The retreat from corporate diversity programs widened this week as Citigroup (C) and PepsiCo (PEP) announced rollbacks of their DEI policies amid mounting scrutiny from a new administration in Washington, D.C.
At Citigroup, CEO Jane Fraser announced in a memo to company employees that the New York banking giant would no longer require new hires to be selected from a diverse set of job applicants.
She also said that an existing "diversity, equity and inclusion and talent management” team would now be known as "talent management and engagement."
"It is important to note that we’re living in an environment where things are changing quickly," Fraser said.
Jane Fraser, CEO of Citigroup, testifies in 2023 before a Senate committee in Washington, D.C. (Tom Williams/CQ-Roll Call, Inc via Getty Images) ·Tom Williams via Getty Images
PepsiCo, the beverage giant, said in its own memo from CEO Ramon Laguarta that it will no longer have a DEI officer dedicated specifically to such issues, will "sunset" DEI workforce representation goals, and expand its supplier base.
The company, he added, will be announcing a new "inclusion for growth" strategy that is "in keeping with our company's deep history of building an inclusive and respectful workplace culture."
PepsiCo CEO Ramon Laguarta, at the World Economic Forum, in Davos, Switzerland, on Jan. 18. (REUTERS/Denis Balibouse) ·REUTERS / Reuters
"As we have always done, we will continue to hire and promote the best talent, ensuring we reflect the skills and perspectives needed to succeed in a competitive market."
Anti-DEI activist Robby Starbuck said in a post on X that PepsiCo responded to his plans to publish a story about what he called the company's "woke" policies by agreeing to drop the DEI initiatives.
The two companies join other prominent US businesses that have made similar retreats, including Meta (META), Walmart (WMT), McDonald's (MCD), Lowe's (LOW), Ford (F), Tractor Supply (TSCO), John Deere, and Target (TGT).
The changes reflect a trend away from corporate-backed DEI that followed a 2023 US Supreme Court ruling, Students for Fair Admissions v. President and Fellows of Harvard College, and an executive order from President Donald Trump ending federal DEI programs and ordering agencies to "combat illegal private sector DEI actions."
In Students for Fair Admissions, the court specifically ruled against race-conscious admissions programs at Harvard University and the University of North Carolina, saying the programs violated the Constitution's Equal Protection Clause of the 14th Amendment.
Citigroup cited the changes in Fraser's memo.
"The recent changes in US federal government policy, including new requirements that apply to all federal contractors, call for changes to some of the global strategies and programs we've used to attract and support colleagues from various backgrounds," Fraser said.
Other big banks have also made some recent adjustments to how they talk about DEI.
Goldman Sachs (GS) said earlier in February that it would drop a requirement for its IPO clients to include women and minorities on their board of directors.
And JPMorgan Chase (JPM) dropped almost all mentions of "diversity, equity, and inclusion" from its annual report released last week.
The nation's largest bank removed four uses of the phrase compared with last year's report, including references to "diversity, equity & inclusion centers of excellence" that were touted as part of JPMorgan's "firm culture."
The phrase still appears in a section where the firm discloses its reputation risks.
"JPMorganChase has been and expects that it will continue to be criticized by activists, politicians and other members of the public concerning business practices or positions taken by JPMorganChase with respect to matters of public policy (such as diversity, equity and inclusion initiatives)," the company stated.
JPMorgan CEO Jamie Dimon, a longtime advocate of diversity, told employees in a private town hall meeting this past week that legal changes, along with Dimon's own desire to cut down on bureaucracy, would lead to alterations for some DEI programs.
"Obviously, we have to accommodate the law. So the law changed. We can't have quotas," Dimon said in a recording obtained by Yahoo Finance, adding that he "was never a firm believer in bias training" and had questions about money being spent on certain DEI programs.
"I saw how we were spending money on some of this stupid shit and it really pissed me off ... I’m just going to cancel them. I don’t like wasted money in bureaucracy," Dimon said.
Correction: A previous version of this article misspelled Jane Fraser's name. We regret the error.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed.
