As companies scale back on diversity, equity and inclusion initiatives, Faculty Affiliate Carliss Chatman writes about the legal risks in “running away” from these agreements in article for Bloomberg Law. Chatman is an associate professor a Southern Methodist University’s Dedman School of Law specializing in the fields of corporate law, commercial law, race and entrepreneurship, and ethics.
She points out several ways pulling from DEI agreements could have including being held to the Supreme Court decision in Comcast Corp. v. NAAAOM, companies could “vulnerable” if a plaintiffs can show race as a motivating factor to a decision to alter or terminate a contract.
This risk isn’t hypothetical. As companies such as Target and McDonald’s face public scrutiny for reversing course on supplier diversity, Black-owned businesses are left with fewer procurement opportunities and diminished access to markets that briefly opened during the post-George Floyd DEI wave. If those opportunities didn’t evaporate because of objective performance metrics, but due to external political pressure or discomfort with racial equity branding, that may be enough to support a Section 1981 claim.”
Chatman concludes the article with her own input on how companies should approach racial inclusion in contracting:
Boards and executives shouldn’t view supplier diversity and inclusive contracting as discretionary add-ons, but as integral to long-term value creation, legal compliance, and market competitiveness. This requires treating racial equity commitments as serious governance matters—not symbolic gestures easily reversed when political winds shift.”
Read more here: DEI Rollbacks Create Legal, Governance Risks Under Section 1981
