As the row back against diversity, equity and inclusion (DEI) initiatives by US organisations continues, businesses in Great Britain are being urged to stay on course with their DEI – or increase the risk of falling foul of UK law.

In February, Big Four firms KPMG and Deloitte in the US both stepped back from their DEI commitments, following President Trump’s backlash against measures that seek to tackle discrimination. In his first week in office, Trump issued a series of executive orders targeting DEI programmes in the public and private sectors, designed to put a dampener on lawful efforts to advance equal opportunity. 

KPMG and Deloitte DEI row back in US

As first reported by the Financial Times, KPMG CEO Paul Knopp told the firm’s 40,000 employees via an internal email that the company would be shutting down its Accelerate 2025 programme, originally set up to ensure that half of the firm's partners and managing directors came from underrepresented groups by this year.

KPMG’s US firm has also removed its annual ‘transparency reports’, first introduced in 2020 to document the firm’s progress in increasing representation among women and minority groups. A statement from KPMG International said: “KPMG is committed to creating an environment where everyone has equal opportunity to succeed and thrive. This has been core to our culture for many years and is part of our values and business strategy. 

“While each KPMG member firm complies with its local legal and regulatory requirements, across our network we will continue to provide opportunities in the communities in which we work, to cultivate a sense of belonging, and to bring different perspectives and experiences to better serve our people, clients and society.”

Meanwhile, Deloitte US has announced it would end its DEI programme and has instructed staff working on contracts for the American government to remove pronouns from their emails. In contrast, Deloitte’s UK firm has reiterated its DEI commitment. A spokeswoman for Deloitte UK told ICAEW Insights: “There are no changes to our DEI initiatives here in the UK.”

Challenges for multinational firms

However, the internal DEI split has highlighted potential challenges facing multinational firms operating on both sides of the pond and raised questions over the extent to which the US shift will affect firms operating in the UK.

Caspar Glyn KC is chair of the Employment Lawyers Association (ELA), which represents around 7,000 specialist, qualified employment lawyers in the UK. In an open letter to business, he said it was “legally incoherent” for a business in Great Britain to follow US businesses in abandoning or reducing DEI policies.

“If you operate in Great Britain and roll back your DEI policies for workers here in response to the US Administration’s recent approach towards DEI policies, you will increase the risk of adverse findings of discrimination against your business,” Glyn warns.

Why DEI policies matter

Glyn also says employers have a responsibility to take reasonable steps to prevent third-party sexual harassment under sections 40 and 40A of the Equality Act 2010. Those requirements will be strengthened by the Employment Rights Bill, currently passing through parliament. “An employer without DEI policies will be unlikely to be able to demonstrate that they had taken all reasonable steps,” Glyn warns.

At the same time, section 109 of the Equality Act 2010 provides a defence to an employer for the discriminatory acts of an employee. “While the statutory defence is a difficult one to make out, without DEI policies and training, it would be hopeless,” Glyn adds.

However, the ELA points out that if US law follows the current Administration’s approach to ‘affirmative action’, that would merely result in aligning the US position more closely with existing GB law. 

“In Great Britain, ‘positive action’ has never permitted using race or other protected characteristics as a selection criterion to favour applicants or candidates for recruitment or promotion, save for one rarely used tie-breaker exception, when candidates are truly equal,” Glyn explains. As such, companies operating in both GB and the US may now find it easier to have a single global policy that complies with the law in both locations.

Thorough review of DEI iniativies

Olivia Dobbie, a barrister and D&I lead at the ELA, says companies with a presence on both sides of the Atlantic would be well advised to undertake a thorough review of all their DEI policies and initiatives to ensure local compliance within each jurisdiction. 

“For companies operating in multiple jurisdictions, this may mean that global mission statements or policies will have to be kept broad to ensure they meet the requirements of all jurisdictions they cover. Local policies and initiatives can draw any necessary distinctions that are specific to that locality,” she says.

“This is unlikely to require any changes to GB-based companies who do not contract with federal government because there have been no changes to GB law. As such, if policies are compliant with the Equality Act 2010, they should not be disturbed in our view.” 

Litigation risk

Organisations should seek legal advice to ensure the specific arrangements they operate do meet local requirements and are consistent with the Executive Order, Dobbie adds. “What is clear however, is that peeling back policies and initiatives for GB-based entities solely because that is the mood music on the other side of the Atlantic, would be an error and could lead companies based here into greater litigation risk.”

Yelena Travis-Powell BEM, ICAEW’s Head of Global Equality, Equity & Belonging, says: “The ELA open letter highlights that maintaining DEI initiatives is important for UK businesses in fulfilling their legal duties and incorporating diverse perspectives, which can improve decision-making and service quality. 

“Having a comprehensive DEI policy will enable employers to implement lawful positive actions confidently while effectively navigating legal risks associated with unlawful positive discrimination. At ICAEW, we will continue our efforts to champion DEI to remove barriers and promote an inclusive accountancy profession where everyone has the opportunity to succeed and thrive.”