Navigating DEI Challenges: A Guide for Corporate Boards

Challenges in DEI Programs

Corporate boards are facing a tough time with diversity, equity, and inclusion (DEI) programs. The rules are changing, and it's not easy to keep up. Companies with operations worldwide have it even harder because laws differ from one place to another.

Handling DEI Programs

To handle this, boards need to be well-informed and careful. They should:

• Ensure discussions stay private and well-documented.
• Label private talks as such.
• Be mindful of who is present during meetings.
• Ensure discussions focus on the company's interests, not personal ones.
• Avoid sharing private information publicly.

Oversight of DEI Risks

Boards have a duty to oversee DEI risks. This is especially important now, with new rules and enforcement actions. They should get regular updates on DEI efforts and potential risks. This includes looking at past and present DEI activities, like:

• Policies
• Training
• Lawsuits

Risky Areas

Some areas are riskier than others:

• Tying compensation to diversity metrics can be tricky. If a company links pay to diversity levels of US employees, it might face scrutiny, even if the pay is for non-US employees.
• Setting demographic targets can be seen as a quota system, which could lead to legal trouble.

Risks of Changing DEI Programs

Boards should also think about the risks of changing or ending DEI programs. They need to consider:

• How these changes might affect the company's reputation.
• Talent retention.
• Legal risks involved.

Managing Risks

To manage these risks, companies should:

• Regularly monitor legal developments.
• Update their risk assessments.
• Ensure they have the right insurance coverage for potential legal issues.