Political Backlash Has Already Undercut CRE’s Approach To DEI. Now It’s Expected To Get Worse
This is Part 2 of the fifth annual installment of Bisnow's DEI Data Series. Part 1, published earlier this week, examined the diversity of the boards and executive leadership of the biggest companies in commercial real estate. Additional stories will follow in the coming days. To read the entire series, please click here.
The highest-profile opponent to corporate America's yearslong DEI push is preparing to take power.
President-elect Donald Trump has called for banning DEI programs and surrounded himself on the campaign trail with advisers like Elon Musk who have been publicly hostile toward these initiatives. This indicates that there could soon be a sea change in how the government handles workplace diversity.
This shift, coming four years after a national reckoning on race made DEI a major focus for commercial real estate firms, could threaten the progress they have made on adding women and people of color to their ranks.
“I imagine that there are a number of senior officials and companies now — even the most committed to DEI — who are trying to figure out, ‘How do we hold the line and keep doing what we’re doing in a way that doesn’t draw too much attention from the new administration?’” said Michael Posner, a professor of ethics and finance at NYU Stern School of Business.
Even before Trump won the election, the attacks on DEI from politicians on the right — coupled with last year’s Supreme Court ruling against affirmative action programs in college admissions — had already led companies to tamp down their promotion of diversity initiatives and take action to avoid lawsuits, according to several professionals who work on diversity efforts.
Many firms that remain committed to DEI initiatives have softened the language around those programs to strip out the most politically divisive terminology, and they have hired experts to evaluate potential risks in their hiring practices. Those moves are likely to accelerate under a Trump administration, while other companies are expected to use his election to retreat from policies they felt coerced into embracing over the last few years.
“We're absolutely going to see more true colors coming out,” said Melina Cordero, founder of inclusive workplace consultancy P20. “We already have seen companies pulling back.”
New research shows the commercial real estate industry has continued to make progress toward greater diversity over the last year despite growing pushback. Bisnow’s annual analysis of C-suites and boards of directors at the industry’s largest companies, published this week, showed this was the fourth consecutive year in which women and people of color increased their ranks in the halls of power.
But those increases have been minor, and the industry still has a long way to go: C-suites at the 100 companies Bisnow investigated remain more than 85% white and 70% male.
Some publicly traded commercial real estate giants like KKR, JLL and AvalonBay Communities have cited DEI as a potential risk factor in investor materials: they have said legal rulings could impact their hiring practices and have brought in consultants to ensure they’re on the right side of the law.
Dozens of lawsuits have cropped up over the last two years challenging various diversity programs in the workplace, said Jason Schwartz, partner and co-chair of the labor and employment practice group at Gibson Dunn.
“It's a very active litigation and activist environment right now, and I don't expect that to slow down anytime soon,” Schwartz said.
The Changing Landscape
This past year, the phone isn’t ringing as often as it once did at Kimberly Reed’s diversity consultancy, Reed Development Group.
After the death of George Floyd at the hands of police in 2020, a reckoning washed across the corporate world, including commercial real estate.
“We wanted to disconnect our phone,” Reed said of the days and weeks immediately following Floyd’s death, when the calls for her executive leadership and strategy consultancy work just kept coming. She said that momentum continued through 2023, but it changed noticeably this year.
“In 2024, it was less. No question about it,” Reed said.
The efficacy and validity of diversity efforts have been in question almost since they came into vogue. The brewing opposition was supercharged in June 2023 by the Supreme Court decision that ruled affirmative action for college admissions is unconstitutional.
The ruling was specific to higher education, but business leaders were immediately confronted by its possible implications on the future of corporate DEI programs.
Weeks after the decision, a group of 13 Republican attorneys general sent letters to Fortune 100 companies warning them about the tenuous legality of certain attempts to diversify their companies. Conservative organizations, buoyed by a largely conservative Supreme Court, have successfully used the court system to overturn policies of racial preference in government programs in a handful of instances.
Meanwhile, some city officials on the other end of the political spectrum are pushing in the opposite direction — toward requiring or incentivizing diversity in hiring. In 2022, Boston began requesting that developers of larger projects that require city approval also submit details about the diversity of their teams.
D.C. introduced a new type of request for proposals in 2020 that prioritizes awarding development opportunities to companies owned or controlled by individuals who are part of disadvantaged populations.
The muddying of the waters around whether and how DEI programs can continue has created confusion and fear of litigation for business owners. Publicly traded firms are conducting vulnerability assessments and creating contingency plans to get ahead of potential negative social media campaigns targeting them for their diversity efforts, The New York Times reported in October.
Some of the corporate world’s trepidation is driven by past successful campaigns led by Robby Starbuck, a former music video director who now rails against DEI online, according to The Times.
The native Californian’s efforts have often focused on brands familiar to Middle America. After an online campaign in July, John Deere said it would no longer participate in “social or cultural awareness” events and pledged to root out “socially motivated messages” from its training materials.
Lowe’s, also a target for Starbuck, told employees in a memo obtained by the Associated Press in August that it was reviewing its DEI policies in light of the ruling on affirmative action and said it would combine all the employee resource groups for “individual groups representing diverse sections of our associate population” into a single group.
After a campaign targeting Harley Davidson, the company posted a statement saying it would limit corporate DEI training to align with legal requirements and reorganize its resource groups to focus on business development, mentoring and training.
“Companies and institutions are facing this pressure from both sides of the political spectrum, and it's forcing them to take these stances that they don't want to take,” Reed said. “That's the key, because it's fear that makes these stances, not the reality of what’s going on.”
The backlash has emerged in part as a response to strong support for DEI initiatives coming from the White House and political leadership on the left.
President Joe Biden has been an advocate throughout his term in office, signing an executive order in June 2021 to direct federal agencies to advance DEI initiatives.
As DEI has garnered more political scrutiny in recent years, Biden has remained relatively steadfast, declaring in a May speech that “the values of diversity, equity and inclusion are the core strength of America.” Vice President Kamala Harris last year called the decision overturning affirmative action “a step backward for our nation.”
“There's no doubt that the president of the United States sets a tone, has a leadership position that creates a broader environment that's either more inclusive, more forward looking, or not,” Posner, who worked in President Barack Obama’s administration, told Bisnow.
Walking A Tightrope
While the effects of the change in administration on DEI efforts remain to be seen, the increasing political pressure and legal threats have already led commercial real estate companies to change how they implement and message diversity initiatives.
In its annual report filed with the Securities and Exchange Commission in February, investment giant KKR said its “ability to successfully identify, hire, and promote employees,” may be impacted by legal and judicial developments outside of the firm’s control that “may necessitate changes to employment practices.”
Brokerage firm JLL cited DEI as a potential risk factor in its annual filing. The firm said it is working to implement DEI initiatives that will help it attract and retain talent but added that “shifts in perspectives and expectations about social issues and priorities surrounding DEI may occur at a faster pace than we [are] capable of managing effectively.”
JLL’s global head of DEI, Nashunda Williams, told Bisnow last month that despite the broader backlash to diversity initiatives, the firm has remained committed to its DEI strategy and plan.
REIT AvalonBay said this year the affirmative action ruling spurred it to engage an outside firm to “help ensure legal compliance and to mitigate risk as we continue to expand our programming.”
Extra Space Storage Senior Vice President of People Whitney Harper said the REIT has received inquiries from employees about whether their policies surrounding DEI will be changing after seeing other companies pull back.
The REIT has not shifted its mission, she said. CEO Joseph Margolis told employees at a 2025 strategy meeting last month that the company would be “steady” and "consistent" in its DEI work even amid swings in the political landscape, Harper said.
But some companies have retreated from diversity efforts amid the backlash. Retailer Tractor Supply was one of the more vocal examples outside of commercial real estate, announcing in June that it would eliminate DEI roles, retire DEI goals, withdraw from carbon emission goals and no longer provide data to the Human Rights Campaign.
The move, the company said, was because it had heard from customers that the programs and initiatives had “disappointed them.”
“We definitely had questions from our team members saying, ‘Are we going to follow suit? Are we going to scale back DEI?’” Harper said.
Meanwhile, companies are softening the language they’re using in communications with employees and investors in an attempt to avoid becoming the center of a political battle or opening themselves up to legal ramifications.
Given the political tension surrounding hot-button words like “DEI” and “diversity,” companies are increasingly turning to terms like “belonging” and “inclusion” that evoke broader themes of togetherness, experts said.
“Companies are thinking: A, how can we name this so that it doesn't turn people away or cause problems?” Cordero said, “And B, how can we make it clear this is not about a quota system for underrepresented people? It's also an effort meant to include and involve and benefit all.”
Healthpeak Properties, a Denver-based REIT, rebranded its DEI initiative to “IDEA” this year. The new term stands for inclusion, diversity, equity and accountability, “reflecting an emphasis on action and impact,” its Corporate Impact Report said.
Experts say language adjustments could bring people to the table who may have otherwise been turned off by the charged buzzwords.
“If you said to somebody, ‘What do you think of DEI?’ you might get really polarized reactions, right?” Schwartz said. “But if you said to somebody, ‘What do you think about a corporate program that is designed to make sure that everybody is included and has a fair opportunity to succeed at the company?’ Most people would say, ‘Well, yeah, that sounds great. I agree with that.’”
Harper said Extra Space Storage has also made “tweaks” to its language surrounding diversity goals, shifting from terms like “psychological safety,” to terms like “inclusive leadership.”
“I think we also realized that some of the DEI language felt inaccessible,” she added.
As a DEI consultant, Reed has had to make some adjustments to her pitch to corporate executives for her programming, pivoting language to keep it palatable. The equity at the center of the term DEI has been replaced with equality in Reed’s telling — shifting the emphasis away from a recognition of past injustice and toward present togetherness — and a B for belonging has been added to drive home a community-building mission.
“This whole legal framework goes back to my point of why I use equality versus equity,” Reed said. “We advise our clients the same way because of upcoming legal rulings.”
These companies that have publicized such changes are publicly traded firms, which Cordero said have exercised more caution about their DEI programs because executives must answer to their boards and shareholders. Private companies have more latitude.
“Those who didn't care before can continue not caring, and those who cared before can continue caring,” she said.
Many companies are still forging ahead with diversity initiatives because of investor pressures, employee retention goals or financial objectives.
A McKinsey study last year found that companies with over 30% of women on their executive teams are “significantly” more likely to financially outperform those at or below 30%. Companies in the top quartile for ethnic diversity show, on average, a 27% financial advantage above the others.
But those companies are now finding themselves walking an even narrower tightrope, forced to consider how opponents of their goals will try to frame their efforts, whether their programs could be met with pushback from employees, and if there are possible legal implications.
“It just makes it so much harder if you're operating in an environment where you're being attacked, essentially, for trying to do the right thing,” said Posner, the NYU professor. “There's a cognitive dissonance that goes with that — ‘We can't talk about it, but let's try to do it under the radar’ — that's not the way you make effective decisions.”
A significant number of major corporations have sought to do legal audits of their diversity programs, according to Schwartz, who estimates he has done about 50 since the SCOTUS decision came down.
Katie Schwarting, a partner in the real estate finance practice at Seyfarth who formerly chaired the Commercial Real Estate Finance Council’s DEI Committee, said one year ago she could count on a strong turnout at the committee’s meetings. The group was not only racially diverse but also included people from each real estate sector and U.S. region.
Now, Schwarting finds herself looking over attendee lists to make sure the meetings are full and representative of the industry. She chalks up the sluggish attendance to changing corporate culture, where the sidelining of DEI at their companies is leading professionals to volunteer their time to other initiatives.
“Like other things that are going on in the world, we're seeing this divide,” she said. “We are seeing people who are actually fully advancing DEI, and then there are others who deprioritize diversity because there is a backlash. There is a feeling like, ‘Really, is this necessary? I've had the training. I'm not sure I need it again.’”
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