America’s foremost DEI shareholder activist warns that anti-diversity groups are forcing companies to underperform

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America’s foremost DEI shareholder activist warns that anti-diversity groups are forcing companies to underperform

The great corporate DEI rollback is well underway, as a

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—including

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and Pepsi—have made changes to their diversity and inclusion programs.

But Andrew Behar, CEO of the shareholder activist group As You Sow, believes the rhetoric around DEI retreats we’ve seen so far obscures a larger truth: “Companies are actually holding strong.”

In a recent interview with Fortune, Behar explained that his group has spent months meeting with the heads of businesses caught in the

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determined to blame everything from

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to

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on diversity efforts. As You Sow has also proposed

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at companies like John

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,

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, and Ford.

Based on his conversations with CEOs, Behar says he isn’t particularly worried about

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over the executives of multinational companies.

“Anyone who’s looking at the data, which the companies are, comes to the conclusion that greater diversity leads to financial outperformance,” he said.

For the past three decades, As You Sow has been using shareholder resolutions and direct engagement with companies to push for climate policies, and, more recently, social justice initiatives. But As You Sow is not alone in this pursuit, Behar is quick to point out. One of his group’s allies, Nia Impact Capital,

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to audit the company’s method for recruiting and retaining talent in light of accusations of racial discrimination, despite

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CEO Elon Musk’s much-publicized stance against DEI.

This interview has been lightly edited for length and clarity.

Have you been taken by surprise by recent anti-DEI fervor?

I’ve been surprised by the relentlessness of this administration to force companies to underperform.

How did we get here? 

Let me give you a little background. Around 2018, a group of shareholders came together and said, “We’re finding that companies with greater diversity in their management teams are outperforming financially.” We started taking a look at that, and we ended up writing a letter with 3,000 companies, representing $4 trillion of assets, signing on to say, “We think that disclosure of your diversity, equity, and inclusion information is material. We need it to make buy-sell decisions, and to know how to weight our portfolios.” That was the start of this.

We met with hundreds of companies and they pretty much all agreed. We’re talking about companies like [Northrop] Grumman. I remember meeting a 30-year ex-Navy guy who is working at Grumman and saying, “Yeah, we’ve got to have greater diversity. It’s why we perform so well.”

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In any case, some of the companies were more resistant, so we filed some shareholder resolutions.

Then there was this whole anti-ESG crusade, which grew out of the backlash to

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and

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. It’s a desperate attempt to hold the patriarchy in power. Along came these third-rate bloggers giving a ****** look at a company and going, “You’re too woke,” and the companies reacting.

What do you think of Robby Starbuck, the Tennessee-based online conservative influencer who has claimed credit for forcing companies to drop DEI? He is not a shareholder activist, but his online campaigns have boosted the anti-DEI movement.

He has no business threatening companies when their shareholders, the people who the board reports to, have spent years working with the company to get them on track for financial outperformance.

For example, Lowe’s had

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vote in favor of gender pay equality just a few years ago. Probably about $80 billion worth of shares voted for that. Then some blogger in Tennessee says, “I don’t like this.” And suddenly the company goes, “Oh, we’re going to ignore the people we report to and go with this guy.” So shareholders are troubled. We would like to understand the metrics by which the board came to that decision.

To see them reverse it, without any consultation, without any methodology, without any frankly, data, that’s troubling to us. We have to ask who’s really in charge, and whether we’ve got the right board of directors there.

What’s your plan for pushing back against the anti-DEI groups?

We are sitting down with the companies. For the most part, we find their basic tenet is: We need to do things that are going to be good for all stakeholders, especially for financial outperformance. But they made some adjustments to keep anti-DEI activists at bay.

We had three

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last week, just because they’re trying to figure it out. They want to sell their pickup trucks, but they also want to continue to have a diverse employee base, because they know that it leads to financial outperformance, so it’s tough for them.  

But we believe that management teams should be able to hire and promote people based on merit. We are really into meritocracy. What we find is that there are obstructions to people, to women and to people of color, that we’re trying to remove. So I just want to be clear about that. It’s not just a blanket, “Andy loves DEI.”

What sorts of responses do you expect to see from large companies on these issues?

I think

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, where 98% of shareholders agreed with management and voted against an anti-DEI resolution.

But these anti-DEI resolutions have never gotten more than 2%, because they’re bad for business. The other side is trying to use big government to manipulate market forces, which is never going to work. The anti-DEI groups are trying to inject politics where it doesn’t belong. This is about business and about the U.S. being competitive in the global markets.

I understand they’re isolationists, and they’re going to try to pull us out of all the global markets, but multinationals have a lot of power, and I don’t think they’re going to stand for it.

Why do these groups keep proposing anti-DEI resolutions? They want press coverage?

They want the press coverage. They also want to throw sand in the gears of capitalism. This is an anti-capitalist, anti-freedom, anti-democracy crusade that is being waged to try to suppress information and suppress shareholders from having the disclosure and the information they need to make good fiduciary decisions.

Ford and Lowe’s did not respond to a request for comment. Robby Starbuck told Fortune, “I’m in touch with the actual people businesses need to walk into their stores. Conservative consumers trust me and listen when I call out a brand for bad behavior.”

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