As the DEI debate rages on, research keeps pointing to the business benefits

Farm equipment maker John Deere is one of the latest companies to distance itself from DEI efforts. The company posted on X on July 16 that it would no longer “participate in or support external social or cultural awareness parades, festivals or events,” and will “ensure the absence of socially-motivated messages” in compliance with federal and local laws. The company added that “the existence of diversity quotas and pronoun identification have never been and are not company policy.” John Deere also ended an array of its corporate diversity and climate efforts. 

Meanwhile, JPMorgan Chase CEO Jamie Dimon affirmed the bank isn’t retreating from its diversity efforts despite the “ridiculous ESG, DEI groups coming at us,” he said in January at an event hosted by the Female Quotient at the World Economic Forum, Fortune’s Ruth Umoh reported. “I’m going to start by telling you that I’m a full-throated, red-blooded, patriotic, unwoke, capitalist CEO,” Dimon said.

During the discussion, Dimon acknowledged the Supreme Court’s revocation of affirmative action, stating, “They spoke, we’ll salute, we’re going to follow the law,” he said. The firm plans to remain compliant, otherwise, little will change in regard to DEI programs. JPMorgan Chase is No. 12 in the Fortune 500. 

Major organizations are also weighing in. Fortune’s Emma Burleigh recently reported in CHRO Daily that the Society of Human Resource Management (SHRM), the world’s largest human resources group, announced that it would be dropping “Equity” from its approach to “Inclusion, Equity and Diversity.” SHRM wrote in a LinkedIn post on July 9: “By emphasizing Inclusion-first, we aim to address the current shortcomings of DE&I programs, which have led to societal backlash and increasing polarization.” Burleigh noted the reaction from many HR practitioners was “swift and furious.”

But as some grapple with whether dropping the “E” in DEI will make it more acceptable, there are many business leaders who still see the practice as essential. A report by Workday (a CFO Daily sponsor) released in February is based on a survey of 2,600 global business leaders, such as CEOs and leaders from HR, finance, IT, and sales. Seventy-eight percent say the importance of DEI increased in the past 12 months, with 85% stating they have a budget for DEI initiatives—an increase of 11% compared to last year’s survey. Some of the top reasons for supporting DEI: positively impacting business success and results (39%); improved employee engagement (40%); staff well-being (41%); and attracting and recruiting a diverse workforce (43%).

Regarding consumers, 75% say that diversity and inclusion—or a lack thereof—influence their purchase decisions, according to a July 16 report by Kantar, a London-based marketing data and analytics firm. Kantar’s Brand Inclusion Index 2024, released this month, is based on a survey of more than 23,000 people in 18 countries. And inclusion is what many employees want.  

Companies with diverse leadership teams continue to be associated with higher financial returns, according to McKinsey. An annual report released by the firm in November is an extensive and comprehensive snapshot of the state of DEI, based on 1,265 companies in 23 countries contributing. Financial outperformance is calculated as the likelihood to place above the median profitability of other companies in the same industry and region. In 2015, top-quartile companies in gender diversity on executive teams had a 15% greater likelihood of financial outperformance versus their bottom-quartile peers; in 2023, that figure hit 39%.

A strong business case for ethnic diversity in executive teams is also consistent over time, with a 39% increased likelihood of outperformance for those in the top quartile of ethnic representation versus the bottom quartile, according to the report.

I remember meeting Siemens Energy AG’s Maria Ferraro back in 2021. Ferraro holds two C-suite positions at the technology that she believes are intertwined—CFO and chief inclusion and diversity officer. In her CFO role, Ferraro can provide “tangibility” of the fact that inclusion and diversity are fundamental for sustainable value creation, she told me. 

Sheryl Estrada
sheryl.estrada@fortune.com

The following sections of CFO Daily were curated by Greg McKenna.

Leaderboard

Tim Foote was promoted to chief financial officer of Blackberry (NYSE: BB), effective immediately. He succeeds Steve Rai, who has been CFO since 2019 and is leaving to pursue other opportunities outside the company, Blackberry said. Foote joined Blackberry following the Canadian company’s acquisition of Good Technology in 2015 and most recently served as CFO of the cybersecurity division.

Brad Tade was promoted to chief financial officer and treasurer of ADMA Biologics (Nasdaq: ADMA), a biopharmaceutical company, effective immediately. The move comes five months after the company announced former CFO Brian Lenz would transition to a consulting role. Tade joined ADMA last June as vice president of financial operations and has over twenty years of experience in the medical device and pharmaceutical industries.

Big Deal

Nearly 60% of 650 IT and cybersecurity professionals surveyed by information security firm Optiv said their organizations’ cyber budgets had increased year-over-year, according to the company’s annual Cybersecurity Threat and Risk Management Report. Though the recent global IT outage resulted from a failed software update, not a cyberattack, it exposed the vulnerability of companies, public services and other organizations to such disruptions.

Sixty-one percent of respondents said their company had experienced a data breach or cybersecurity incident in the past two years, with 55% experiencing four or more such incidents in that period. 

“As we see security budgets increasing, many organizations are also recognizing the need to make smart investments in process and governance assessments to ensure compliance,” said Jason Lewkowicz, an executive vice president and the chief services officer at Optiv.

Going deeper

“This AI tutor could make humans 10 times smarter, its creator says,” is a new article from the World Economic Forum promoting its recent report, Shaping the Future of Learning: The Role of AI in Education 4.0. Squirrel AI CEO Derek Haoyang Li believes his company’s large adaptive model (LAM) can “imitate the best teacher in the world” and help address education disparities across the globe. Annual worldwide spending on AI and virtual reality in education is predicted to rise from $1.8 billion in 2018 to $12.6 billion by 2025, according to an analysis from HolonIQ.

Overheard

“Former U.S. President Donald Trump has expressed a desire for a weaker USD, but his core policies (on immigration, tariffs, taxes) point to a stronger USD.”

— Thierry Wizman, Macquarie’s global foreign exchange and rates strategist, on fears that Trump may seek to artificially weaken the U.S. dollar if elected.