By: Chad Spitler, Founder and CEO, Third Economy

Risk mitigation is top of mind for U.S. corporate issuers in 2025, as the current federal administration attacks diversity, equity and inclusion, or “DEI”.

Just pick up a newspaper or scroll through LinkedIn and you’ll see hundreds of responses to corporate DEI commitments (or retractions) in reaction to recent legal challenges and political rhetoric.

DEI as a practice has come under fire. Critics contend that programs intended to assist people from historically disadvantaged groups do more to divide than to foster genuine inclusion, undermining fairness and hiring for merit or capability. Proponents believe that DEI leads to better financial results by creating cultures where different perspectives mitigate risk and drive innovation, and that helping uplift people is the right thing to do.

Companies are facing a dilemma – reframe or remove DEI initiatives to avoid attack (but risk disenfranchising stakeholders that support DEI) or stand strong with their beliefs (and risk potential attacks from the administration or other important stakeholders).

As with all corporate strategy, there isn’t a one-size-fits-all roadmap or playbook on how to manage this dynamic. Company decisions will be more nuanced, to make commitments that are best for their unique stakeholders and ultimately, their business. While the media may be quick to jump on any company update as a “retreat” from the tenets of DEI, many businesses are reframing their commitment to DEI as simply “inclusion” or “belonging”, to create workplace cultures that welcome everyone and to generate financial success.

In today’s highly divided world, can companies create cultures where both sides are valued, and their respective positions are heard?

Welcome to DEI 2.0, focused on inclusion and belonging for financial results, versus social impact.

Here’s what we can expect from companies in the era of DEI 2.0.

Companies will reflect on their values and how DEI aligns with their moral and ethical foundation.

The moral and ethical foundation of DEI is fairness, based on the belief that every individual possesses inherent worth and dignity, regardless of their identity or background. This foundation is not likely to significantly change for most companies.

However, companies will tailor (and potentially change) the strategies and communications around their values to fit their customers and key stakeholders, ensuring that these efforts reflect the priorities of the communities they serve.

What does this mean in practice? A bell curve of responses from companies across the board:

• Some companies will keep their existing programs and language in place. For select organizations, this means a continuity of trust with core customer and employee groups and a DEI strategy that remains unchanged, part of which involves lifting people up from historically disadvantaged demographics. This will be even more important for mission-driven organizations.
• Most will reposition their programs and their language. This represents businesses that would like to maintain trust with existing customer and employee groups that support DEI – but need to adjust their framing and approach in response to feedback from opposing groups. This is the most common outcome that we are seeing today: a move toward inclusion and belonging for all (tied to financial success) and away from the social impact objective.
• Some will roll-back programs entirely. For some organizations, particularly those who may have never bought in on the value of DEI, this represents retracting commitments entirely. This applies to companies answering to activist stakeholders in select geographic areas and/or those who cannot make the case for the business value of DEI in today’s environment.

Our advice:

Draw upon your code of ethics for guidance. These documents were developed by your predecessors and peers to ensure corporate integrity, and foster accountability to build trust and credibility with your stakeholders.

Don’t react to one stakeholder group while alienating another. Be inclusive to all. We are just now starting to see the spillover effects of corporations rolling back DEI programs – customer boycotts, employee lawsuits and other scrutiny. The backlash can often be just as intense as opposition to the initiatives themselves (Don’t believe me? Just ask Target these days!). Make sure that key stakeholders like employees or employee groups are fully considered before changing your course of action.

Even if diversity is “out”, inclusion is always “in”. While DEI is increasingly becoming weaponized, its core tenets are not. Inclusive environments lead to higher levels of innovation, creativity, and collaboration and diverse teams perform better when inclusion ensures that all voices are heard and valued. Figure out ways to include all your employees and create paths for growth for everyone.

Companies will be even more focused on connecting the dots between DEI 2.0 (inclusion and belonging) and financial value.

It will be more important than ever to make the link between a company’s approach to inclusion and belonging and long-term value creation.

Companies will need to evaluate initiatives, procedures, and programs to ensure they meet the objective of driving long-term financial resilience and performance. This will include linking initiatives to financial outcomes and revising communications (including policies, financial communications, job postings and reports) where needed, to better focus this point.

Integrating DEI 2.0 into core business strategies will allow for the full financial benefits of sustainability – which is always about helping companies to achieve competitive advantages, to capitalize on market trends, and to promote innovation.

The result? An organization that is more collaborative, better engaged, ready to meet challenges, and foster innovation.

Our advice:

Evaluate initiatives to ensure they meet the objective of financial value creation. Carry this through all your internal and external communication channels.

• Tools like materiality assessments are helpful to reinforce that your sustainability priorities are aligned with key stakeholder views.

Consider the long-term impact. Administrations change every 4-8 years and reacting to today’s political challenges may be detrimental to your long-term strategy and goals. Identify a lane and stay consistent.

Companies will make language changes to avoid legal scrutiny and overall politicization.

Whether announced publicly through a press release or scrubbed in the cover of night, companies will make shifts around how they discuss DEI programs moving forward. For some, this may simply be a rebrand of efforts or for others, a name change to reflect the complete overhaul of a program. In general, many companies are moving away from the language of social impact objectives, quotas, and goals.

Our advice:

Consider some of these shifts that we are seeing to promote a broader sense of inclusion:

• Programmatic names are changing from “DEI” or “DEIB” to “Belonging” or “Inclusion”
• Employee resource groups or “ERGs” are being expanded to “Affinity” groups, affirming any employee can participate
• “Diversity” is being broadened to cut across racial and gender lines (i.e. “first-generation college graduates” or “disadvantaged backgrounds”)
• “Pay equity” is being repositioned as a tool for employee retention

Keep all disclosures and communications around sustainability and DEI precise and clarify any nuance to ensure that all efforts can be tied to your overall business strategies.

Companies will continue to prioritize profit.

Like it or not, the DEI conversation has solidified that corporations’ biggest priority in the U.S. is driving profit – and that includes managing today’s political highwire.

While the past decade has seen some momentous shifts in our working culture (including the radical transformation of remote work), today’s DEI debates make clear that companies must balance multiple stakeholder groups in their pursuit of financial value.

Is this a bad thing? Not necessarily ¬– our view is that this creates a more transparent environment in which all key stakeholders have a better sense of the values and the ideals of the company.

2025 has proven to be a major inflection point for U.S. companies of all size. But instead of looking at this moment as an abandonment of sustainability principles, we could view this shift as an opportunity to advance DEI to be ever more inclusive, and to better tie inclusion to long-term financial performance and innovation.

DEI as a construct lives on in many of the reframed programs and initiatives in 2025. The language may be different, but the foundational values remain the same for the companies doing it right – fairness and creating cultures where people feel comfortable, celebrated and able to do meaningful work that enables financial success for all.

If our programs unintentionally divide people on either side, then we need to be open to constructive feedback and continuous improvement until everyone feels included.