'Anti-woke' in the US, DEI at home: The new playbook for European companies

Companies with operations on both sides of the Atlantic have a new formula when it comes to DEI—and it depends on the location.

- Ben Dummett & Joe Wallace

Grocery store chain Aldi, investor-advisory firm Institutional Shareholder Services and lender Banco Santander are among the businesses to have recently recalibrated their diversity, equity and inclusion policies to vary by region.

In some cases, companies are excluding the U.S. from what were once global commitments. In others, they are scrubbing buzzwords and acronyms—such as LGBTQ—from American websites and annual reports, while still promoting DEI goals elsewhere.

The moves aim to avoid unwanted attention from the Trump administration, which has ordered an end to DEI programs across federal agencies and threatened to investigate the "most egregious and discriminatory" corporate practitioners.

Facing an anemic economy at home, Europe Inc. is eager to avoid lawsuits or consumer boycotts in the faster-growing U.S. market.

The challenge is to do so while abiding by regulations in Europe, where there are moves to introduce more DEI requirements, and keeping customers and staffers on board.

"European companies choosing to pause or roll back DEI initiatives could face significant regulatory risk and reputational backlash in Europe," said Jeanne Martin of U.K.-based ShareAction, a responsible-investment nonprofit.

ISS said last month that it would no longer consider the racial or gender composition of American companies' boards when making its director voting recommendations to shareholders. But the advisory firm plans to continue to do so for European companies.

The deviation suggests ISS isn't "clear on the definition of good governance," said Thomas Schweppe, managing director of investor advisory firm 7Square.