Authors: John M. Valley, Jessie Armour and Shae-Lynne Shaheen
Recent developments in diversity 2024 to 2025: a year of change
Last year we noted the beginning of a shift in the momentum of, and increasing challenges to, efforts to increase diversity among corporate leadership in Canada, the United States and elsewhere. While some jurisdictions continue to build on their prior progress on diversity, this is occurring against a backdrop of varying degrees of social and legislative support and at a much slower pace.
The speed and extent of the change is most notable in the United States, where challenges to DEI have increased seemingly exponentially. There has been a move, particularly at the federal level, to eliminate many practices that are perceived to detract from a merit-based focus. As a result, many companies have taken steps to reduce or reframe their communications surrounding DEI and some institutional investors and proxy advisory firms have also revised their voting guidelines. However, shareholders still consistently and strongly opposed anti-DEI shareholder proposals this past proxy season and it appears that many U.S. companies are quietly continuing many of their diversity initiatives.
United States
Change in political environment
In January, U.S. President Donald Trump issued several executive orders relating to DEI programs. The executive orders sought to eliminate all government DEI programs and to require federal contractors and federal grant recipients to certify that they do not maintain any DEI programs that violate federal antidiscrimination laws. They were also directed to enforce laws governing sex-based rights, protections, opportunities and accommodations to project men and women as biologically distinct sexes without recognition of self-assessed gender identity. The executive orders have prompted a flurry of activity in the United States, including those set out below:
- Injunctions were obtained against the implementation of certain elements of the executive orders, although some of these have since been vacated.
- In January, the attorneys general of 10 states issued a letter challenging DEI programs at six large U.S. financial institutions, warning them that their DEI policies could violate U.S. state or federal laws.
- In February, a letter was issued with the support of the attorneys general of 16 U.S. states confirming continued support for many best practices for diversity, equity, inclusion and accessibility.
- In March, the U.S. Equal Employment Opportunity Commission and the U.S. Department of Justice issued two technical assistance guides setting out the views of those agencies on what may constitute unlawful DEI discrimination.
- In May, the U.S. Department of Justice announced it would use the False Claims Act to investigate and pursue claims against companies receiving federal funds that knowingly violate federal civil rights laws.
- In July, T-Mobile, with a view to securing U.S. government approval for its acquisition of U.S. Cellular’s wireless business, and in response to pressure from the U.S. Federal Communications Commission, committed to the Chair of the Commission that it would no longer have employees or teams focused on diversity, would eliminate all references to diversity and DEI on its company websites and in all future communications and would abandon all specific targets or goals for diverse spend in its procurement policies.
Court decisions
In December 2024, the U.S. Court of Appeals for the Fifth Circuit vacated the SEC’s approval in 2021 of NASDAQ’s listing rules requiring (a) disclosure of a diversity matrix identifying (i) the number of directors who are men, women or choose not to disclose; and (ii) the number of directors in different racial or ethnic categories or who are LGBTQ+; and (b) each listed company to have at least one female director and one director who self-identifies as an underrepresented minority or as LGBTQ+ or to explain why they do not. NASDAQ chose not to appeal the ruling, and the SEC approved recission of the listing requirement in January 2025.
In June, the U.S. Supreme Court concluded that the standard for proving disparate treatment at work is the same for all employees, regardless of whether they are members of a minority or majority group. The Court expressly rejected the view that employees who are members of a majority group and who allege that they have been the victims of discrimination at work face a heighted burden compared to minority group members. The case involved a heterosexual woman who claimed that she had been denied opportunities at work because of her sexual orientation after promotions were awarded to a lesbian woman and a gay man.
Shareholder response
U.S. institutional investors have re-examined their diversity-related voting policies in response to political pressure. For example, the updated proxy voting polices for BlackRock, State Street and Vanguard no longer include negative voting recommendations for a failure to achieve specific levels of gender, racial or ethnic diversity. However, the policies for BlackRock and Vanguard continue to address board diversity, with BlackRock’s proxy guidelines stating that in the case of an S&P 500 company, if the company is an outlier in its board composition, it may vote against members of the nominating or governance committee. Vanguard’s proxy guidelines state that it may vote against the nominating or governance committee chair if board composition or related diversity disclosures fall short of market norms.
Proxy advisory firms have also updated their approaches to their diversity-related voting recommendations. Starting with the 2025 proxy season, Institutional Shareholder Services (ISS) will no longer consider gender or racial or ethnic diversity on a U.S. company’s board. Glass Lewis has retained its existing diversity policy, but when it makes an against or withhold recommendation for a director of a U.S. company for diversity reasons, it includes a notice that identifies a supporting rationale if the investor wishes to vote in a different manner. Despite these changes to their U.S. voting guidelines, the ISS and Glass Lewis guidelines with respect to diversity at Canadian companies remain unchanged. For Canadian companies, ISS will generally recommend voting against or withholding votes for the nominating committee chair (or its equivalent) of companies on the S&P/TSX Composite Index where the board has no apparent racially or ethnically diverse members and the company has not provided a formal, publicly disclosed written commitment to add at least one racially or ethnically diverse director at or prior to the next annual general meeting. Glass Lewis continues to require Canadian companies listed on the TSX to have a board that is at least 30% gender diverse and for other Canadian companies to have at least one gender-diverse director. However, it is not clear whether further changes by either or both of ISS and Glass Lewis will be made this year.
Despite the political pressure on diversity, shareholders overwhelmingly rejected anti-DEI shareholder proposals at several U.S. companies, including American Airlines Group Inc., Apple Inc., Deere & Co., Dick’s Sporting Goods, Inc., Goldman Sachs Group, Inc., Merck & Co. and Target Corporation.
Company response
Many U.S. companies had already considered aspects of their diversity initiatives in the face of the U.S. Supreme Court’s Harvard decision in 2023 [PDF]. However, in response to the rapidly changing environment, the 2025 proxy season saw a further and more significant change in the way that companies disclosed matters relating to their diversity initiatives. For example, surveys showed a marked drop in references to DEI among U.S. public company proxy materials, with related terms (“racial”, “gender” and “diversity”) generally seeing significant, but smaller, declines.1 While the nomenclature and extent of the disclosure may have changed, there is anecdotal evidence that many of these companies appear to have quietly continued their diversity initiatives.
Canada
Developments in the United States had a clear impact in Canada, with anecdotal evidence suggesting that many issuers actively considered and revised the nature and extent of their own diversity-related disclosures, particularly for those companies that are dual-listed or that have significant United States operational footprints. Similar trends to those noted in the United States relating to the nomenclature used by TSX-listed companies in their proxy materials were evident, but so too was the apparent continuation of many of the underlying diversity-related initiatives.
In February, the government of Canada issued for consultation draft regulations under the Bank Act proposing to require banks to provide prescribed diversity disclosures to shareholders. The draft regulations are modelled on regulations applicable to companies incorporated under the Canada Business Corporations Act (CBCA) and would require disclosure with respect to term limits or other mechanisms for board renewal, board diversity policies, whether the representation of individuals from designated groups is considered when identifying director candidates or making executive appointments, any targets for the representation of designated groups on the board or within senior management and the number and percentage of directors and senior management members from each designated group. The draft regulations under the Bank Act would differ from the existing regulations under the CBCA in that disclosure for First Nations, Inuit and Métis representation would need to be provided for each such category rather than for all Indigenous Peoples collectively.
In April, the Canadian Securities Administrators (CSA) announced that they were pausing their work on amendments to the existing diversity-related disclosure requirements, stating that the move is intended to give Canadian markets and issuers time to adjust to recent developments in the U.S. and globally.
United Kingdom
In March, the U.K. government issued a consultation on how to introduce mandatory ethnicity and disability pay reporting for employers with 250 or more employees.
The U.K. Financial Conduct Authority and Prudential Regulatory Authority also confirmed in March that they would not be taking any action following their previous consultations on measures to improve diversity and inclusion in the financial services industry. They stated that they wished to avoid additional regulatory burden and potential overlap with the U.K. government’s proposed legislative agenda in this area, including on gender action plans and disability and ethnicity pay gap reporting.
In April, the U.K. Supreme Court concluded that references to the words “man”, “woman” and “sex” in the U.K. Equality Act 2010 refers solely to biological gender. Statutory guidance on legislation establishing gender-based targets to increase the proportion of women on public boards in Scotland had defined “woman” as including trans women. In response to a challenge from a feminist organization, the Court concluded that persons who had acquired a gender different from their biological gender, even if they have a gender recognition certificate under the Gender Recognition Act 1994, are nevertheless to be considered to be members of their biological sex. As a result, the appointment of a trans woman to a board does not count towards achieving the goal of women comprising 50% of the non-executive board members.
European Union
The deadline for member states of the European Union to transpose into law the European Union Gender Balance on Corporate Board Directive, which requires that 40% of non-executive director positions (or 33% of all director positions) in listed companies be held by members of the underrepresented sex by 2026, was December 28, 2024. However, according to the European Institute for Gender Equality, only nine member states were in compliance by the deadline.
Diversity reports around the world
United States
Using data provided by Equilar, 50/50 Women on Boards reported that in the United States, women held 30.2% of the corporate board seats among the Russell 3000 Index companies as of December 31, 2024. This represents an increase of one percentage point from December 31, 2023. The report noted that the rate at which women are being added as directors in the United States has slowed: only 26.3% of new directors were women, and 88% of them were the result of adding a board seat rather than replacing an existing director who was a man. 50/50 Women on Boards also reported that as at December 31, 2024, people of colour held 19.1% of board seats on Russell 3000 companies, compared to 18.2% the year before, with women of colour at 7.7% and men of colour at 11.5%.
United Kingdom
The FTSE Women Leaders Review [PDF], issued in February 2025, reported that in 2024 women’s representation the boards of the 350 largest public companies in the United Kingdom had reached 43.4%, compared to 42.1% in 2023. The continued progress may reflect the relatively high appointment rate of 46% for women directors on the FTSE 350. In terms of women’s representation on executive committees, the report noted that the percentage of women in FTSE 100 leadership roles (comprising both executive committees and direct reports) had reached 36.3%.
Each year, the Parker Review [PDF] provides information on the ethnic diversity of U.K. public companies. The most recent update noted that directors from an ethnic minority represented 19% of director positions among the FTSE 100 companies (unchanged from 2023) and 15% of director positions among the next 250 FTSE companies (an increase of two percentage points from 2023). The report noted that among FTSE 100 companies, on average 11% of senior management positions were held by individuals from an ethnic minority based in the U.K, while the average percentage was 9% among the next 250 FTSE companies.
Australia
According to the Watermark Search International 2025 Board Diversity Index, among the companies included in the S&P/ASX 300 Index in Australia, women held 37% of the board seats as of January 1, 2025, compared to 36% the prior year. The report also noted that only 8.1% of S&P/ASX 300 directors were of non-Anglo/European backgrounds, a decrease from 9% the year before. Indigenous persons held only seven board seats, there were between four and 20 LGBTQ+ directors and no directors with a disability were identified.
As these developments and reports indicate, progress on diversity internationally has slowed considerably.
- See, e.g., “Report: Big US Companies Are Disclosing Less of Their Work in DEI… But That Doesn’t Mean They’re Abandoning DEI,” The Conference Board, August 4, 2025. ↩︎
