What does it mean when one of the largest spirits companies turns away from its DEI goals?

On August 21, conservative activist Robby Starbuck announced via social media that Brown-Forman, the spirits conglomerate that includes brands such as Jack Daniel’s whiskey and Herradura tequila, would be ending its DEI goals and removing the company from the Human Rights Campaign’s Corporate Equality Index.

In the post, Starbuck takes credit for the move, suggesting that Brown-Forman took this step preemptively to avoid exposure.

https://twitter.com/robbystarbuck/status/1826432179661889899

It’s unclear what was at risk of being revealed since publicly traded companies tend to share their DEI goals on their websites and annual reports, and HRC’s Corporate Equality Index is widely publicized. However, amid the recent anti-DEI backlash, does Brown-Forman’s move indicate corporate America’s fear of right-wing boycotts or is there more to this move than meets the eye?

Is this the end for DEI goals?

“We’re at a pivotal moment in our society where everybody is literally on pins and needles,” spirits consultant Samara B. Davis tells Fast Company. She places Brown-Foreman’s decision against the backdrop of the recent Supreme Court ruling striking down affirmative action in college admissions as well as the lawsuit against the Fearless Fund, a venture capital firm that invests in women-of-color-owned companies. A number of companies are reportedly rethinking and retooling their DEI policies fearing legal challenges. But in the case of Brown-Foreman Davis thinks that the move is more about optics than a meaningful change in the way that the company operates. “They’ve done DEI longer than any spirits brand has. They’ve never made it a big deal.”

In an emailed statement, a representative for Brown-Forman confirmed the “evolution” of the company’s DEI strategies. However, on a recent earnings call, the company didn’t mention the change. As far as Brown-Forman’s competitors are concerned, they appear to remain committed to their stated goals, although it may be too soon to tell.

Perhaps as a feature—or a bug—of DEI language is that it can be vague. HRC’s Corporate Equality Index, however, is a more concrete marker for corporate behavior. HRC is one of the nation’s largest LGBTQ+ advocacy organizations, and it has been publishing its Corporate Equality Index for over two decades. The index evaluates companies based on their commitment to fostering inclusive workplaces for LGBTQ+ individuals. HRC ranks all Fortune 500 companies, while other companies must opt in.

Recently, Brown-Forman, Ford, Lowes, and Harley Davidson have pulled out of the index, with Starbuck appearing to target companies found on the list with threats of boycott. Molson Coors announced plans to cut its DEI-training programs Wednesday. However, in a statement, Eric Bloem, HRC’s vice president of programs and corporate advocacy, says “the attacks on DEI are nothing new” and that these attacks are a response to “immense” progress.

Bloem calls Brown-Forman’s move “immensely disappointing coming from a company that previously made their workplace a welcoming one for LGBTQ+ employees and others; they received a 100 score on the 2023-2024 Corporate Equality Index. The company has now made a hasty and terrible long-term business decision that abandons its financial duty to recruit top talent from across the full talent pool.”

Across the competition

Dave Karraker, President of Raptor Communications, a San Francisco-based spirits PR consultancy, echoed the concern over recruitment. “I’m looking at which company I’m going to join; I’m going to be looking for who’s externally professing and exhibiting my values.” He credits DEI policies as a way to ensure companies have the best workforce policies and labels Brown-Forman’s move as a knee-jerk reaction that sets a dangerous precedent.

In contrast, a representative for Beam Suntory, the company behind Maker’s Mark whiskey and El Tesoro tequila, stated that the company remained committed to its DEI initiatives. Similarly, the website for Diageo, the company behind spirits powerhouses Johnnie Walker, Smirnoff, and Casamigos features a prominent section dedicated to DEI and lists several explicit goals, including having 45% of their leaders come from an “ethnically diverse” background by 2030.

Although employee retention is crucial to a company’s success, Brown-Forman’s move may be more about sales than anything else. The company reported an 8% sales decrease in the quarter ending on April 30, 2024, and Davis speculates that this move might represent a risk-averse industry looking to avoid any potential Bud Light-style boycotts. Karraker also believes that the company may have made a calculation that a possible boycott from anti-DEI groups might be more costly than a boycott in response to the rollback of those goals.

It remains to be seen which, if any, of their competitors will face similar pressure to scale back their DEI efforts. Given our highly polarized political landscape, this might be a sign that although corporations want to do the right thing by their employees, public declarations may not be worth the risk.