Will U.S shifts in Equality, Diversity and Inclusion Policies have an impact in the UK?

In recent months, a significant shift has occurred in the United States regarding Diversity, Equity, and Inclusion (DEI) initiatives. Under President Donald Trump’s administration, several major companies have scaled back or entirely rolled back their DEI programs. This trend has sparked discussions about the potential ripple effects on global business practices, including those in the UK – think McDonalds, Coca-Cola, Apple, and Starbucks.

This blog explores the current trends in the U.S., considers the possible impact in Scotland, and underscores the critical role of the protections enshrined in employment and labour law.

Current Trends in U.S. DEI Initiatives

Several prominent U.S. companies have recently altered their DEI strategies:

• Wells Fargo: The financial institution has ended its policy requiring a diverse slate of candidates for senior-level roles, aligning with the administration’s stance on DEI.
• Walmart, Lowe’s, and Meta: These companies have announced plans to scale back their commitments to diversity, equity, and inclusion.
• Target: The retailer has significantly reduced its DEI initiatives, including altering its supplier diversity goals and diversity-focused training programs.

Potential Impact on UK Businesses

While U.S. based companies’ domestic policy changes do not directly affect UK businesses, these shifts could still influence the UK business landscape:

1. Global Corporations Operating in UK: Many multinational companies with operations in both the U.S. and the UK may consider aligning their global DEI strategies such that Equality, Diversity and Inclusion (EDI – the term coined this side of the Atlantic for DEI) initiatives may suffer here. This could lead to a re-evaluation of equality and diversity initiatives within their Scottish branches.
2. Supply Chain Considerations: UK businesses that are part of the supply chains of U.S. companies might experience changes in expectations or requirements related to equality and inclusion practices.
3. Cultural Influence: The U.S. has historically been a trendsetter in corporate practices. A significant rollback of equality diversity and inclusion initiatives could embolden some UK businesses to reconsider or reduce their own commitments.

Attitudes to DEI initiatives in the UK

In contrast to the position of the new US administration, the Scottish Government has reaffirmed its commitment to diversity and inclusion. The Scottish Government’s Diversity and Inclusion Employer Strategy, published July 2024, serves as a call to action for all leaders, managers, and employees in the Scottish Government to disrupt the status quo and promote inclusivity.

Other organisations, such as Social Investment Scotland, have undertaken a policy overhaul through a diversity lens, dedicating efforts to ensure recruitment is free from bias and committing to gender balance in board appointments.

In Scotland there are a number of other organisations championing EDI.  Organisations such as the Scottish Human Rights Commission, and the Scottish government’s “Fair Work Framework” seek to ensure that the people in Scotland have a world-leading working life where fair work drives success and there is equal opportunity.

There is reason to be hopeful that the rollback of EDI initiatives will not extend to Scotland.   An example of a US company bucking the trend of the direction of travel in America is that of McDonalds who recently announced that here in the UK they will maintain diversity, equality and inclusion initiatives.

Whilst these re-affirmations of commitment are welcome, what protections – if any – are there from US conglomerates altering their practices in Scotland to align with those practiced in America?

Legal Landscape in the UK

In Scotland, employment law is governed by predominately UK-wide legislation. Key statutes include the Equality Act 2010, which consolidates and supplements previous anti-discrimination laws, and the Employment Rights Act 1996.

The Equality Act 2010 prohibits discrimination on the grounds of protected characteristics such as age, disability, gender reassignment, race, religion or belief, sex, and sexual orientation. Employers are legally required to ensure that their workplace practices do not discriminate against employees or potential employees based on these characteristics – which, of course, includes during the recruitment stage.

Any business operating in the UK will be subject to UK employment legislation.  Just a few months ago, a new positive duty on employers to take reasonable steps to prevent sexual harassment was introduced.   The Employment Rights Bill, currently going through the UK Parliament is likely to extend that duty to “all reasonable steps” and to all types of harassment, and will make employers liable when employees are harassed by third parties, unless appropriate preventive measures have been taken.  There have been recent changes to the protection for women who have returned from maternity leave.   The trend in the UK therefore remains to increase the protection of minority groups, and to require employers to take steps to address unequal treatment.

Employment tribunal and Employment Appeal Tribunal decisions continue to show a commitment to ensuring that the protections of the Equality Act are interpreted in a way that gives them proper effect.   Discrimination claims can attract significant awards-  in the last reporting period (UK-wide), the highest award made was some £995,128 from a sex discrimination claim closely followed by £964,465 in a disability discrimination claim.  These are extreme cases but the median award for disability discrimination, for example, was £17,000, for sexual orientation discrimination £26,000 and for age discrimination £86,000.

Attitudes toward upholding the protections offered in the Equality Act seem unlikely to change in the short to medium term, and it is clear that any global or US-based businesses operating in Scotland, will need to maintain their commitment to equality of treatment and avoiding discrimination.

Company Employment Policies/Handbook

An Equality, Diversity and Inclusion policy is a staple of any company employee handbook. It ought to cover the values of the business and helps prevent unlawful discrimination by cementing how a business strives to deal with equality, diversity or inclusions complaints.

In updating outdated policies now, companies can ensure that irrespective of changes to equality, diversity and inclusion practices of other businesses, or in other countries, they remain at the forefront of the push for a fairer more inclusive workforce, and as a result minimise the legal risks.

Conclusion

While the rollback of DEI initiatives in the U.S. may influence global corporate strategies, UK businesses must remain vigilant in upholding their legal obligations under employment law.

Maintaining a robust approach to equality and inclusion is not only a legal requirement but also a strategic advantage in fostering an inclusive and equitable workplace, attracting the best staff, and maintaining a positive reputation.

Whilst the media would have you believe that things are bleak the evidence in the UK is quite the contrary. Employers should, nonetheless, take this opportunity to review their contracts, their companies’ policies and ensure they are fit for purpose. In-person training for staff and management could and should be encouraged to cement learning – particularly given recent developments with the new positive duty on Employer’s in respect of harassment.

Our team are always here to help whether it is advice, review or training. Do not hesitate in contacting us.

This update contains general information only and does not constitute legal or other professional advice.