SCOTUS Strikes Down Affirmative Action. Corporate DEI May Now Face Pushback

In a widely expected ruling, the Supreme Court decided to strike down the use of affirmative action in college admissions, one of the blockbuster decisions of this term.

But the implications of the decision in the high court’s rulings in Students for Fair Admissions v. University of North Carolina and Students for Fair Admissions v. Harvard may have wider and lasting impacts on corporate diversity initiatives, including those impacting commercial real estate.

The rulings were 6-3 and 6-2, with Justice Ketanji Brown Jackson, a Harvard graduate, recusing herself from the Harvard case.

"Eliminating racial discrimination means eliminating all of it," Chief Justice John Roberts wrote for the court. "The student must be treated based on his or her experiences as an individual—not on the basis of race. Many universities have for too long done just the opposite."

Legal experts expect the ruling to open the doors to lawsuits and legal challenges to hiring programs that utilize race as a significant factor. It’s also expected that, long-term, it will impact the number of people of color graduating from colleges and elite universities, which will impact the talent pipeline for DEI initiatives.

In a brief filed with the Supreme Court in the Students for Fair Admissions case, employers such as General Electric, Google and JetBlue Airways said the loss of affirmative action means losing "a pipeline of highly qualified future workers and business leaders" and future struggles meeting diversity goals. A Harvard study from 2013 found that repealing affirmative action led to "a significant loss of workplace diversity."

"Many in our industry already bemoan a 'supply problem,'" CRE Recruiting CEO Allison Weiss said about the industry's rationale for not hiring more Black, brown and otherwise diverse candidates.

An analysis by HR Dive found that all 100 of the Fortune 100 firms have a DEI program. Bisnow’s examination of diversity within the commercial real estate industry has shown recent progress has been slight, and in some cases, backsliding. The percentage of people of color in the C-suites and executive teams across 89 of the largest firms in the industry rose from 10.9% to 11.6% year-over-year.  

"With the current economic climate and the corporate world’s need for immediate ROI and results, we’re in danger of sacrificing the long-term health of our industry for minimal, short-term cost savings," Weiss said. "I fear that turning over affirmative action gives those already looking for reasons to set aside DEI efforts a 'get out of jail free' card."

Many observers suggest that, with affirmative action gone, companies will begin to face reverse discrimination lawsuits, and will be forced to spend money defending their decision, regardless of the case’s merit. Title VI of the Civil Rights Act bans discrimination in programs receiving federal funding, but Title VII, which pertains to private employers, is similarly worded, suggesting it may face the same challenges.  

Axios reported that America First Legal, led by former Trump administration official Stephen Miller, has already filed a series of complaints this year on these grounds, seeking to investigate the hiring practices of firms such as BlackRock, Morgan Stanley, McDonald's and Starbucks.

The broader fear of some advocates for increased diversity is that a fear of lawsuits and pushback may dampen corporate commitment and enthusiasm to such efforts, potentially creating more internal resistance and a parsing of any program or communication with any connection to diversity.

Weiss and others suggest that companies double down on their efforts and  work closer with industry affinity groups such as AAREP, FIIRE, REA-L and others, as well as sponsoring education projects and scholarships.

“Recruiting and retaining talented people from diverse backgrounds and perspectives helps drive innovation in commercial real estate and life sciences,” Breakthrough Properties Chief Business Officer Susie Harborth said. “Regardless of the Supreme Court’s decision regarding affirmative action programs, there are things that private industry can and must do to expose an ever-widening pool of candidates to meaningful career opportunities and then offer them support and mentoring at every stage of their development.”