RBC's CEO Dave McKay stands outside RBC's offices on Queens Quay in Toronto on June 21, 2019. In a memo to all RBC employees in February, McKay made clear that the company 'must remain committed to building an inclusive workplace.'Christopher Katsarov/The Globe and Mail
Facing executive orders designed to crack down on diversity, equity and inclusion practices in the United States, Royal Bank of Canada is trying to walk a tightrope: staying true to core values in these realms, while appeasing a U.S. President who is hell-bent on eradicating any mention of them.
To do this, the bank, which is Canada’s largest company by market value and employs 95,000 people globally, has told staff its executives will not waver in certain respects. In a memo to all RBC employees in February, chief executive officer Dave McKay made one thing clear: “We must remain committed to building an inclusive workplace.”
He also wrote that for RBC to be its best, “we need to attract and retain top talent that reflects the diverse client segments, markets and communities we serve.”
Over all, though, there wasn’t much mention of diversity and equity, and halfway through the memo he pivoted to acknowledge the elephant in the room: “We also know we need to consider the rapidly changing legal landscape around diversity, equity and inclusion programs, particularly in our second home market,” he wrote, referring to the U.S.
In January, U.S. President Donald Trump signed multiple executive orders around DEI. In one, he directed federal agencies to submit reports identifying private-sector companies with the most “egregious and discriminatory” DEI programs, and threatened civil-compliance investigations and potential regulatory action against publicly traded corporations and large non-profits.
Even before such orders were signed, Mr. McKay wrote, DEI initiatives had fostered many conversations “about whether they are leading to the intended outcomes of fairness, access and inclusion for everyone. As we continually reimagine the bank for the future, we see an opportunity to improve our own inclusion practices, which includes ensuring that no one is inadvertently disadvantaged or excluded.”
He didn’t go into detail, but such grievances are often aired by white men who fear initiatives such as affirmative action result in less talented employees getting promoted simply because they come from racialized backgrounds. RBC declined to comment for this story.
Because the legal landscape is changing so quickly in the U.S., it is tough to put too much stock in a single memo. However, the commentary offers a rare window into the challenge that Canadian companies with U.S. operations now face. If they push too hard, they risk setting off the President, who could block their next U.S. acquisition, and if they pull back too much, they could anger Canadian employees, clients and shareholders who are furious about tariff threats and talks of annexing their country.
Already, there is a Canadian case study that illustrates the anger that can erupt when DEI initiatives get scrapped hastily. After Shopify Inc. scaled back some diversity programs and teams in February, hundreds of Canadian technology leaders condemned the company and defended the initiatives in an open letter.
If there’s any solace for Canadian companies, it’s that U.S. companies face the same challenge – even corporate giants. Last week, Apple Inc., the world’s largest company by market value, had to beat back a shareholder proposal at its annual general meeting that asked the company to end diversity policies that include the use of race and sex in hiring decisions.
While the shareholder proposal was shot down, Apple CEO Tim Cook addressed the reality of this new world. “As the legal landscape around this issue evolves, we may need to make some changes to comply, but our north star of dignity and respect for everyone and our work to that end will never waver,” he said.
After the meeting, Mr. Trump posted a message written in all caps on Truth Social: “Apple should get rid of DEI rules, not just make adjustments to them. DEI was a hoax that has been very bad for our country. DEI is gone!!!”
Last week even BlackRock Inc., once a world leader in progressive cultural reforms, told investors it is abandoning targets to increase the representation of employees in its work force and will also fold its DEI and talent-management teams into one “Talent and Culture” group.
For now, RBC is trying to balance the competing interests. In the bank’s memo to employees, Mr. McKay told staff there will be a survey in April “that asks for specific feedback on what you feel is most important to you as an RBCer.” He also promised to gather everyone’s perspective “to help shape how this comes to life.”
The question, however, is whether the middle ground will hold for very long. Even with good intentions, policies and commitments can be watered down so much that, eventually, they stand for nothing.