01 May 2024 I’ll Take a Soda, a Show and Even the Check – But Please, Hold the DEI
Conservative Shareholders Challenge Discriminatory Practices at Coca-Cola, Pepsi, MGM and Citigroup Meetings
Washington, D.C. – Giving voice to growing concerns regarding corporate Diversity, Equity and Inclusion (DEI) policies, shareholders with the National Center for Public Policy Research’s Free Enterprise Project (FEP) are presenting proposals this week calling out Coca-Cola, Pepsi, MGM Resorts and Citigroup for discriminatory practices.
FEP’s proposals ask that each company’s board commission and publish a report on whether it engages in any practices associated with DEI initiatives that may create risks of discriminating illegally on bases such as race and sex, thereby potentially triggering justice-seeking responses from stakeholders (including employees, suppliers, contractors and retained professionals), and the potential costs of such discrimination to their business.
Last year the U.S. Supreme Court ruled in SFFA v. Harvard that discriminating on the basis of race in college admissions violates the equal protection clause of the 14th Amendment. Attorneys General of thirteen states shortly thereafter warned Fortune 100 companies that SFFA implicated corporate DEI programs. Prior legal advice regarding the legality of racially discriminatory programs has been called into question post-SFFA. Recent analysis of hiring by Fortune 100 companies in the wake of the 2020 race riots found that whites were excluded from 94 percent of the hiring decisions, providing prima facie evidence of illegal discrimination by these companies.
FEP’s Citigroup proposal (Proposal #8) quoted Citi CEO Jane Fraser declaring that she was “completely committed to supporting our affirmative action program,” noted eight career development programs that facially discriminate on the basis of race/sex/gender, and identified $1 billion in “strategic initiatives” apparently intended to allocate Citi resources on the basis of race in order to “help close the racial wealth gap.”
Ethan Peck
“DEI is immoral, divisive, illegal and detrimental to shareholder value,” said FEP Associate Ethan Peck, who presented FEP’s Citigroup proposal yesterday. “It may sound benign to naive ears – after all, why would anyone oppose ‘diversity’ or ‘inclusion?’ But like with everything woke, the normal meanings do not apply; rather, they have esoteric definitions concealing a radical political agenda. According to the twisted logic of DEI, a group of 10 women is more diverse than a group of 5 men and 5 women.
“It has always been the case that hiring based on race and gender is illegal, but in light of the recent Supreme Court decision on affirmative action, it’s now clear beyond a doubt,” continued Peck. “What this means is that it’s only a matter of time before employees sue companies – and win – for not being hired or promoted because they happen to be white, straight or male.”
FEP’s Coca-Cola proposal (Proposal #6) reminded shareholders in 2021 that Coca-Cola infamously instructed its employees to “be less white,” and that to be less white means to be less “ignorant,” “oppressive” and “arrogant,” alongside a host of other false and discriminatory slurs. Having not learned from the fallout of that discriminatory incident, the company still boasts: “It is our aspiration by 2030 to have women hold 50% of senior leadership roles… and in the U.S. to have race and ethnicity representation reflect national census data at all levels.” In addition, Coca-Cola’s “Equity Accountability Councils” (EAC) “focus on economic equity for Asian Pacific, Black, and Hispanic communities.”
Stefan Padfield
“It is difficult to think of a way for Coca-Cola to socially engineer the company to reach these goals without discriminating on the basis of race and sex,” said Free Enterprise Project Deputy Director Stefan Padfield, who will present the proposal today. “And the risks here are very real. As set forth in our proposal, associated potential liability could run to $125 billion based on the damages in a recent relevant lawsuit and the company’s current exposure.”
FEP’s PepsiCo proposal (Proposal #11) noted that PepsiCo has apparently adopted gender and race hiring and promotion quotas in order to “increase our Black and Hispanic managerial populations, respectively, to 10% by 2025” and have “50% women in management roles by 2025.” In addition, PepsiCo is allocating resources on the basis of race as part of its Racial Equality Journey (REJ) Initiative, including “$400 million to increase Black representation at PepsiCo, support Black businesses and empower Black communities” and “$172 million to empower Hispanic communities and businesses.”
“Pepsi asserts that its employees are recruited, hired, assigned and promoted without regard to race, color, sex or any other protected category, but it nonetheless doubles down on its ‘representation goals,’ which
do absolutely nothing short of blatantly sorting people into race, sex, and other protected-
category buckets and then counting them out for purposes of what is essentially Pepsi’s social
engineering project,” noted Padfield, who will present this proposal today.
FEP’s MGM Resorts proposal (Proposal #5) notes problems particularly with MGM’s selection of suppliers and vendors:
MGM is potentially discriminating in illegal ways as follows: (1) adopting a goal of “15% procurement from Diverse Suppliers by 2025,” (2) allocating $300 million to diverse suppliers in 2022, and (3) allocating resources in potentially discriminatory ways via its Supplier Diversity Mentorship Program with a goal of graduating 150 diverse owned businesses by 2025.
In addition, MGM has been rated “medium risk” by the 1792 Exchange on its “Spotlight Bias Report,” which notes among other things that MGM “vets vendors according to LGBTQ policies,” which could lead to MGM illegally discriminating against vendors on the basis of a vendor’s religious beliefs.
“MGM claims that ‘by embedding diversity… into our business strategies, we are… more directly able to attract members of diverse communities to our resorts and entertainment offerings,’” noted Padfield, who is presenting FEP’s proposal today. “Does that mean that MGM views its customers as racists who need to be served by members of their own race in order to feel comfortable? That is hardly a compelling rationale. More importantly, it wouldn’t excuse illegal race discrimination even if true.”
More information about these proposals, as well as other key votes, can be found in FEP’s mobile and web app, ProxyNavigator.
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