Conducting a risk assessment amid anti-DEI governmental action

Many companies began backtracking on DEI policies due to social pressure, including from activists like Robby Starbuck. But in the first weeks of the Trump administration, new pressure has been emerging from the federal government itself. Executive orders directly impact DEI activities within the federal government, but the administration has made it clear via executive order that it will act to “deter DEI programs or principles (whether specifically denominated ‘DEI’ or otherwise) that constitute illegal discrimination or preferences.”

Additionally, each federal agency will be required to produce a list of at least nine organizations, including large corporations, nonprofits, universities and state legal and medical associations, for further investigation.

“They’re basically saying, ‘make us a list of who we can go after,’” said Max Marcucci, managing director and practice chair for risk and reputation at Leidar. “And so, for certain organizations, that’s very alarming.”

Marcucci is currently involved in conducting risk assessments to help clients understand their exposure to potential investigation – and the resulting reputational risks involved.

Some questions Marcucci advises organizations to start thinking of right now:

• What are you likely to be hit on?
  • This is a moving target, and the language in the executive orders remains vague.
  • The executive order specifically seeks to end “affirmative action” and disallowing “workforce balancing based on race, color, sex, sexual preference, religion, or national origin.” This would appear to put specific diversity hiring goals based on those characteristics at risk – but could leave room for other kinds of diversity metrics, such as first-generation college students or recruiting from certain areas within the United States.
  • However, the government’s actions have shown a broader crackdown on DEI, including targeting federal workers who have merely attended internal diversity events for potential firing, so in practice, this could be much broader – though it would likely face additional First Amendment scrutiny.
• What are the reasonable precautions to take now?
• How are we communicating about the situation internally?
• If you do become a target, how would we communicate that?
• Who do you need to be talking to both internally and externally?
• What decisions will need to be made if we become a target?

Sandy Lish, principal and co-founder of The Castle Group, agreed that the first step is identifying the kinds of risks this executive order poses.

“If you don’t know what (the risk) is, you can’t know how to communicate,” Lish said. “And so, if their risk is losing funding, if their risk is losing people, if their risk is litigation, all of those things require very specific and intentional communication strategies.”

And there is no one-size-fits-all solution. Lish said that her agency’s clients, which span state government, nonprofits and private sector, are weighing which actions of the administration they need to comment on.

“We’re only a week into a new landscape and we have to make decisions about what our stance is going to be. Because every client, whatever they do, whatever sector they’re in, has important work to do, and can’t be distracted from that work,” Lish said. “Do we want to be commenting every time something happens, or do we want to be doing our due diligence to understand what do our stakeholders expect and need to hear?”

Marcucci also noted that the rapidly changing situation makes it difficult to plan – which is by design.

“One of the challenges is, we don’t know what’s happening day to day, sometimes hour by hour,” he said. “That’s the keeping-them-on-their-toes mentality that the Trump administration has adopted. So, you can prepare for anything you want, but it may go out the window tomorrow.”

Operationalizing DEI

Several professionals PR Daily spoke with believethere may be safety in embedding DEI practices into every aspect of the business rather than siloing it into a separate function.

Marcucci said the term DEI can be overly broad, which has created challenges for organizations.

“If it means everything, then it almost means nothing,” he said. “Then others can define it. I think that what we may be seeing … is less of a total abandonment of the principles behind ESG or DEI and more of a change in messaging to not focus or make it so separate from everything else your organization is doing.”

Chris Pinto, a DEI consultant and former DEI communications and strategy leader at Deloitte, agrees that DEI needs to be more operationalized across organizations and tied closely to business outcomes, as Costco did in a rebuke to activist investors.

“I’m kind of tired of the line people say, ‘Oh, well, you know, it’s a business imperative,’” Pinto said. “Well, that’s great. Can you demonstrate how? And that’s what I tell the chief diversity officers: get off that topic.”

Instead, Pinto suggests focusing on firm, concrete measures to prove the success of these measures, such as focusing on how DEI can help the employee life cycle from recruiting to onboarding all the way through offboarding.

Marcucci echoed his sentiments, saying he believes the organizations that emerge most successfully from this moment will be those that fully integrate the principles known as DEI into the organization at its foundation.

“Move away from the messaging of DEI and instead focus on culture, focus on employee wellness and employee needs, talk about who they actually want to attract and recruit and not just say ‘diverse.’”

But of course, there is also a business imperative to communicate a stance to stakeholders. But even that is more complex than it appears.

“It’s not as simple as, ‘what do we say about our DEI program in our company?’” Lish said. “Or, what’s our statement, or what are our policies, or what employee resource groups do we have? But it’s, what are we? What do our customers or stakeholders expect from us? And again, in a very changeable landscape, language matters.”

Lish noted that some people – including the federal government – are paying close attention to when the letters “DEI” are being used or when they’re being avoided.

“While there’s a lot of concern, we also have to remember that there are also people that are very happy about the way this is going,” Lish said. “And so, an organization needs to understand where it sits in that and who its stakeholders are and what it stands for.”

Allison Carter is editorial director of PR Daily and Ragan.com. Follow her on LinkedIn.