Walmart facing backlash over DEI policy reversal as shareholders and Dem officials urge them to reconsider

Walmart's decision to dial back its diversity, equity and inclusion "DEI" programs was widely celebrated by conservatives, but some shareholders and Democratic officials are pushing back.

The retail giant joined the growing list of companies scaling back DEI initiatives in November following similar moves from big names including Harley-Davidson, John Deere, and Tractor Supply. McDonald's, Amazon, Meta and American Airlines have also since announced a change to their DEI policies as more companies follow suit.

While some investors hailed Walmart's move as a step in the right direction, others are urging the retailer to reconsider its abandonment of DEI. In a letter addressed to Walmart CEO Doug McMillon, a group of more than 30 Walmart Inc. shareholders, who represent more than $266 billion in combined assets, asked the company to explain the business impact of abandoning DEI initiatives, calling the reversal "disheartening," Bloomberg first reported.

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"Seeing the company retreat from its stated values and the business opportunities associated with a diverse and inclusive workforce is very disheartening," the signatories wrote. "Additionally, Walmart has not offered a financial or business case for this change in policy, but the company identified advancing ‘belonging, diversity, equity and inclusion’ as one of four priority ESG issues that ‘offer the greatest potential for Walmart to create shared value."

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The shareholders, which include Amalgamated Bank, Investor Advocates for Social Justice and Mercy Investment, accused the retail giant of giving "into bullying and pressure from anti-DEI groups" while ignoring requests "for addressing risks associated with racial inequity from a significant number of its shareholders in the past two proxy seasons."

The investors requested a meeting with senior Walmart leadership, urging them to consider a recommitment to "DEI strategies and programs that help reduce bias and systemic barriers, create inclusive workplaces, and advance the best talent."

A group of 13 Democratic state attorneys general expressed a similar sentiment in a separate letter sent to McMillon a day later. The signatories, which include the attorneys general of New York, New Jersey, Maryland, Nevada, Rhode Island, Hawaii, Vermont, California, Minnesota, Maine and Connecticut, asked the retailer to explain how it will protect civil rights in the workplace and chastised Walmart's decision to roll back DEI policies.

"Threats to boycott, sue or otherwise negatively impact Walmart’s bottom line may well have contributed to your decision to walk away from your commitments to DEI. But we are concerned that Walmart failed to consider the other side — the customers and employees that will be alienated by this departure," they wrote.

"These changes are bad for business, and for Walmart’s customer base, including those in our states," the letter continues. "Especially considering your prior statements on the critical values of diversity and inclusion, we urge you to reconsider your announced changes."

When reached for comment, Walmart told Fox Business, "We’re the same company with the same values with the same commitment to creating a sense of belonging for all of our associates, customers and members. We are focused on creating a Walmart for everyone and will continue to reinforce this commitment through our actions."

Walmart U.S. CEO and President John Furner similarly defended the move in November during an appearance on "CBS Mornings" after the nation's largest retailer confirmed it would be making a number of changes, including removing sexual and transgender products from third-party merchants inappropriately marketed toward children from its online marketplace.

It also said Walmart will stop funding the Center for Racial Equity, a nonprofit that Walmart launched in 2020 as a five-year initiative, and would ditch the terms "LatinX" and "DEI" altogether in official communications.

"Like many companies all across the U.S., we've been on a journey," Furner said of the reversal. "We'll continue to be on a journey. And what we're trying to do is to ensure every customer, every associate feels welcomed here in the shop and to feel like they belong."

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Walmart will also no longer participate in the Human Rights Campaign Corporate Equality Index, a report which rates U.S. businesses on their policies for LGBTQ employees.

Fox Business' Kristine Parks contributed to this report.