DEI, indeed.
DISCLOSURE: The information presented in this blog is the opinion of Align Impact and does not reflect the view of any other person or entity. The information provided is believed to be from reliable sources but no liability is accepted for any inaccuracies. This is for information purposes and should not be construed as an investment recommendation. Past performance is no guarantee of future performance. Align Impact is an investment adviser registered with the U.S. Securities and Exchange Commission.
