Navigating DEI Challenges: A Guide for Corporate Boards

Corporate boards are facing a tough time with diversity, equity, and inclusion (DEI) programs. The rules are changing, and it's not easy to keep up. Companies with operations worldwide have it even harder because laws differ from one place to another. To handle this, boards need to be well-informed and careful. They should make sure their discussions stay private and are well-documented. This means labeling private talks as such, being mindful of who is present during meetings, and ensuring that discussions focus on the company's interests, not personal ones. They should also avoid sharing private information publicly. Boards have a duty to oversee DEI risks. This is especially important now, with new rules and enforcement actions. They should get regular updates on DEI efforts and potential risks. This includes looking at past and present DEI activities, like policies, training, and lawsuits.Some areas are riskier than others. For example, tying compensation to diversity metrics can be tricky. If a company links pay to diversity levels of US employees, it might face scrutiny, even if the pay is for non-US employees. Similarly, setting demographic targets can be seen as a quota system, which could lead to legal trouble. Boards should also think about the risks of changing or ending DEI programs. They need to consider how these changes might affect the company's reputation and talent retention. They should also assess the legal risks involved. To manage these risks, companies should regularly monitor legal developments and update their risk assessments. Boards should also make sure they have the right insurance coverage for potential legal issues.