In 2025, with President Donald Trump’s return to office, significant policy shifts occurred in the United States regarding Diversity, Equity, and Inclusion (DEI) initiatives. Executive Orders signed by President Trump mandated the termination of DEI programs within federal agencies and among federal contractors. Additionally, audits were launched to investigate whether private companies maintaining DEI initiatives were in violation of fundamental rights and çivil-rights laws. These developments introduced uncertainty in the business environment and prompted many companies to reassess their DEI strategies.
The first Executive Order in this context was titled “Ending Radical and Wasteful Public DEI Programs and Preferencing,” which repealed federal policies that had previously supported DEI programs both within the federal government and, indirectly, in the private sector. According to the provisions of this Executive Order, the White House directed that all DEI offices, positions, plans, actions, initiatives, and programs be dismantled within 60 days.
Following the signing of the order, diversity-related plans and initiatives were removed from the websites of numerous federal agencies, including the White House.
In addition to this initial directive, President Trump signed a second Executive Order – Ending Illegal Discrimination And Restoring Merit-based Opportunity- repealing long-standing equal opportunity provisions for federal contractors, originally established in 1965. This order nullified policies that had required affirmative action and prohibited employment discrimination by federal contractors on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin.
While the order does not impose a direct prohibition on DEI programs within private entities—likely due to potential legal liabilities—it explicitly states that the federal government will no longer promote such programs among contractors. Furthermore, the Attorney General was instructed to provide recommendations on how the federal government could encourage the elimination of “unlawful discrimination and preferential treatment” associated with DEI programs in the private sector.
These Executive Orders, particularly Executive Order 14173, do not abolish all DEI policies. Rather, they specifically target practices considered to be “discriminatory” or “inconsistent with merit-based principles.” The orders do not prohibit equal opportunity initiatives broadly, but rather restrict preferential treatment based on group identity.
Following these directives, several large U.S. corporations have begun to phase out or significantly revise their DEI programs.
Key Considerations for Companies
Pursuant to the issued Executive Orders, each federal agency is required to identify up to nine investigatory targets with the objective of reviewing potentially unlawful DEI-based preferences and discriminatory practices. As a result, companies operating within the United States or those maintaining direct engagement with U.S. markets are now compelled to reassess their DEI-related policies to ensure alignment with federal law.
- Areas subject to DEI-related scrutiny include, but are not limited to:
- Human resources policies
- Recruitment and hiring procedures
- Promotion and performance evaluation criteria
- Training programs (including mandatory DEI trainings)
- Internal corporate communications (e.g., presentations, manifestos, email signatures, websites)
- Goal-setting and KPI documentation
- International Obligations
The Executive Orders are applicable solely within the territorial jurisdiction of the United States and do not relieve multinational corporations of their obligations to comply with DEI-related regulations in other jurisdictions. In particular, the European Union, Canada, and numerous other countries have enacted binding legal requirements mandating DEI practices across both public and private sectors. Accordingly, multinational enterprises withdrawing from DEI initiatives may face not only regulatory non-compliance risks abroad, but also suffer reputational harm in international markets that prioritize inclusivity and diversity standards.
- Compliance with Federal Law
The Executive Order on the Restoring Equality Of Opportunity And Meritocracy signed by President Trump on April 23, 2025, expressly rejects any policy that incorporates considerations based on race, sex, or other protected characteristics, and reaffirms a strict merit-based framework in public employment and contracting.
The Order further seeks to undermine or revoke federal regulatory frameworks grounded in the concept of disparate impact, which had previously served as the basis for enforcement actions under Titles VI and VII of the Civil Rights Act of 1964
Within 30 days of the date of this order, the Attorney General, shall report to the President, all existing regulations, guidance, rules, or orders that impose disparate-impact liability or similar requirements, and detail agency steps for their amendment or repeal, as appropriate under applicable law; and other laws or decisions, including at the State level, that impose disparate-impact liability and any appropriate measures to address any constitutional or other legal infirmities.
The Order also calls for federal contractors to cease the implementation of DEI policies and to commit solely to non-discrimination obligations as required by law. In this context:
- Obligations requiring contractors to develop affirmative action policies have been rescinded. This is because the U.S. Equal Employment Opportunity Commission (EEOC) has stated that DEI initiatives may be unlawful if they result in employment decisions being made based on protected characteristics of employees or applicants.
- Federal contractors may not be compelled to pursue workforce balancing goals in recruitment processes based on protected characteristics such as race, sex, sexual orientation, or religion.
- Federal offices and agencies have been directed to initiate audits and investigations aimed at eliminating unlawful discrimination based on DEI principles.
- All federal agencies must ensure that hiring, promotion, and performance evaluation processes are based solely on individual initiative, merit, performance, and work ethic; no factors grounded in DEI considerations shall be taken into account.
- Where companies wish to continue DEI-related policies, it is recommended that such initiatives be articulated using less ideological and more neutral terms such as “inclusivity,” “culture of belonging,” or “respect and equality.” For instance, practices such as mandating “more diverse hiring slates” may present legal risks by potentially constituting direct or indirect discrimination under applicable law.
A careful balance must be struck between DEI objectives and legal obligations; all practices should be implemented within a framework that is inclusive yet objective, transparent, and verifiable.
Notably, should institutions rebrand DEI initiatives under alternative labels, such practices may be subject to additional scrutiny and investigation on the grounds of “deceptive labeling.”
- Board Governance Guidance
The U.S. Securities and Exchange Commission (SEC), along with other regulatory agencies, is removing guidance that includes special incentives for female and minority board directors. This shift underscores that while diversity in board composition may be encouraged, the candidate selection process must adhere strictly to principles of merit and qualification.
In conclusion, The newly emerging policy environment shaped by anti-DEI presidential actions in the United States has had significant legal and strategic implications for private sector entities. While some companies have responded by retracting DEI programs, the abrupt and wholesale dismantling of such initiatives under political pressure may result in reduced employee engagement and harm to corporate reputation in the public eye. Consequently, many companies—committed to ethical values, corporate sustainability, and employee satisfaction—have opted not for complete abandonment of DEI frameworks but rather for their legal restructuring and realignment in compliance with the new regulatory expectations.
Under the executive orders issued in this context, the specific enforcement measures applicable to private sector companies have not yet been clearly defined. However, the Attorney General is mandated to submit a comprehensive report to the President within 120 days outlining how such investigations should be conducted and what enforcement actions—such as legal proceedings or administrative sanctions—may be considered.
To date, there has been no formal feedback from relevant agencies regarding any additional steps to be taken alongside potential enforcement actions.