Consistent with the uptick in company pledges and initiatives since the 2020 George Floyd murder and other landmark racial injustice events, Bloomberg Law reported on an increasing number of employee and investor lawsuits, including shareholder derivative actions, filed against companies. Suits tend to allege a misalignment or lack of alignment between companies’ DE&I-related actions and practices and previously publicly articulated commitments or policies or—on the flip side—an inappropriate use of capital to achieve aims unrelated to shareholder value.
The article (informed by Reed Smith and other sources) advises companies to balance multiple stakeholder interests in a manner that minimizes litigation risk when developing DE&I initiatives by, for example, using aspirational language and avoiding concrete goals such as quotas. We previously reported risk mitigation guidance on this same topic (as to board diversity specifically) from Jenner & Block.
See Society/Gibson Dunn & Crutcher: “ESG Legal Update: What Corporate Governance & ESG Professionals Need to Know” and additional resources on our Board Diversity, Racial Equality & Diversity, and Human Capital/Workforce Management pages.