Not that many months ago, seemingly everyone in corporate Canada was talking about diversity, equity and inclusion. The country’s blue-chip class never tired of touting all the programs they’d launched to diversify their ranks and the C-level execs they’d appointed to make the changes happen—all while spawning a robust industry of consultants, facilitators and racial-equity assessors to help. Everybody made bold statements every chance they got. “Inclusion isn’t just a buzzword,” CIBC announced repeatedly. “It’s the cornerstone of our culture.”
What a difference six months make. In March, we contacted representatives from several Canadian giants—including Manulife, RBC, CIBC, Intact Financial, BMO, EY, Telus, TMX Group, Sun Life, BCE, Fairfax Financial, Sobeys and Canadian Tire—to talk about their DEI initiatives. All of these organizations had been diversity stalwarts whose leaders took every opportunity to talk up their progressive bona fides—revamped hiring processes, workplace training seminars, ironclad commitments to self-reflection and growth. But that was then. Today? Most of the companies politely declined our requests. Some didn’t respond at all.
The proximal cause of this about-face is Donald Trump, whose comeback is both a symptom and driver of this corporate vibe shift. His latest presidential campaign made anti-wokeism its central plank, harnessing growing discontentment that seemed to crystallize in 2023, when Bud Light partnered with trans influencer Dylan Mulvaney on social media, sparking a customer boycott and a 28% drop in sales.
But the backlash was brewing long before that. Even consultants who’ve devoted their life’s work to DEI have felt disillusioned. “I loathe the way we’ve been doing EDI over the past couple of years,” admits Michelle Grocholsky, an equity-sector veteran and founder of the consultancy Empowered EDI. Grocholsky’s target isn’t DEI itself, but rather an aggressive, performative strain that seems disinterested in actual change.
The grassroots pushback against DEI is rooted, perhaps even largely, in bigotry. But it’s also a response to the industry’s missteps and excesses: the perfunctory hiring quotas, the sometimes hacky training sessions, the bluster of chief diversity officers who, in the end, achieved middling results, particularly in the top echelons of the corporate world. In its most recent annual diversity audit of publicly traded companies in Canada, the law firm Osler, Hoskin & Harcourt reported that, in 2023, 30% of board seats were held by women, 10% by visible minorities (up from just 5.5% in 2020 but unmoved from the previous year) and 1% by Indigenous people, even though these demographics comprise 51%, 27% and 5% of the country’s population. Not exactly a resounding triumph.
Then along came Trump, who tipped the backlash into overdrive. Within hours of taking office, he signed an executive order banning DEI programs across the federal bureaucracy and barring the government from awarding contracts to private entities that practise so-called “illegal DEI.” Government agencies went into panic mode, scouring their rosters for employees to fire and scrubbing DEI-adjacent content—much of it anodyne or irrelevant—from their websites. The Defense Department even removed an image from its online database of the Enola Gay, the airplane that dropped the first atomic bomb, presumably because of the word “gay.”
Some state attorneys general have argued that any program that features hiring quotas or preferential benefits for marginalized groups could run afoul of the 14th Amendment of the U.S. Constitution, which protects against unfair treatment based on immutable characteristics like race. A few U.S. behemoths, including Costco and Cisco Systems, have refused to back down on DEI. Others—among them Alphabet, Meta, McDonald’s, Walmart, Harley-Davidson, BlackRock, Morgan Stanley, JPMorganChase and Citigroup—have backed away.
A similar realignment is happening north of the border. Nissan Canada, whose U.S. arm has faced pressure from conservative anti-DEI activists like Robby Starbuck, pulled support for Pride Toronto. Molson Coors removed all mention of DEI from its latest annual report. Shopify killed programs supporting Black, Indigenous and women entrepreneurs, and reportedly laid off the employees who ran them. Most executives in Canada aren’t being quite so blatant. Some are even doubling down. In a recent post on LinkedIn, Lightspeed Commerce CEO Dax Dasilva—a racialized gay man—wrote: “Recently, we’ve seen some of the world’s largest companies roll back their DEI initiatives. Make no mistake, at Lightspeed this is more than just a passing trend—this is a commitment based on 20 years of our history. I promise we’ll continue fostering this type of safe environment, and it will remain core to our DNA.”
But Dasilva is an exception. Most Canadian leaders appear to be keeping their heads down—and frantically consulting their legal teams. Their skittishness is hardly irrational. Canadian businesses that operate in the U.S. or trade on U.S. exchanges are just as vulnerable to charges of “illegal DEI” as their U.S.-based peers. (Incidentally, Lightspeed trades on both the TSX and the NYSE.) Bad vibes being contagious, there’s also good reason to fear that the DEI backlash could soon be in full force here.
But some business leaders are surely glad for an excuse to move on from DEI, which has sucked up a lot of oxygen over the past five years. “Executives are emboldened by what’s happening politically,” says Grocholsky. “Some are all too willing to say, ‘We’re not doing this anymore.’”
Still, she says, it’s too early to write DEI’s obituary. For every circumstantial reason to abandon it, there’s a better one for holding fast. Europe, a critical market for Canada given America’s protectionist turn, still views DEI initiatives favourably. Trump won’t be president forever, and the post-Trump era might be unkind to organizations that capitulated to a foreign leader.
And of course, diversity, equity and inclusion are all virtues in and of themselves. Nothing Trump has done can change that fact. So while DEI is clearly at an inflection point, it isn’t necessarily at an end point. To bounce back, the industry must reckon with what went wrong.
DEI evolved in response to the biggest conundrum of the post-Civil Rights Era: that racial inequities continued even in the absence of legal segregation. To explain this phenomenon, the intellectual community (and later the corporate one) settled on the notion of “systemic” racism—an invisible social force, embedded in nominally colour-blind institutions. “The problem with colour-blindness is that it was never truly colour-blind,” says Marie Henein, one of Canada’s top criminal lawyers, who has championed DEI at her firm, Henein Hutchison Robitaille. “If it was, we wouldn’t have the constellation of people in power that we have now.”
Systemic racism joined the public conversation in 2020, after the murder of George Floyd sent American historian Ibram X. Kendi’s book How to Be an Antiracist into bestseller territory. Kendi is now a controversial figure, but he’ll likely be remembered for a single, powerful idea—that outcomes matter more than intentions. His thesis elegantly captures DEI’s underlying philosophy: If a company is routinely elevating white people at the expense of people of colour, that company is upholding racism, even if its leaders don’t consciously have racist thoughts. The same analysis can be applied to discrimination based on gender, sexual orientation and neurodiversity.
DEI, by this reasoning, is a process of refinement. The objective is to eliminate the internal procedures that distort judgement and impede equitable decision-making. “Imagine if you did job interviews behind a curtain, and everyone’s voice was AutoTuned,” says Bay Street power broker Wes Hall, founder of the BlackNorth Initiative, whose aim is to combat systemic racism in Canada. “Imagine that all of your questions dealt directly with the job and people’s ability to do it. In that world, you wouldn’t need DEI. Every organization would be diverse.”
Hall’s point is that talent is equally distributed across the population, so a company that rigorously selects for talent would naturally produce diverse outcomes. “People think that DEI is in conflict with notions of merit,” adds Camellia Bryan, a leading equity researcher at the University of British Columbia. “But actually, the goal is to help organizations become more merit-based.”
That’s the primary goal, at least. Subsidiary goals include retention (ensuring that diverse talent sticks around), cohesion (ensuring diverse teams work well together and feel comfortable raising new ideas) and outreach (nurturing a diverse customer base). DEI takes many forms: seminars, marketing campaigns, internal audits of hiring and promotion processes.
At its worst, it can be appallingly gimmicky. “I’ve been in meetings with a large organization,” says Grocholsky, “in which I’ve been asked to tell an executive, ‘The next person you hire must be racialized.’” In her experience, such tokenistic efforts engender suspicion and aggrievement. The beneficiaries find that there’s an invisible asterisk beside their names, while peers resent them for allegedly unearned privilege.
People think that DEI is in conflict with notions of merit, but actually, the goal is to help organizations become more merit-based.
— Camellia Bryan, a leading equity researcher at UBC
The most successful DEI leaders, Grocholsky says, tend to eschew superficial fixes for thoughtful, process-based reforms. The beer company Sleeman has removed criminal background checks from most of its hiring requirements. The Ontario Veterinary Medical Association has encouraged its member clinics to conduct interviews via standardized sets of questions. The Accelerator Centre, a Waterloo startup incubator, has reviewed its website and funding applications for tech jargon, and attached explanatory hyperlinks where necessary. “There are many predictors for what a successful entrepreneur looks like,” says Tabatha Laverty, an Accelerator vice-president. “Knowledge of acronyms isn’t one of them.”
In 2017, SickKids Foundation, the charitable arm of the Toronto children’s hospital, conducted an internal survey and found that 71% of its employees self-identified as white and 88% as heterosexual. These metrics weren’t just an HR problem, says Emily Pang, the foundation’s COO and chief of staff; they were a revenue problem in the making. “In Toronto, there’s wealth in many populations,” says Pang. “We cannot fundraise in the Chinese, Black or South Asian communities if we don’t get our house in order.”
And so the foundation overhauled its hiring process. Job descriptions now distinguish between mandatory and non-mandatory skills, in order to encourage applications from women and racialized people, who tend to count themselves ineligible for a job unless they tick every box on the hiring call. Candidates whose first language isn’t English can request interview questions in advance so they have time to prepare. Each hiring panel is itself diverse, and if recruiters are unable to solicit a diverse slate of applicants, HR tells them to keep searching.
The team also works to ensure sure diverse employees stick around with DEI events that go beyond the typical training sessions. They often feature visitors—a spoken-word artist for Black History Month, a concentration-camp survivor for Holocaust Remembrance Day, a drag queen for Pride—or informal group discussions of pop culture. If the foundation fails to nurture a sense of belonging, Pang reasons, it will struggle to retain talent, putting it out of touch with the diversifying donor base on which it depends. DEI, by this reasoning, is a matter of survival.
“The problem with colour-blindness is that it was never truly colour-blind. If it was, we wouldn’t have the constellation of people in power that we have now.”
– Marie Henein,
one of Canada’s top criminal lawyers
That’s the most powerful case for DEI, the one that resonates across the ideological spectrum. Since 2015, McKinsey & Co. has put out four papers that correlate DEI with profitability. The latest, from 2023, finds that the most racially diverse businesses are 39% more likely to see above-average returns than their least diverse competitors. Because McKinsey keeps details of its methodology secret, independent researchers have been unable to check its work, and academics who’ve attempted similar studies have failed to replicate its findings.
But nobody needs McKinsey to affirm what’s common sense: that companies with diverse applicant pools will have access to a greater range of talent than those that select narrowly for race or gender. The countervailing risks are increasingly external: DEI has become costly for businesses because anti-DEI partisans want it that way. In the spring of 2023, the U.S. mega-retailer Target released a line of Pride-themed merchandise, including a children’s book about pronouns, a tuck-friendly swimsuit and messenger bags by the London designer Erik Carnell, whose work playfully incorporates Gnostic imagery.
The backlash was swift and brutal. The most paranoid customers accused Target of grooming children; the most humourless accused it of trafficking in the occult. A rap song called “Boycott Target” became a hit on Apple Music. Target recalled some items and moved others to the back of the store, but it couldn’t contain the fallout. In the second quarter of 2023, sales were down 5.4% from the previous year.
Then, in August 2023, Target was hit with a lawsuit on behalf of Brian Craig, a shareholder who claims his stock lost 17% of its value because of the boycott. Craig’s case—backed by America First Legal, a non-profit founded by Trump adviser Stephen Miller—has since inspired a class action, with other investors alleging malfeasance.
According to preliminary court documents, Target’s proxy statements reassured shareholders that it was conducting DEI risk assessments. The plaintiffs claim that while Target did ample due diligence to ensure its Pride campaign was well received by the LGBTQ+ community, it didn’t study how conservative shoppers might react. A risk assessment that fails to consider the possibility of a boycott, the court documents allege, isn’t a full risk assessment at all.
In the spring of 2023, the U.S. retailer Target released a line of Pride-themed merchandise. The backlash from conservative shoppers was swift and brutal, including calls to boycott Target entirely.Brandon Bell/Getty Images
The case will likely turn on legalistic questions: How much disclosure is Target obliged to give? At what point does a business decision become a violation of fiduciary duty? Perhaps the novelty of the suit will jeopardize its chances in court, but in the current culture, novelty is its strength. America First Legal bills itself as a right-wing counterpart to the American Civil Liberties Union. Its goal isn’t to mollify aggrieved investors but rather to shift U.S. corporate norms. To that end, the suit sends a message to companies everywhere: If you practise DEI, you could face trouble you never imagined.
That message is coming from other quarters, too. Under Trump, the Federal Communications Commission is investigating Walt Disney, Verizon and Comcast to determine whether, in their zeal to diversify, they favoured some racial groups over others. If so, the administration contends, they may have violated civil rights law.
The attorney general of Missouri has made a similar argument in a case against Starbucks. The suit alleges that the coffee giant used hiring and promotion quotas for marginalized groups, leading to slow service and inflated prices. (Starbucks denies the allegations.) It appears that the attorney general is seeking legal remedies for what are basically market problems—if Missouri residents feel ripped off by Starbucks, they should head not to the courts but to Dunkin’—and yet the oddness of the case hardly undermines its potency. Even specious lawsuits bear financial and reputational costs.
The atmosphere of uncertainty is now palpable in Canada. Ellie Kang, a New York–based lawyer with the Toronto firm Torys, says that Canadian companies operating in the U.S. and therefore answerable to U.S. laws should review any initiatives that include preferential treatment for individual groups, especially if they include hard numbers. Managers should speak carefully about diversity goals, she adds, favouring aspirational language over hard commitments. (Hence a recent memo from RBC CEO Dave McKay that leaned heavily on “inclusion” and acknowledged potential difficulties in the U.S.: “We also know we need to consider the rapidly changing legal landscape around diversity, equity and inclusion programs, particularly in our second home market.”) And many companies would do well to pursue diversity by other means entirely. “You can strengthen your recruiting efforts at individual schools or in individual geographic areas,” says Kang. “It’s never been illegal [in the U.S.] to have a good outreach program.”
“Imagine that all of your questions dealt directly with the job and people’s ability to do it. In that world, you wouldn’t need DEI. Every organization would be diverse.”
– Wes Hall,
Bay Street power broker and founder of the BlackNorth Initiative
The landscape is still safer in Canada, where programs that seek explicitly to hire from marginalized groups are legally protected by federal and provincial legislation—and by the Charter of Rights and Freedoms. While Section 15(1) of the Charter establishes a right to equal treatment, Section 15(2) clarifies that this right does not prevent organizations from working to ameliorate past discrimination.
And yet, Canadian organizations run legal risks, too. Peter MacKinnon, a law professor and senior fellow at the Macdonald-Laurier Institute, points out that the two sub-parts of Section 15 are in obvious tension. A hiring program that favours a specific group will, by definition, disfavour other groups, undermining the “equal protection” principle laid out in 15(1). Does 15(2) confer complete immunity from 15(1)? MacKinnon suspects there are limits.
He also suspects that some post-secondary institutions with expansive DEI programs—the medical school at Toronto Metropolitan University, for instance, which has created separate admission streams, called equity pathways, for targeted groups, or the University of Calgary, which recently earmarked 45 faculty positions for “equity-deserving groups” including female, non-white, queer or disabled applicants—may be pushing against what’s constitutionally tolerable in Canada. “To the best of my knowledge, there has not been a published case of a Charter challenge against DEI,” says MacKinnon. “But I suspect we’ll see one soon.”
Of course, one can’t have a case without a plaintiff, a fact that underlines DEI’s larger issue: not that companies might face lawsuits, but rather that people might wish to sue in the first place. DEI’s legal woes are ultimately downstream from a bigger crisis of legitimacy.
Any discussion of DEI must, eventually, address the movement’s most contentious aspect: the training seminars. Work by a pair of sociologists—Harvard’s Frank Dobbin and Tel Aviv University’s Alexandra Kalev—suggests that training may be the most overrated tool in the DEI kit. These sessions are limited in their efficacy because training always is: In the workplace, most genuine learning happens on the job.
Dobbin and Kalev cite research suggesting that training sessions can engender backlash among the majority population, whose members feel singled out. One obvious rebuttal is to blame the majority for its apparent recalcitrance, but this rhetorical move hardly makes the problem go away. And if anti-bias training is failing to win people over—or worse, fuelling resentment—then DEI has a big problem
A crack-up in the Toronto school system became a cause célèbre among DEI opponents. It began in April 2021, when Richard Bilkszto, a retired educator serving as interim principal of an adult high school, attended a session facilitated by Kike Ojo-Thompson. The conversation drifted to the topic of Canada versus the U.S., with Ojo-Thompson asserting that the racism here is far worse than it is there. “They at least have a fighting posture against...the monarchy,” she added. “Here, we celebrate the monarchy, the very heart and soul and origin of the colonial structure.”
Bilkszto disagreed, arguing that the supposed egalitarianism of Canadian social services made the country a more racially enlightened place.
“You and your whiteness think that you can tell me what’s really going on with Black people,” she replied. “Is that what you’re doing?”
At the follow-up session, Ojo-Thompson brought up Bilkszto’s remarks again, describing them, while laughing, as “a wonderful example” of the kind of “resistance” that white people put up when confronted with their racism. Bilkszto’s peers piled on, both at the meeting and on social media. Colleagues distanced themselves. Part-time contracts dried up. In August 2021, a case manager at the Workplace Safety and Insurance Board of Ontario characterized Ojo-Thompson’s conduct as “abusive, egregious and vexatious.” In the fall of 2023, Bilkszto died by suicide.
To imply that his death resulted directly from his confrontation with Ojo-Thompson is to make yet another grandiose, subjective claim. But even a sympathetic account of Ojo-Thompson’s conduct would concede some unflattering points. Her arguments were sloppy. She pitted colleagues against one another. She behaved more like a bully than a facilitator.
The case is hardly the only example of DEI training gone awry. In 2020, as violence against Chinese Canadians approached its COVID-era peak, Asian students at a UBC residence were given a document exhorting them to reflect on their “yellow privilege.”
In 2021—a year for which the Anti-Defamation League reported a 34% increase in U.S. hate crimes against Jews—two Jewish clinicians at a Stanford University training session say they were separated into racial affinity groups and lumped in with white “oppressors.” At a 2022 seminar at Coca-Cola, employees were encouraged to “try to be less white.”
A pro-DEI sign is posted on the University of Michigan campus in April, after the university announced it was revoking its DEI programs in response to President Donald Trump's executive order.Bill Pugliano/Getty Images
Perhaps nobody should be surprised, given the bigness and newness of the DEI industry, that some practitioners traffic in misguided ideas. What’s strange, though, is the reluctance among many DEI leaders to acknowledge these missteps.
Why? These errors and excesses don’t impugn all DEI trainers any more than individual cases of physician malpractice impugn all doctors. Anti-DEI partisans cherry-pick bad cases to mount arguments against the industry. Reducing the frequency of these cases will at least make the work of DEI opponents harder than it currently is. It’ll also make DEI more effective. Self-reflection, internal criticism, the establishment of best practices—these aren’t signs of weakness. They are what strong professional communities do when they wish to become stronger.
Grocholsky wants companies to look carefully at the training they provide, avoiding facilitators with non-evidence-based ideas or belligerent tactics. Organizations, she adds, should keep in mind that training seminars, even of the highest calibre, are a poor replacement for deep structural reform. “The way we solve our problems,” says Grocholsky, “is not through judgement or shame or stereotypes.”
Grocholsky also opposes crudely instrumental practices like hiring quotas. Not only are these measures legally contentious, she says, but they patronize the groups they purportedly serve. And they undermine the foundational premise of DEI. If it’s true—and it surely is—that talent can be found equally in every sub-population, then it follows that companies need not resort to gimmicks to engineer diverse outcomes. A well-designed system, scrutinized for bias and optimized for merit, should deliver the desired results, not quickly and temporarily, but gradually and durably. “Talent doesn’t discriminate,” says Grocholsky, “so companies need not discriminate, either.”
To Grocholsky’s recommendations, I’d add one more: Pro-DEI business leaders could stand to regain the confidence they’ve lost. Yes, DEI opponents have notched some wins, but they won’t prevail in the long run. They’ve aligned themselves with an unpopular U.S. president who loves recessionary economic policies. They might soon regret having acquired the baggage of the Trump brand.
DEI’s biggest advantage over the naysayers is that its fundamental premises—merit matters, biases distort decision-making, diversity correlates with dynamism—are as defensible as any premises have been. The industry is vulnerable to fads and groupthink, but at the highest level of abstraction, it gets the big things right. Its mission is a just (and profitable) one. These alone are reasons for confidence.
At the beginning of my interview with Pang at SickKids, she admitted she didn’t normally talk to journalists—the experience, she said, made her nervous. Having been turned down for interviews by so many execs, I thought the fact that she chose to do this interview at all put her among the most courageous leaders in Canada.
When I asked about the foundation’s diversity metrics, Pang was candid. “We haven’t made a huge sea change,” she said. The proportion of non-white people at the foundation has risen from 29% to 37%, and the staff is now 8% Black, as is the CEO, Jennifer Bernard. A recent audit accounting for multiple types of diversity—race, ability, sexual orientation—puts the organization at just over 50%.
“We have more work to do,” says Pang, “but what we’ve achieved so far, we’ve done organically.” There have been no grand gestures or shocks to the system, just a slow, painstaking process of transformation, coupled with the promise of greater transformation to come. It’s a humble achievement, but also an honest and durable one—the kind everybody should be proud to talk about.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.