NEW YORK (AP) — Walmart’s sweeping rollback of its diversity policies is the strongest indication yet that a profound shift is taking place among American companies that are reevaluating the legal and political risks associated with bold programs to support historically underrepresented groups.

The changes announced by the world’s largest retailer Monday followed a series of legal victories by conservative groups who have filed a series of lawsuits against corporate and federal programs aimed at uplifting minority- and women-owned businesses and workers.

The retreat from such programs took shape with the election of former President Donald Trump, whose administration is certain to make the dismantling of diversity, equity, and inclusion programs a priority. Trump’s new deputy policy chief will be his former adviser Stephan Molenaarwho leads a group called America First Legal that has aggressively challenged companies’ DEI policies.

“There has been a lot of risk reassessment looking at programs that could be considered reverse discrimination,” said Allan Schweyer, principal investigator at the Conference Board’s Human Capital Center.

“This is another domino falling and it’s a pretty big domino,” he added.

Among other changes, Walmart said it will no longer prioritize suppliers owned by women or minorities. The company also will not renew its five-year commitment to a racial equality center created in 2020 after the police killing of George Floyd. And it pulled out one prominent gay rights index.

Schweyer said the biggest trigger for companies making such changes is simply a reassessment of their legal risks, which began after US Supreme Court ruling in June 2023 that ended affirmative action in college admissions. Since then, conservative groups using similar arguments have won legal victories against various diversity programs, especially those that steer contracts to minority- and women-owned businesses.

Most recently, the conservative Wisconsin Institute for Law & Liberty secured a victory in a case against the U.S. Department of Transportation over its use of a program that gives priority to minority-owned businesses when it awards contracts.

Companies face significant legal risk if they continue with DEI efforts, said Dan Lennington, deputy counsel at the institute. His organization says it has identified more than 60 programs within the federal government that it considers discriminatory, he said.

“We have a legal landscape across the entire federal government, all three branches – the U.S. Supreme Court, Congress and the President – ​​are all now firmly focused toward equality of individuals and individualized treatment of all Americans, rather of diversity, equity and inclusion, treating people as members of racial groups,” Lennington said.

The Trump administration will also likely directly target DEI initiatives through executive orders and other policies that impact private companies, especially federal contractors.

“The impact of the election on DEI policy is enormous. It cannot be overstated,” said Jason Schwartz, co-chair of the Labor & Employment Practice Group at law firm Gibson Dunn.

As Miller returns to the White House, rolling back DEI initiatives will likely be a priority, Schwartz said.

“Companies are trying to find the right balance to make it clear that they have an inclusive workplace where everyone is welcome, and that they want to bring in the best talent, while at the same time trying not to alienate different parts of their employees and customer base. who might feel one way or another. It is an almost impossible dilemma,” Schwartz said.

Marc Morial, CEO of the National Urban League, a civil rights group that has worked with Walmart in the past on diversity and inclusion issues, called the company’s withdrawal from DEI “stunning” and “unexpected.”

“This is contrary to the Walmart I know,” said Morial, who argued that DEI policies are how organizations ensure compliance with federal anti-discrimination laws such as the Civil Rights Act of 1964, and that any suggestion of favoritism or preferential treatment “is truly defamatory of what DEI stands for.”

He said Walmart would see “a strong message” in the decision, but that civil rights leaders are “very interested in having a dialogue first and foremost” with Walmart executives.

A recent Pew Research Center survey found that employees are divided on the benefits of DEI policies. While still generally popular, the share of employees who said focusing on diversity in the workplace was mostly a good thing fell to 52% in the October survey, compared to 56% in a similar survey in February 2023 Rachel Minkin, a research associate at Pew, called it a small but significant shift in a short time.

There will be more companies pulling back from their DEI policies, but it likely won’t be an across-the-board pullback, says David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion and Belonging at New York University.

“There are many more companies that are sticking with DEI,” says Glasgow. ‘The only reason you don’t hear about it is because most people do it secretly. They put their heads down and do DEI work hoping not to attract attention.

Glasgow advises organizations to stick to their own core values, as attitudes towards the subject can change quickly in four years.

“They’re going to look a little weak if there’s some sort of flip-flopping, depending on which way the political winds are blowing,” he said.

One of the reasons DEI programs exist is because without them, companies can be vulnerable to lawsuits alleging traditional discrimination. “Really think carefully about the risks in all directions of this issue,” Glasgow said.

Walmart confirmed that it will no longer consider race and gender as a litmus test for improving diversity when offering supplier contracts. Walmart says its U.S. businesses purchased more than $13 billion worth of goods and services from a variety of suppliers in fiscal year 2024, including minority-, women- and veteran-owned businesses.

It was unclear how relationships with such companies would change in the future. Organizations working with Walmart on diversity initiatives have offered a cautious response.

The Women’s Business Enterprise National Council, a nonprofit that last year named Walmart one of America’s top companies for women-owned businesses, said it was still evaluating the impact of Walmart’s announcement.

Pamela Prince-Eason, the organization’s president and CEO, said she hopes Walmart’s need to cater to its diverse customer base will continue to drive contracts to women-owned suppliers, even if the company doesn’t have explicit dollar targets.

“I suspect Walmart will continue to have one of the most inclusive supply chains in the world,” Prince-Eason wrote. “Any retailer’s ability to serve the communities in which it operates will continue to value understanding its customers (many of whom are women) so that it can better deliver the products and services they want. No one understands customers better than Walmart.”

Walmart’s announcement came after the company spoke directly with conservative political commentator and activist Robby Starbuck, who has been pushing corporate DEI policies and addressing individual companies on the social media platform X. Several of those companies have subsequently announced that they are withdrawing their policies. initiatives, including FordHarley Davidson, Lowe’s And Tractor offer.

Walmart confirmed to The Associated Press that it will better monitor its third-party marketplace items to ensure they do not contain sexual and transgender products targeted at minors. The company will also stop participating in the Human Rights Campaign’s annual benchmark index, which measures workplace inclusion for LGBTQ+ employees.

A Walmart spokesperson added that some changes were already underway and were not the result of discussions with Starbuck.

RaShawn “Shawnie” Hawkins, senior director of the HRC Foundation’s Workplace Equality Program, said companies that “abandon” their obligations to workplace inclusivity are “shirking their responsibility to their employees, consumers and shareholders.” She said the purchasing power of LGBTQ customers is powerful and noted that the index will have a record participation of more than 1,400 companies by 2025.

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Associated Press Staff Writer Matt Brown in Washington contributed to this report.