DEI and the New Reputation Risk Frontier
By Ali Bien-Aime
In today’s volatile business landscape, diversity, equity, and inclusion (DEI) efforts have highlighted the tension between political pressure and public backlash, becoming a key axis of reputational risk. The Q1 2025 Reputation Risk Index™ from Global Situation Room (GSR) confirms what many communications and corporate affairs leaders already sense: backlash against DEI is now a defining issue in the reputational risk environment.
The Index, developed in partnership with GSR's Global Risk Advisory Council—a group of over 100 former world leaders, public affairs veterans, and multinational executives—tracks how companies are affected by a rapidly shifting political and cultural climate. DEI programs, once a differentiator, are now under increased scrutiny. Companies that once trumpeted their commitments are facing pressure from all sides: from the Trump Administration threatening legal action to activists and consumers holding them accountable for perceived retreat.
Backlash to the Backlash
Few companies illustrate the reputational stakes of shifting DEI posture better than Target. After years of investment in racial equity initiatives, including a public $2 billion pledge to support Black-owned businesses, Target rolled back its programming this year. This included ending its REACH program and rebranding its Supplier Diversity initiative. The response was swift. A 40-day boycott organized by church and civil rights leaders captured national headlines. Target lost $12 billion and its stock price dropped by over $27. That Target is getting sued for allegedly misleading investors about boycott risks with regards to their pro-DEI campaign in 2023, which resulted in a smaller boycott, could lead one to assume that more investor lawsuits over Target’s anti-DEI swing are in Target’s future. The initial 40-week boycott is being extended indefinitely as Target fails to meet activists’ demands and former customers discover alternative stores, like Costo, which has kept DEI initiatives and profited. There’s no end in sight. Then there’s the case of Disney, which rolled back its programs, but not to the satisfaction of the administration, which still investigating them.
Target’s experience demonstrates a key insight from the Reputation Risk Index: reputational harm does not only arise from what companies do, but also from what they undo, especially if done abruptly or without engagement from affected communities.
Reframing, Not Retreating
Council members Isabel Guzman and Brett Bruen emphasized in the Q1 report briefing that the solution is not to abandon DEI, but to reframe and reinforce it. Guzman, former Administrator of the Small Business Administration, argued that companies must continue to serve increasingly diverse customer and employee bases. Bruen, a former White House director of global engagement, warned that companies pulling back on DEI risk alienating their core stakeholders. Both speakers noted that language matters. Some companies are finding success by dropping politically charged labels while preserving the intent of their programs. Others are deepening behind-the-scenes partnerships with affected communities while dialing down public rhetoric. This quiet consistency, they argue, may be more sustainable than splashy commitments in a polarized environment.
Reputation Resilience through Strategic Engagement
Bruen offered a practical framework: companies should define a few areas where DEI aligns directly with business strategy, such as safety, mental health, or access to opportunity, and focus resources there. For instance, LGBTQ inclusion efforts framed around employee wellbeing or consumer safety tend to withstand political turbulence better than those based solely on identity.
The Reputation Risk Index notes that long-term trust is built through relationships, not press releases. Brands that maintained ties with communities before moments of crisis, like Levi Strauss with racial equity groups, weathered recent storms more effectively than those perceived to be jumping on trends.
Preparing for Q2 and Beyond
With legal challenges to DEI gaining traction and new executive orders targeting university and corporate programs, companies must prepare for sustained reputational pressure. Guzman warns that demographics are destiny: as the U.S. continues to diversify, market share and workforce viability will depend on inclusive engagement. The economic power of minority communities is not going away, Guzman noted.
In a reputational landscape where value can be lost in days and recovered only over years, organizations must balance caution with conviction. The message from the Index is clear: DEI remains a reputational risk—but also a reputational opportunity. Navigating it requires strategic clarity, authentic communication, and long-term investment in the communities to which companies are trying to give back.
