Legal Risks and ESG Implications in Media and Publishing: The Gannett Discrimination Case as a Warning Signal

The Gannett discrimination case, dismissed in August 2024 by a federal court in Virginia, has become a pivotal case study for media companies grappling with the legal and ESG risks of diversity, equity, and inclusion (DEI) initiatives. The lawsuit, brought by five former employees, alleged that Gannett’s 2020 “Inclusion Report” — which aimed to achieve racial and gender parity in its workforce — resulted in “reverse discrimination” against white workers through exclusionary hiring practices and promotion decisions tied to diversity goals [1]. While the court ruled the claims “vague and conclusory” and dismissed most allegations, the case underscores the growing legal scrutiny of DEI policies in the post-Students for Fair Admissions era [2]. For investors, the case highlights the delicate balance media companies must strike between advancing DEI objectives and avoiding litigation risks that could undermine ESG alignment and long-term liability management.

The Legal Landscape: From Aspirational Goals to Concrete Risks

The Gannett case is emblematic of a broader trend: the increasing legal challenges to workplace DEI programs. The court’s dismissal hinged on the absence of specific quotas or enforcement mechanisms in Gannett’s Inclusion Report, which outlined aspirational goals such as increasing representation of people of color in leadership by 30% [3]. This outcome aligns with the Supreme Court’s 2023 SFFA decision, which curtailed race-conscious admissions policies, signaling a heightened judicial skepticism toward race-based initiatives. However, the ruling also clarified that aspirational diversity goals, absent concrete enforcement, are not inherently discriminatory.

Yet, the case has left media companies in a precarious position. Legal experts warn that the pending Supreme Court decision in Ames v. Ohio Department of Youth Services could further redefine the boundaries of “reverse discrimination” claims, potentially raising the bar for plaintiffs from majority groups [4]. For media firms, this uncertainty necessitates a reevaluation of DEI strategies to ensure compliance with evolving legal standards while maintaining ESG credibility.

ESG Implications: Balancing DEI Commitments and Investor Expectations

The Gannett case also raises critical questions about ESG alignment. While DEI initiatives are a cornerstone of ESG frameworks, particularly under the EU’s Corporate Sustainability Reporting Directive (CSRD) and similar regulations, litigation risks can erode investor confidence. Research indicates that DEI-related signals, such as inclusive hiring practices and corporate statements of support, are positively correlated with ESG ratings and stock performance [5]. However, controversies or legal challenges, as seen in the Gannett case, can trigger reputational damage and higher debt costs, as creditors perceive increased risk [6].

Investors are increasingly scrutinizing how companies navigate these tensions. For instance, the Trump administration’s 2025 mandate for merit-based hiring and admissions policies has pressured media companies to either rebrand or scale back DEI initiatives [7]. Gannett’s decision to remove DEI language from its corporate website reflects this trend, yet such moves risk alienating stakeholders who prioritize diversity as a core ESG metric. The challenge lies in aligning DEI goals with legal compliance while maintaining transparency to avoid accusations of “greenwashing” or insincerity [8].

Investor Reactions and the Future of DEI in Media

The Gannett case has also amplified investor concerns about DEI-related litigation. Shareholder proposals opposing DEI initiatives have surged, with anti-ESG groups like the National Center for Public Policy Research (NCPPR) arguing that such programs expose companies to reputational and financial risks [9]. While these proposals often receive minimal support, they serve as a tool to pressure companies to justify their DEI strategies. For example, Target faced lawsuits and stock price declines after rolling back DEI programs, illustrating the potential financial consequences of abrupt policy shifts [10].

Media companies must now weigh the costs of litigation against the benefits of DEI. A 2023 analysis revealed that women and journalists of color in Gannett newsrooms still face significant pay gaps, suggesting that superficial DEI adjustments may not address systemic inequities [11]. This duality — between legal defensibility and substantive progress — requires a nuanced approach. Companies like Amazon and IBM have opted to retain DEI goals while rebranding initiatives as “belonging” or “inclusive leadership,” a strategy that mitigates legal risks without abandoning core objectives [12].

Conclusion: Navigating the Crossroads of Law, ESG, and Media Ethics

The Gannett case serves as a cautionary tale for media companies navigating the intersection of DEI, ESG, and legal risk. While the court’s dismissal provides temporary relief, it underscores the need for proactive risk management. Companies must ensure that DEI initiatives are both legally defensible and aligned with ESG expectations, avoiding the pitfalls of either overreach or underinvestment. For investors, the case highlights the importance of due diligence in assessing how media firms balance these priorities, as ESG ratings and long-term liability are increasingly intertwined in an era of heightened scrutiny.

As the legal landscape evolves, media companies that adopt transparent, data-driven DEI strategies — while remaining agile in response to regulatory shifts — will be best positioned to mitigate litigation risks and sustain ESG credibility. The Gannett case is not an endpoint but a signal: the path forward requires vigilance, adaptability, and a commitment to equity that transcends legal and market pressures.

Source:
[1] Court tosses journalists' 'reverse discrimination' challenge to Gannett's diversity policy [https://www.hrdive.com/news/court-dismisses-white-journalists-challenge-gannett-diversity-policy/727063/]
[2] Federal court dismisses one of first post-SFFA lawsuits alleging reverse discrimination [https://www.constangy.com/sharpen-your-focus/federal-court-dismisses-one-of-first-post-sffa-lawsuits-allegating-reverse-discrimination]
[3] Gannett beats claims of bias against white workers, for now [https://www.reuters.com/legal/litigation/gannett-beats-claims-bias-against-white-workers-now-2024-08-21/]
[4] The rise of “reverse” discrimination claims [https://www.constangy.com/sharpen-your-focus/the-rise-of-reverse-discrimination-claims]
[5] Investor Reactions to Diversity Reputation Signals [https://www.researchgate.net/publication/47464282_Investor_Reactions_to_Diversity_Reputation_Signals]
[6] ESG and the Cost of Debt: Role of Media Coverage [https://www.mdpi.com/2071-1050/16/12/4993]
[7] Libraries under siege: How Trump's cuts put community ... [https://www.usatoday.com/story/news/politics/2025/04/03/libraries-trump-federal-funding-cuts/82598580007/]
[8] Greenwashing trends point to increasing sophistication ... [https://www.thomsonreuters.com/en-us/posts/esg/greenwashing-trends/]
[9] Shareholders Clash over Diversity, AI and Climate [https://www.manifest.co.uk/boardroom-breakdowns-shareholders-clash-over-diversity-ai-and-climate-accountability/]
[10] Target Bet Against DEI and Lost. Why Are They Doubling Down? [https://jamaalglenn.substack.com/p/target-bet-against-dei-and-lost-why]
[11] Paying the watchdogs: Compensation, equity, and ... [https://centerforcooperativemedia.org/research/payequity/]
[12] The Buzz: How Companies Are Responding to Anti-DEI Backlash [https://pac.org/impact/the-buzz-how-companies-are-responding-to-anti-dei-backlash]