Anti-DEI Activists Target Goldman Sachs and JPMorgan Chase

In an unexpected turn of events, leading U.S. banks Goldman Sachs and JPMorgan Chase have found themselves in the crosshairs of right-leaning activist groups pushing them to abandon or shrink their diversity, equity, and inclusion (DEI) efforts. The Wall Street Journal reported on Wednesday that these groups, including the National Center for Public Policy Research, the National Legal and Policy Center, and the Heritage Foundation, each own small stakes in shares of the banks they are targeting and have submitted proposals challenging their business practices late last year.

The activists argue that the banks' policies leave them and their shareholders vulnerable to costly legal challenges. Shareholders could have a chance to vote on the proposals ahead of the banks' annual meetings this spring, although boards typically recommend shareholders vote against such measures. Similar proposals from conservative groups in the past have rarely exceeded two percent shareholder support.

JPMorgan Chase CEO Jamie Dimon and Goldman Sachs CEO David Solomon have both publicly stated their commitment to continuing their DEI efforts despite the pressure from activist groups. Dimon, in a CNBC interview at the World Economic Forum in Davos, said, "We're going to continue to reach out to the Black community, the Hispanic community, the LGBT community, the veterans community." Solomon, in a separate CNBC interview, stated that his company is attuned to what its clients are asking for and will continue to focus on promoting diversity, equity, and inclusion in their workforces and customer bases.

However, the activists have not been deterred. The National Center for Public Policy Research wants Goldman's board to conduct an independent audit analyzing the bank's legal and reputational risks stemming from its race-based initiatives, and is asking JPMorgan to consider abolishing its DEI program altogether. Ethan Peck, deputy director for the Free Enterprise Project at the NCPPR, said neither JPMorgan nor Goldman seem interested in reaching compromises to avoid the proposals going to a shareholder vote.

The cultural landscape has shifted, with President Donald Trump now leading a Federal government that favors conservative ideals, and the Supreme Court largely right-leaning. This opens the way for anti-DEI organizations to receive the Federal government's support in ending possible discriminatory policies. Trump has also signed an executive order against DEI, stating that "Illegal DEI and DEIA policies not only violate the text and spirit of our longstanding Federal civil-rights laws, they also undermine our national unity, as they deny, discredit, and undermine the traditional American values of hard work, excellence, and individual achievement in favor of an unlawful, corrosive, and pernicious identity-based spoils system."

The banks' DEI policies have been shown to have a positive impact on business outcomes, such as better financial performance, increased innovation, and improved employee engagement and retention. However, the activists' concerns about potential legal and reputational risks associated with these initiatives could lead to further scrutiny and potential backlash from shareholders.

In conclusion, the cultural shift towards anti-DEI policies could potentially impact the long-term financial performance of Goldman Sachs and JPMorgan Chase by affecting their ability to attract and retain talent, foster innovation, and maintain a positive reputation. However, the banks' CEOs have expressed their commitment to continuing their DEI efforts despite the pressure from anti-DEI activists. The outcome of this battle remains to be seen, but one thing is clear: the future of DEI in corporate America is at a critical juncture.