Diversity, Equity and Inclusion is not a new concept. It has been embedded in American corporate and legal life for more than seven decades, shaped by executive orders, civil rights legislation, and decades of workplace policy. What is new is the intensity of the backlash against it, and the emergence of a direct corporate alternative.
For investors who track Corporate Social Responsibility and ESG, the DEI debate is not a sideshow. How companies approach workforce diversity is a measurable component of the social pillar of ESG analysis. The direction that debate takes will affect how companies are evaluated, how they attract talent, and ultimately how they perform.
The legal foundation for workplace diversity was laid in the middle of the 20th century. President Truman's Executive Order in 1948 guaranteed equal access and treatment for individuals of all races within the armed forces. The Civil Rights Act of 1964 extended that principle to the private sector, making it illegal for the first time to discriminate in hiring and promotion based on race, gender, national origin, or religion, with age protections following later.
As a direct response to those laws, companies developed diversity training programs intended to help employees adapt to increasingly integrated workplaces. That practice has evolved continuously ever since, expanding into what is now broadly called Diversity, Equity, Inclusion and Accessibility, or DEIA.
Despite the legal framework and decades of corporate programs, many observers argue that meaningful progress has been slow and uneven, a point of frustration shared across the political spectrum, though for very different reasons.
The most visible challenge to DEI in recent years has come not from critics arguing that diversity is unimportant, but from those arguing that demographics should play no role in hiring decisions at all. That position has coalesced around a new acronym: MEI, standing for Merit, Excellence and Intelligence.
The term was popularized by Alexandr Wang, chief executive of Scale AI, and has drawn prominent support including from Elon Musk. As Wang described it on his company's website, MEI means hiring the best candidates for open roles without considering demographics, with the argument that a process based on merit will naturally yield a variety of backgrounds and perspectives on its own, according to The Wall Street Journal.
"We will not pick winners and losers based on someone being the 'right' or 'wrong' race, gender, and so on." — Alexandr Wang, Scale AI
MEI has spread from tech into other industries. The Wall Street Journal reported that companies from technology to agriculture are dialing back DEI efforts in favor of this alternative framework, a shift that carries significant implications for hiring practice, corporate culture, and how companies represent themselves to investors and employees alike.
A 2023 Pew Research Center study offers a useful snapshot of where public opinion stands. Fifty-six percent of workers surveyed said focusing on DEI in the workplace is a good thing. But the numbers reveal a more divided picture underneath that headline figure.
Women support DEI at higher rates than men: 61 percent of women versus 50 percent of men view workplace DEI efforts favorably. The partisan divide is sharper still. Among Democratic and Democratic-leaning workers, 78 percent say DEI is a good thing. Among Republicans and Republican-leaning workers, that figure drops to 30 percent, according to Pew.
The survey also found that relatively few workers place high personal importance on workplace diversity. Roughly a third say it is extremely or very important to work alongside a mix of employees of different races and ethnicities, and similar shares express that about age diversity and gender balance. Those numbers suggest that while DEI is broadly supported in principle, its salience varies considerably by individual experience and political orientation.
At the same time, the data makes clear that structural inequalities persist. By double-digit margins, more respondents say being a woman, being Black, or being Hispanic makes it harder to succeed where they work, compared with those who say it makes it easier. Being White or being a man, by contrast, is more often identified as an advantage.
Amid the conflict, the Wall Street Journal identified one area of convergence: the problem of unconscious bias. The disagreement is over what to do about it. DEI proponents argue that structured diversity initiatives force leaders to examine their hiring processes and work to eliminate implicit bias. MEI advocates agree that hidden biases are a problem, but frame them primarily as a threat to hiring quality rather than a barrier to workforce diversity.
Research supports the DEI side of that argument. A study published by the National Bureau of Economic Research found that DEI initiatives that push leaders to scrutinize their processes for implicit bias could produce substantial benefits, according to co-author Evan Rose.
Human-resources professionals warn that as DEI goals fade and MEI principles take their place, biases could quietly re-enter hiring decisions, particularly in recruitment practices that historically underrepresented communities already struggle to access.
Jeffrey Artis, CEO of Genesys Works, places roughly 800 high school seniors, 93 percent of them people of color, into internships at major companies each year. He has watched this debate cycle through the corporate world before.
"The rhetoric changes every five years. What doesn't change is companies' need for the best talent." — Jeffrey Artis, CEO, Genesys Works
That observation cuts to the center of the debate. MEI proponents argue that removing demographic considerations produces better hires. DEI proponents argue that without intentional outreach, the talent pipeline itself remains narrow, and that the best candidate in a limited pool is not the same as the best candidate available. Both sides claim the mantle of meritocracy. How companies resolve that tension will shape their workforce, their culture, and their standing with an increasingly values-conscious investor base.
For values-based investors, the DEI debate is a live ESG issue. The social pillar of ESG analysis encompasses labor practices, workforce diversity, and equal opportunity, all of which are directly affected by how companies respond to the current political pressure. Companies that quietly roll back DEI commitments while maintaining ESG marketing language will face growing scrutiny from analysts and shareholders who track these metrics.
The question is not simply which acronym a company uses. It is whether its practices produce a workforce that reflects the full range of available talent and whether its culture supports the people it hires once they arrive.
Monitor how companies in your portfolio characterize their workforce diversity commitments in annual ESG reports and proxy statements. Watch for changes in language from DEI to MEI or similar reframings, and evaluate whether underlying practices change alongside the terminology. Track how institutional investors and proxy advisors respond to companies that reduce or eliminate diversity initiatives, as that response will shape corporate behavior more than political rhetoric alone.
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References:
U.S. Department of Labor, Office of Labor-Management, "History of DE&I" https://www.dol.gov/agencies/olms/deia/history
Ibid.
Borchers, Callum, The Wall Street Journal, "Merit, Excellence and Intelligence: An Anti-DEI Approach Catches On," 7/24/24 https://www.wsj.com/lifestyle/workplace/dei-catches-on-merit-intelligence-
Minkin, Rachel, Pew Research Center, "Diversity, Equity and Inclusion in the Workplace," 5/17/23 https://www.pewresearch.org/social-trends/2023/05/17/diversity-equity-and-inclusion-in-the-workplace/
Borchers, Callum, The Wall Street Journal, "Merit, Excellence and Intelligence: An Anti-DEI Approach Catches On," 7/24/24