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Executive Branch Guidance, and New Glass Lewis Policy, on Corporate DEI Practices
On February 5, 2025, the U.S. Department of Justice (DOJ) and the U.S. Office of Personnel Management (OPM) issued internal memoranda (the “Memoranda”) providing guidance relating to implementation of the Administration’s Executive Orders (EOs) on diversity, equity, inclusion, and accessibility (DEI) policies and practices at government agencies and private-sector companies. The DOJ has been directed […]
Gail Weinstein is a Senior Counsel, Philip Richter is a Partner, and Steven Epstein is the Managing Partner, at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, and Steven J. Steinman.
On February 5, 2025, the U.S. Department of Justice (DOJ) and the U.S. Office of Personnel Management (OPM) issued internal memoranda (the “Memoranda”) providing guidance relating to implementation of the Administration’s Executive Orders (EOs) on diversity, equity, inclusion, and accessibility (DEI) policies and practices at government agencies and private-sector companies. The DOJ has been directed to issue a report by March 3, 2025 with further specific recommendations on how the government will discourage private sector “illegal DEI.” On February 19, 2025, proxy advisory firm Glass Lewis sent a letter to its clients stating that, in light of the Administration’s approach to DEI, it is re-evaluating its DEI-related voting guidance.
Key Points
- Private-sector companies may be criminally “investigated and punished” for their DEI practices. The Memoranda are extensive in their breadth and detail. Most notably, they indicate that the DOJ will be investigating (civilly and criminally) DEI practices at privatesector companies and will be engaging in “litigation activities” to deter DEI practices at such companies. The memoranda also indicate the Administration’s views with respect to certain specific DEI practices.
- Glass Lewis will be issuing new voting guidance relating to DEI. The proxy firm stated in its letter to clients that it will issue new guidance on March 3, 2025. With respect to institutional investors who “remain committed to the value of diversity,” Glass Lewis stated that, given the Administration’s position, it may not be “fully possible” for Glass Lewis to support those investors’ voting preferences.
- Companies will be subject to uncertainty relating to DEI for some time—given a marked lack of clarity in the EOs and the Memoranda; pending litigation challenging the EOs; and pending changes in proxy advisors’ guidelines. As a result, companies may face difficult choices with respect to whether, when, and how to revise, limit, or eliminate their DEI policies and practices in response to the EOs. See “Practice Points” below.
- Companies should keep apprised of DEI-related developments—including the expected March 3, 2025 DOJ report and Glass Lewis guidance; any further DEI-related guidance from the Administration; any announced investigations or cases the government actually brings against companies or others with respect to their DEI practices; any developments in pending (and any future) DEI-related litigation; and any emerging consensus or general practice among peer companies with respect to DEI.
