Diversity, equity and inclusion investment opportunities

DEI can provide a platform for businesses to better execute their strategic goals, against a backdrop of evolving customer and employee needs, as societies become increasingly global and under-represented groups enhance their spending power. It is no coincidence that, despite dramatic pushback and against growing dissenting voices, many of the largest and best performing companies in the US remain committed to their DEI commitments.

DEI backlash in the US

The Trump presidency has turbocharged the DEI backlash, adding fuel to the fire set by the Supreme Court’s decision to overturn race-based admission policies at US colleges in 2023. In January 2025, his first set of executive orders included identifying private sector companies with ‘egregious and discriminatory’ DEI programmes.

“It is no coincidence that many of the largest and best performing companies in the US remain committed to their DEI commitments.”
 

This has galvanized many in the US business community to remove or water down such programmes, as they increasingly threaten their relationship with the new administration, and potentially pose risks to their federal contracts. Some have held firm however, understanding the bigger picture – that DEI strengthens businesses and is vital to long-term corporate survival.

Necessary for long-term relevance

The facts cannot be ignored. Globalisation is enhancing the need to tackle diversity at US corporations, as stakeholders beyond their borders continue to value or regulate for such policies or reporting. According to US Census projections, growing immigration means the country will become more racially and ethnically diverse over the coming decades. Women are projected to control two-thirds of discretionary spending by 2028¹, while making more than 80% of household consumption decisions² and influencing around US$43 trillion of global spending³.

This has massive implications for companies’ employees and customers – and how to monetise them. Organisations which increasingly reflect these changing customer needs are better equipped to outperform their non-diverse peers. Therefore, despite rising backlash against DEI since the 2023 US Supreme Court decision, we have actually observed continued improvement in companies’ inclusive policies and diversity representation in recent years.

Meritocracy and DEI are not mutually exclusive

It is worth highlighting that DEI goes beyond visible diversity. Socioeconomic diversity also presents opportunities to find merit in pockets of society where strong talent is undiscovered or underutilised.

In the US, those from the bottom 20% of family income are 77 times less likely than their wealthy peers to be admitted to Ivy League or similar universities⁴, which remain a significant recruitment ground for major corporations. With only approximately 5% of students accepted to such institutions, diversifying the talent bench can be a key driver of innovation. Merit does not need to be compromised for diversity. Instead, diversity breeds merit. 

The wide-reaching benefits of DEI

DEI does not simply mean good headline representation figures at firms. It is also supported by inclusive policies that lead to greater participation of women and other underrepresented groups in the workplace.

For instance, gender-neutral or shared parental leave impact all employees undertaking familial responsibilities in the home. Improvements in female health and fertility benefits do not only benefit female employees, but also males (whose partners also benefit) and same-sex couples looking to start or expand their families.

Walking back these efforts can create unintended consequences, which go beyond the targeted groups. While some companies may be less vocal about their diversity efforts, investments made into inclusive programmes will not be so easily rolled back without significant employee pushback. These programmes and benefits have also become an effective tool in attracting the best and brightest talent – something that companies will not be as willing to forego.

Opportunities remain 

The road to better diversity and inclusivity has not been without its hiccups. There is some legitimate and constructive criticism around the implementation of DEI polices – primarily tokenism and insincere pandering on inclusivity.

While target-based policies have largely been effective at improving board-level diversity, this has not necessarily permeated throughout organisations or translated to more inclusive workplaces. 

“There is room for the better execution of diversity practices, by not relying solely on quantifiable metrics, but also by leveraging policies or practices that ultimately benefit all in the workplace as well.”
 

Despite women on average making up more than a quarter of board representation at S&P 500 and MSCI ACWI Index constituents, gender or cultural representation in executive roles (CEO and CFO) remains at less than 10%⁵. There is also a heightened risk of over-boarding, where directors cannot commit sufficient time or attention to the company, with women almost twice as likely to sit on 3 or more boards compared to men at MSCI ACWI Index companies⁶.

This highlights that, while it may be well-meaning, a lack of thoughtfulness about how under-represented groups are included could also lead to many opportunities being given to a chosen few. This does not meaningfully progress diversity in the workplace alone, and does not adequately consider socioeconomic or other forms of diversity either. 

There is room for the better execution of diversity practices, by not relying solely on quantifiable metrics, but also by leveraging policies or practices that ultimately benefit all in the workplace as well. These may require greater time, investment and monitoring, but would likely yield more sustainable results in the long term.

Investing in companies with long-term prospects

Loud rebuking of DEI practices provides an opportunity to look through the noise. In an ever-changing world, it allows us to discern genuine inclusion from the performative – and we are willing to take on the challenge. This provides us with opportunities to invest in companies that are focused on their long-term prospects, and the key role that DEI can play in driving their future performance and longevity.

¹ Center for American Progress, ‘Playbook for the Advancement of Women in the Economy’, (americanprogress.org), March 2024.
² Forbes, ‘Who Runs The World? Women Control 85% Of Purchases, 29% Of STEM Roles’, (forbes.com), March 2024.
³ America’s Small Business Network, ‘Unlocking the power of the female consumer’, (asbn.com), February 2025.
⁴ The HEA Group, ‘Increasing Economic Diversity at Ivy League Schools Shouldn’t be That Hard’, (theheagroup.com), September 2023.
⁵ MSCI, ‘Women on Boards and Beyond: 2023 Progress Report’, (msci.com), 2024. Fortune, ‘S&P 500 boards have hit a tipping point that may lead to more female CEOs’, (fortune.com), March 2024.
⁶ Institute of Directors, ‘Governance explainer: Overboarding’, (iod.com), August 2023.

The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested. Past performance is not a guide to future performance. The views expressed in this document should not be taken as a recommendation, advice or forecast.