Good morning. If you search for “DEI” (Diversity, Equity, and Inclusion) on social media sites like LinkedIn, you’ll find a multitude of posts vehemently praising or criticizing DEI practices in the workplace. DEI has also seeped into the political arena, with some companies abandoning DEI while others forcing it forward. While the debate is lively, the business case for DEI has been a focus of research for years, and studies continue to point to DEI leading to improved financial outcomes.
Agricultural machinery manufacturer John Deere is one of the latest companies to distance itself from DEI efforts. The company posted on July 16 that it will no longer “participate in or support outside social or cultural awareness parades, festivals or events” and will “ensure the absence of socially motivated messaging” in accordance with federal and local laws. The company added that “diversity quotas and pronoun identification have not been, and will not be, company policy.” John Deere also ended a series of corporate diversity and climate initiatives.
Meanwhile, JPMorgan Chase CEO Jamie Dimon said at a Women’s Index-sponsored event at the World Economic Forum in January that the bank “is not going to back away from diversity efforts, despite all the ridiculous ESG, DEI groups coming at us.” luck“Let me start by saying that I’m a passionate, patriotic and unwoke capitalist CEO,” Dimon said, according to reporters at the time.
During the debate, Dimon acknowledged the Supreme Court’s strikedown of affirmative action and said, “We respect the Supreme Court’s decision and will follow the law.” The company plans to continue to comply with the law, but otherwise there will likely be little change regarding its DEI program. JPMorgan Chase is ranked 12th among the Fortune 500 companies.
Big organisations are also speaking out. luckEmma Burley of HR recently reported in CHRO Daily that the Society for Human Resource Management (SHRM), the world’s largest human resources group, announced it was removing “equity” from its approach and shifting to “inclusion, equity and diversity.” In a July 9 LinkedIn post, SHRM wrote, “By emphasizing inclusion first, we aim to address current shortcomings in DE&I programs that have led to growing social backlash and polarization.” Burley noted that the reaction from many HR professionals was “swift and fierce.”
But while some are grappling with whether dropping the “E” from DEI will make it more acceptable, many business leaders believe the practice is still essential. The report, released in February by Workday (a sponsor of CFO Daily), is based on a survey of 2,600 business leaders around the world, including CEOs and leaders in HR, finance, IT, and sales. 78% said the importance of DEI has increased in the past 12 months, and 85% say they have allocated a budget for DEI initiatives, an 11% increase from last year’s survey. Top reasons cited for supporting DEI include positive impact on business success and outcomes (39%), increased employee engagement (40%), staff well-being (41%), and attracting and recruiting a diverse workforce (43%).
Seventy-five percent of consumers say diversity and inclusion, or the lack of it, influences their purchasing decisions, according to a report released July 16 by London-based marketing data and analytics company Kantar. Kantar’s Brand Inclusion Index 2024, released this month, is based on a survey of more than 23,000 people in 18 countries. And inclusion is something many employees want.
According to McKinsey, companies with diverse leadership teams continue to be associated with higher financial returns. The firm’s annual report, released in November, is a broad and comprehensive snapshot of the state of DEI, based on responses from 1,265 companies across 23 countries. Financial outperformance is calculated as the likelihood of beating the median profitability of other companies in the same industry and region. In 2015, companies in the top quartile for gender diversity on their executive teams were 15% more likely to experience financial outperformance compared to those in the bottom quartile. In 2023, that figure reached 39%.
The strong business case for ethnic diversity in executive teams has also remained consistent over time, with those in the top quartile of ethnic representation being 39% more likely to outperform than those in the bottom quartile, according to the report.
I remember meeting Maria Ferraro of Siemens Energy in 2021. Ferraro holds two top executive roles at the technology company, CFO and chief inclusion and diversity officer, and sees them as interconnected. As CFO, she told me, she can “concretely” demonstrate the fact that inclusion and diversity are fundamental to sustainable value creation.
Cheryl Estrada
cheryl.estrada@fortune.com
The following section of CFO Daily was edited by Greg McKenna..
Leader board
Tim Foote Foote has been promoted to chief financial officer of BlackBerry (NYSE: BB) effective immediately. BlackBerry announced that he will succeed Steve Lai, who has served as CFO since 2019 and is leaving the company to pursue other opportunities outside the company. Foote joined BlackBerry following the Canadian company’s acquisition of Good Technology in 2015 and most recently served as CFO of the cybersecurity division.
Brad Knotweed Tade has been promoted to chief financial officer and treasurer of ADMA Biologics (Nasdaq: ADMA), a biopharmaceutical company, effective immediately. The change comes five months after the company announced that former CFO Brian Lentz was moving to a consulting role. Tade joined ADMA last June as vice president of financial operations and has more than 20 years of experience in the medical device and pharmaceutical industries.
Big Deal
Of 650 IT and cybersecurity professionals surveyed by information security firm Optiv, almost 60% said their organisation’s cyber budget had increased year-on-year, according to the company’s annual Cybersecurity Threat and Risk Management report. While the recent global IT outage was caused by a failed software update rather than a cyber attack, it exposed the vulnerability of businesses, public services and other organisations to such outages.
61% of respondents said their company had experienced a data breach or cybersecurity incident in the past two years, and 55% said they had experienced four or more incidents in that period.
“As security budgets increase, many organizations are also beginning to recognize the need to make smart investments in evaluating processes and governance to ensure compliance,” said Jason Lewkowicz, executive vice president and chief services officer at Optiv.
Going deeper
“This AI tutor could make humans 10 times smarter, says author” is a new article promoting a recent report from the World Economic Forum. Shaping the future of learning: The role of AI in Education 4.0Squirrel AI CEO Derek Haoyan Lee believes the company’s massively adaptive model (LAM) can “mimic the world’s best teachers” and help close education gaps around the world. According to HolonIQ analysis, global annual spending on AI and virtual reality in education is expected to grow from $1.8 billion in 2018 to $12.6 billion by 2025.
Stories I’ve heard
“Former US President Donald Trump has stated that he wants a weaker dollar, but his core policies (immigration, tariffs, taxes) suggest a stronger dollar.”
“The outlook for the FX rate is very different,” Thierry Wisman, global currency and rates strategist at Macquarie, said in a client note on Monday. luck report.
