For the fashion industry, the Supreme Court’s landmark decision to reject affirmative action at colleges and universities is the latest, and potentially most significant, in a monthslong backslide on diversity, equity and inclusion policies and programmes.

In a widely expected decision Thursday, the Supreme Court’s six conservative justices effectively prohibited colleges and universities from considering race and ethnicity as a factor in their admissions. Though it only applies directly to US institutions of higher learning — affirmative action policies at Harvard University and University of North Carolina were at the heart of the case — executives at fashion and retail companies expect the ripple effects will extend to their hiring practices and DEI programmes.

States like Florida and Texas have advocated for penalties on companies that mandate DEI training for employees or even just establish DEI departments (both states have already banned both practices at public universities). Anti-LGBTQ extremist groups and conservative politicians led calls to boycott companies that positioned themselves as allies to the trans community, causing some — including Target — to tamp down their Pride celebrations.

For now, companies are reacting more to the potential for a social media blowup than legal threats. But experts say that may change, especially if conservatives emboldened by the ruling mount legal challenges to corporate DEI efforts, including hiring practices meant to boost workforce diversity.

Whether or not those fears are grounded remains to be seen. But even before the ruling, some fashion firms had quietly backed off from investment in DEI efforts, which gained new momentum in the summer of 2020. Experts say there’s no single cause for the slowdown, but rather a mix of conservative backlash, frustration over stalled progress and waning enthusiasm from employees and consumers.

Amber Cabral, a DEI strategist who runs her own consultancy and author of Allies and Advocates and Say More About That, said she’s logged a “massive drop-off” in business in the past few months as companies reconsider how much of a priority DEI is to their broader objectives.

“We are not getting the same amount of calls as we were because people are afraid,” she said.

Last month, the Wall Street Journal reported that mentions of “environmental, social and governance,” “ESG,” “diversity, equity and inclusion,” “DEI,” or “sustainability” by executives on hundreds of earnings calls between April 1 to June 5 are down 31 percent from the same period last year, citing the financial-research platform AlphaSense.

Some fashion and retail companies have looked at folding their DEI pursuits into other departments like ESG or human resources. Others are mulling the idea of rebranding the chief diversity officer as a chief transformation officer or another less-conspicuous title, a diversity chief at a fashion retail company told BoF.

“Diversity initiatives and efforts are under attack,” said Akilah Cadet, founder and CEO of her DEI consultancy Change Cadet, which advises brands like Hill House Home and Dôen. “The future is dire, but it doesn’t mean the work is done.”

Here BoF unpacks what the Supreme Court affirmative action ruling means for fashion firms and their DEI leaders and programmes.

What does the ruling means for fashion’s hiring practices?

Federal law prohibits organisations from considering race and characteristics such as sex and religion as a factor in employment decisions. To sidestep legal risk, companies looking to boost their diversity have historically had to play within a legal grey area. Typically, companies avoid mandating a fixed percentage of individuals in certain positions be of a specific race, while pursuing broader goals such as improving organisational performance or creating aspirational targets like gender parity.

On the heels of the racial justice protests in the summer of 2020, Cadet’s consultancy saw an uptick in companies reaching out in hopes of diversifying their hiring process. Requests ranged from making “the language in the application to the questions asked in an interview” more inclusive to advice on how to “start building accountability,” she said.

But the Supreme Court ruling could serve as a signal that companies have “permission to stop doing the work,” Cadet said. She anticipates some brands will want to remove racially inclusive language from their job descriptions.

Ripple effects from the ruling could frustrate other recruitment and retention efforts, especially if top universities enrol fewer Black students.

“There’s going to be a greater, greater lift required by retail companies if they want to continue to grow their pipeline of diverse talent,” said Kyle Rudy, senior partner at Kirk Palmer Associates, who spearheads the firm’s DEI efforts. “It takes commitment, and, in some cases, continued courage.”

What are the consequences for fashion’s DEI programmes?

Fashion brands, retailers and major conglomerates — from Nike and Lululemon to LVMH and Kering — have named diversity chiefs, created DEI departments, or both over the past few years. They hoped, among other things, to have their internal organisations better reflect their customers, and help minority employees feel they belonged.

Their effectiveness has varied. But while new programmes “weren’t forcing the people who didn’t want to do the work to do it anyway,” they did help create a framework for holding organisations accountable, Cabral said.

DEI programmes have become a lightning rod for conservative politicians, however. Florida governor Ron DeSantis, the leading challenger to Donald Trump for the Republican presidential nomination, has vowed if elected to ban corporate DEI initiatives, characterising them as dangerous and discriminatory.

If companies continue to back off from conversation and investment — such as by halting collection of DEI data for fear it will get them in legal hot water down the line — “we will no longer see metrics, KPIs [key performance indicators] and OKRs [objectives and key results] that hold companies accountable to support BIPOC people’s workplace experience, retention and upward mobility,” Cadet said.

What can companies and diversity leaders do?

Companies should keep in mind that the values of diversity, equity and inclusion are ultimately a means to “mindset shift,” said Cabral.

Diversity leaders should start to think about their transferable skills — like effective communication or change management — as these departments face an uncertain future, she added.

Companies should recognise that with or without DEI programmes, they will still need to diversify their workforce if they’re going to appeal to the next generation of consumers and employees, Rudy noted.

Renaming departments and cutting budgets is also unlikely to allow retailers to fly under the radar on this issue; it may just change where the pressure is coming from. The summer of 2020 showed customers and employees are willing to call out companies they see as falling short on DEI. Just last week, employees of more than 150 Starbucks cafes organised a strike after a union representing baristas claimed some locations were not allowed to put up Pride decorations.

“Be prepared to see more advocacy in society that will find ways for fashion and retail companies to be held accountable like boycotts and exposés to inform consumers of how they want to spend their money,” Cadet said.