Could Trump’s DEI backlash flow into London? The law will get in the way first
Like it or not, when the US does something, the rest of the world tends to follow. But with the anti-diversity, equality and inclusion (DEI) narrative coming from the White House, global businesses may find themselves in a pickle.
Donald Trump’s first act as the US President was to sign an executive order on 20 January to end “radical and wasteful” DEI programmes in the US.
This prompted several global companies, including Meta, Amazon, McDonald’s and Ford, to go full steam ahead and pull back on their DEI initiatives. Will more follow this trend?
Well the US President’s attack on DEI won’t be slowing down anytime soon. He recently blamed a tragic plane crash in Washington DC on a diversity programme at the Federal Aviation Administration.
What does this mean for London?
Throw a stone in the City and you’re bound to hit a business that is US-headquartered. Legal, insurance and even the tech sector – American businesses are booming in the capital.
Over the years, big businesses in London have had DEI initiatives at the heart of their internal strategies. While regulators, especially Lloyd’s of London, have made DEI a key priority.
But the backlash from the US has already caused some boards and HRs to scratch their heads.
As businesses work out internally what their approach will be, from a UK perspective, what does the law say?
Helen Crossland, partner at Seddons, is clear that “in comparison to the US and other jurisdictions, the UK has greater statutory protections when it comes to discrimination.”
Matthew Newnham, partner at Birketts, explained that under the Equality Act 2010 there are “obligations on employers to take certain positive steps in favour of those employees with ‘protected characteristics’”.
Newnham added that under the current Labour government, “these duties are likely to be further strengthened”.
However, Libby Payne pointed out that “legal obligations and DEI policies are two separate things.”
Payne, a partner at Withers, added: “Whilst comprehensive DEI policies are potentially valuable in preventing and defending claims, on their own they are not likely to be sufficient, the most important element is the culture of the business.”
“A business with a culture that is not aligned to its own DEI policies will see little benefit from them and similarly a business with a naturally diverse and inclusive culture may have all the benefits in terms of ease of recruitment and retention and reduced liability for claims, even if they do not have extensive policies in place.”
Crossland went on to note that the UK laws “may butt against some business leaders’ ideological preferences”, but noted that “rolling back DEI initiatives will risk breaking the law and inviting PR damage that could be unpredictable and commercially costly.”
Focusing on the legal sector
Emma Bartlett, partner at CM Murray, noted that “many UK law firms of US headquartered firms have invested significant time and resources into DEI”.
Her opinion is this war on DEI in the US is “unlikely to result in such UK firms taking a similar path.”
As from a legal view on the law sector, she also pointed out that “it is a legislative requirement and a regulatory duty” as regulators, the Solicitors Regulation Authority (SRA), “monitors diversity in UK law firms”.
She explained: “It requires UK law firms to report on their diversity, requires those working in regulated UK firms to treat each other fairly, and SRA Principle 6 provides that solicitors and law firms must ‘encourage equality, diversity and inclusion’”.
While Payne added that “clients are frequently interested in the make up of teams, with diversity within a team and an inclusive culture being viewed as a positive signal of a high performing team.”
However, a handful of US law firms in London were approached for comment on their stance on the US backlash. Notably, most of those requests were ignored.
But speaking to City PM on Tuesday, Kennedys’ newly appointed senior partner, John Bruce was clear that “globally, Kennedys remains committed to DEI initiatives – and proudly so.”
Eyes on the Law is a weekly column by Maria Ward-Brennan focused on the legal sector.