Key Points:

• DEI Retraction: Companies are pulling back DEI initiatives due to concerns about merit and qualifications.
• Investor Pressure: Investors worry DEI and ESG are harming company performance.
• Long-Term Impact: DEI may not return soon due to strong pushback.
• As good as Costco is, it’s not as good as “the Next Nvidia”. Click here now to see what the hype is all about.

Doug and Lee discuss the recent trend of companies walking back their Diversity, Equity, and Inclusion (DEI) initiatives. They reflect on how DEI was once seen as a major transformative force within corporations, both internally and externally. However, pushback began when unqualified individuals were placed in positions due to DEI mandates, raising concerns among investors about prioritizing ideology over merit. They also note how the backlash against DEI is part of a broader pushback against progressive initiatives like ESG (Environmental, Social, and Governance). Companies like Harley Davidson (NYSE: HOG), Lowe’s (NYSE: LOW), and Ford (NYSE: F) have turned away from these initiatives as they face more pressing challenges, leading Doug and Lee to believe that DEI may not see a resurgence in the near future.

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Edited Video Transcript:

All right, so we have this movement of companies walking back DEI.

Now, we’ve got to remember that it’s not that many years ago that when this was a big deal, I mean, this was considered a way that corporations were going to be transformed in terms of, you know, the way that they did business, the way that they did business inside the companies and they did business outside the companies.

And if you didn’t comply.

Listen, yeah.

I mean, it’s like a lot of the green stuff.

Here’s the thing.

What happened?

You know, what happened?

I think, Doug, in many cases, the pushback started when unqualified people were put into positions they weren’t qualified for.

And then when they would try to make the explanation, well, we have to pick this person because of our DEI rules.

And then people were like, what about the rules of putting in the person who’s most qualified for the job?

Well, and it seems to me that investors sort of, I don’t know, caught onto this.

And they were asking the question of, well, I put money into your company and you’re telling me that you’ve decided there’s a set of rules that keeps the best people out of the best jobs.

I bought your stock.

I mean, there’s some investor pushback too.

Especially to the big boys, to like BlackRock and Fidelity and Vanguard.

People were like, you have a fiduciary responsibility to make sure that the companies that your mutual fund owners have, you know, that you’re buying the best company and they aren’t being ruled by a set of, you know, for lack of left or progressive, let’s say left or progressive, but progressive ideals like that when you’re supposed to be responsible for being a fiduciary.

This is sort of like what has almost disappeared now, which is ESG.

I mean, you know, you now have these initiatives that, I think the idea was genuinely when these movements started is that these would be for the social good.

The ideas behind these had merit.

Yeah, I think it did.

Yeah, absolutely.

But what’s happening is that commerce is trumping merit.

Ultimately, over time, people have made the decision that, you know, it’s good for people, it’s good for the environment, but that’s not the, I’m an investor.

I’m not in the business of helping the environment.

Unfortunately, in some ways, I’m not in the business of helping groups of people who may not be as well off normally as other groups of people.

The pushback here is not just DEI.

This is a wave of pushback against things that have happened in the last year.

And, you know, when it started and, you know, that wasn’t all that long ago, it kind of started to get a little bit of traction before 2020.

But after the administration changed, it really got some traction.

The thing is, it’s hit big American companies.

You know, Harley Davidson, whose CEO is European, I believe, tried to initiate this stuff and the hardcore Hogg owner is a, you know, hard charging American, in many cases, blue collar, in many cases, ex-military, are Harley riders.

And this guy just got slammed and the stock got slammed.

But it wasn’t just them.

I mean, Lowe’s, you know, the big box store.

Both Lowe’s and Hogg got hit.

And your favorite company, Ford Motors.

Let’s take Ford as an example.

Ford, I think, views itself as one of the most progressive companies in the world when it comes to the way they treat their employees.

You know, it’s the old sort of we’re the family, we’re rich, we’re going to treat everybody else well.

And I mean, they turned their back on this.

They’ve totally turned their back on because as we’ve discussed ad nauseum, they have problems a lot bigger than DEI that they have to deal with and deal with now.

I get the impression that these things have gone away.

I don’t think there’s like a next cycle several years down the road when these things are suddenly embraced again.

I think- I think that the pushing, they’ve been pushed out so hard that they’re not going to come back.

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