The new executive order aligns with the pressure mounting on several finance companies to dismantle their DEI efforts.
Right-leaning activist groups have been pushing Goldman Sachs and J.P. Morgan Chase to diminish or abandon such efforts, while other financial institutions are facing heat from activists accusing the firms of discrimination, according to reporting from The Wall Street Journal.
A spokesperson for the Heritage Foundation confirmed in a Jan. 27 email to P&I that it filed a proxy proposal to Citigroup, adding that the foundation is “exercising our rights as shareholders.” According to a letter from Citi, the proposal asked the financial institution’s board of directors to issue a report on how it oversees risks related to “surveilling or monitoring customers based on their political or religious status, views, or activities,” and “whether such discrimination may impact individuals’ exercise of their constitutionally protected civil rights.”
The National Legal and Policy Center and the National Center for Public Policy Research have also filed proxy proposals focused on dismantling DEI efforts at finance companies, the groups confirmed to P&I.
Luke Perlot, associate director of the National Legal and Policy Center’s Corporate Integrity Project, said that while the organization is targeting DEI at the corporate level, “we are excited to see the DEI pushback taking hold on the government side as well.”
On Jan. 20, Trump signed an executive order terminating all DEI programs in the federal government, specifically ending all DEI “mandates, policies, programs, preferences, and activities in the Federal Government, under whatever name they appear.”
Operations for the Washington-based National Gallery of Art, which maintains a $1.4 billion endowment, are funded by the federal government. The gallery closed its Office of Belonging and Inclusion as a result of the order, and reassigned people who were in the office to “already vacant positions elsewhere in the museum,” a spokesperson confirmed in an email to P&I.
Trump also signed an order on Inauguration Day revoking several executive actions issued by former President Joe Biden, including one titled “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.”
Ethan Peck, deputy director for the National Center for Public Policy Research’s Free Enterprise Project, said it’s likely some states will also take action targeting DEI, and he thinks “that additional pressure will get more companies to drop it as well.”
However, Jackson Lewis’ Thomas noted that even before Trump issued the executive order targeting universities, foundations and corporations, “you saw some entities take a step back from DEI, or modify their DEI initiative, and you also saw some entities actually doubling down on their DEI initiative,” and he anticipates seeing that continue.
Thomas added that it’s “unclear” how states and different organizations will react to the executive order just yet, as there’s still an aspect of “wait and see,” but he does expect the order to elicit legal challenges.
Differing views
Rep. Tim Walberg, R-Mich., who chairs the House Education and Workforce Committee, said in a Jan. 22 statement that he supports Trump’s recent executive orders for “dismantling DEI,” contending that “America’s savers and retirees have been forced to funnel their hard-earned money into underperforming funds to promote the Biden-Harris administration’s environmental and social justice agenda.”
However, New York City Comptroller Brad Lander, who is the custodian of the city’s five pension systems, pushed back on Trump’s Day 1 DEI-related orders and the assumption that funds supporting DEI initiatives don’t perform as well.
“In the comptroller’s office, we’re proud to have achieved strong pension fund returns — last year’s outperformance saved the city $1.8 billion, and our pensions are better-funded than ever — while significantly increasing the diversity of our asset managers,” Lander said in a Jan. 20 public statement. “Regardless of what happens in Washington, we will not cower or retreat in this work.”
Lander added that dismantling programs seeking to advance DEI on the same day as Martin Luther King Jr. Day was “especially insulting.”
The New York City Retirement Systems managed $286.4 billion in assets as of November. By the end of the 2024 fiscal year on June 30, 13.3% of the allocator’s then-$274.4 billion in assets were made to diverse and emerging managers.
Prepared for what was possible
At organizations where diversity is part of its mission, some had been preparing for increased DEI pushback in 2025.
Among those groups include the Oakland, Calif.-headquartered Robert Toigo Foundation, which offers scholarships for MBA programs as well as professional development for aspirant investment professionals from underrepresented communities.
In an August 2024 interview, President and CEO Nancy Sims told P&I that “it’s an exciting but very uneven time in our industry, as people are trying to determine how to advance initiatives that have the spirit of inclusion, and what will that look like more so in 2025.”
“For those of us who have been around for a very long time, there are always going to be ebbs and flows, but this time is obviously differentiated in many respects,” Sims said. “We’re all committed to continue to bring forward amazingly talented people. The key is what will that look like in the future, and how we will actually build strength across partnerships and — in some cases — enhancing our programs, modifying others. I just think everyone is in conversation.”
In light of MLK Day, the $8.8 billion W.K. Kellogg Foundation noted in a public statement on Jan. 23 that the organization “remains steadfast in our commitment to advancing racial equity and racial healing,” reiterating what President and CEO La June Montgomery Tabron said in a statement prior to Election Day.
“Our mission calls us to advance our healing work to build connections that honor our shared humanity,” the foundation added. “This work demands courage, truth-telling and a willingness to listen and discover the shared stories that reflect our shared values. It is also essential to creating the transformative change our communities so urgently need.”
Since the death of George Floyd nearly five years ago, asset managers have established offices and created roles dedicated to promoting DEI in their business.
Despite challenges posed by the 2023 Supreme Court ruling against affirmative action and backlash from conservative groups, asset managers such as T. Rowe Price have continued promoting inclusivity. Members of the industry have been honored for their work promoting DEI by organizations such as the National Association of Securities Professionals and the Defined Contribution Institutional Investment Association.
Raymone Jackson, T. Rowe Price’s global head of DEI and corporate responsibility, told P&I in a September interview that he believed firms committed to diversity efforts would find a way to maintain them, regardless of the election outcome.
“Election cycles are always going to have an impact on us as investment managers, but certainly as we think about the body of diversity, equity and inclusion, I’d like to hope that companies will still have leadership either way, to be able to decide how do we, how do we find, locate and deliver the best talent to deliver our mission to our clients every day,” Jackson said. “But I think we may have to work differently in either case.”
T. Rowe Price declined to comment on the Jan. 21 executive order. The publicly traded investment firm managed $1.63 trillion in assets as of Sept. 30.
