2025 Top 40 Money Managers Report: How institutional investors are grappling with the DEI backlash

“DEI programming initiatives exploded after George Floyd,” says Ng, a professor at Queen’s University’s Smith School of Business, where his research focuses on equity and inclusion in business. “There was a lot of momentum built up.”

Read: Canadian employers continuing DEI efforts one year after murder of George Floyd

But that momentum has fizzled. Five years on, 2025 looks set to be another landmark year for DEI, but this one will go down in history for very different reasons, thanks to a backlash that has taken hold in certain quarters. The energy behind the DEI movement stalled after the U.S. Supreme Court’s July 2023 ruling in Students for Fair Admissions v. Harvard — which outlawed affirmative action in college admissions — before shifting decisively into reverse gear with the election and eventual inauguration of President Donald Trump.

One of the president’s first acts on his return to the White House was to sign an executive order commanding federal agencies to terminate all DEI offices and positions, as well as any equity-related grants or contracts. “President Trump only has jurisdiction over federal organizations, but the impact has been much deeper and broader,” says Ng. “As a result, a lot of organizations have become cautious when they have DEI programs in place.”

Reason for optimism

Several corporate titans, including Ford Motor Co., John Deere & Co., McDonald’s Corp., Meta, Target Corp. and Walmart Inc. have followed the lead of the Trump administration — often under pressure from their own shareholders — by publicly backing away from DEI policies and commitments.

Read: Walmart rolling back DEI policies

North of the border, Molson Coors Beverages Co. dropped a requirement that its hiring process fulfils specific representation goals and Shopify Inc. reportedly laid off its entire social impact team. And one of the victims of mass firings at the Alberta Investment Management Corp. was the person in charge of its DEI program, although a spokesperson emphasized to Benefits Canada that “the departure of the individual responsible for the formal DEI program has not lessened AIMCo’s firm commitment to these principles.”

Still, Laura McGee, founder and chief executive officer of workplace inclusivity consultants Diversio, sees reasons for optimism. “I was surprised at how quickly U.S. companies started pushing back and how few have actually substantively complied with the spirit of [Trump’ executive orders].”

For example, shareholder votes at Apple Inc. and Costco Wholesale Corp. firmly rejected anti-DEI proposals sponsored by the National Center for Public Policy Research, a conservative think tank. And a similar proposal by the National Legal and Policy Center — another right-leaning non-profit — was rebuffed by shareholders at John Deere (though the company’s management had already signalled its intention to pull back on DEI initiatives) with just 1.3 per cent of votes at its annual general meeting in favour.

Meanwhile, shareholder pressure cuts both ways, as the Shareholder Association for Research and Education has demonstrated with its focus on racial equity audits at Canada’s major banks. After a previous successful campaign in the 2023 AGM season helped convince the Bank of Montreal and the Royal Bank of Canada to match earlier commitments by TD Bank Group and CIBC to undergo a third-party racial equity audit, SHARE turned its attention in 2025 to Scotiabank — the only remaining member of the Big 5 banks to have resisted the call for an independent audit of its DEI commitments.

Read: Molson Coors ends DEI policies, moves to ‘broader view’

“The element that compounds our disappointment is the context in which we are operating, with an anti-DEI wave coming from the U.S.,” says Sarah Couturier-Tanoh, SHARE’s director of shareholder advocacy. “The current political circumstances demand leadership from banks, not cold feet.” More than 37 per cent of Scotiabank shareholders voted in favour of the 2025 SHARE proposal. Jenny Poulos, the bank’s chief human resources officer, said in a statement that the bank will continue “to evaluate and evolve” its approach, noting its pride in existing commitments, which include a Truth and Reconciliation action plan, an employment systems review and a third-party corporate human rights assessment.

Diverse group of voices

Despite all of the political back and forth over the issue of DEI in the last few years, the British Columbia Investment Management Corp.’s Jennifer Coulson remains unmoved.

“The pendulum hasn’t swung for us,” says the BCI’s senior managing director and global head of ESG. “This is something we continue to believe is a strong contributor to basic corporate governance at the board level, which is where we tend to focus our efforts.”

A recent update to the BCI’s proxy voting guidelines reinforced its expectation that investee companies in any part of the world consider all forms of diversity in their director recruitment processes and adopt formal diversity policies, including timelines and targets to improve representation, both on the board and in senior management roles.

Read: Florida files suit against Target, claiming DEI initiatives ‘misled investors’

In the 2024 AGM season alone, the BCI exercised 229 votes against sitting directors — typically, the nominating committee chairs or members — for falling short of its gender diversity requirement that at least 30 per cent of the board are female.

“There are very few people who would argue that having a diverse group of voices around the table is going to be a bad thing from a decision-making perspective,” says Coulson. “As institutional investors, this is a chance for all of us to convey a consistent message that our expectations have not changed and that this does matter for corporate governance.”

For Canadian investors in particular, recent developments offer an opportunity to distinguish themselves from their U.S. counterparts, says Paula Cruickshank, senior vice-president of fund investments at BDC Capital Inc. The latest results from its DEI reporting template found progress in the diversity of the industry’s representation, with women making up at least half of the employees at 37 per cent of its general partners in 2023, up from 31 per cent in 2022 and 21 per cent in 2021. A similar jump was evident over the same period for visible minorities, who made up at least half of employees at 18 per cent of GPs, up from nine per cent in 2021.

“We’re encouraged by the fact that diverse representation has been steadily improving in the industry,” she says. “We’ve integrated these concepts into our approach and we’re not willing to abandon them at this point. And I sincerely hope our GPs and our portfolio companies don’t either.”

Read: Apple shareholders reject proposal to scrap company’s DEI programs

Jennifer Choi, CEO of the Institutional Limited Partners Association, says many of its member organizations remain committed to DEI principles. “Belief systems don’t change overnight, so if you believed in December 2024 that an inclusive culture and diverse teams were of value and were important to your institution and how you consider investment opportunities, then you likely still believe those things today. We’re helping them as they navigate how their institution might evaluate what’s happening and how they might, if needed, make adjustments to how they are executing on those beliefs.”

It’s important to understand that the backlash isn’t necessarily universal, says Coulson. “I have the sense that a lot of companies are continuing to do this work, but they’re just doing it in a quieter way.”

McGee believes the same is true for other Canadian pension funds and money managers. “We haven’t had a single institutional investor say they were backing down from DEI, but we have had several say they were going to publicly change the language they’re using. A lot of people are moving away from the acronym and placing much more of the focus on inclusion.”

Read: Costco defends its diversity policies as other U.S. companies scale back

The international footprint of Diversio’s Canadian clients adds yet another layer of complexity to its approach to DEI — in their roles as both investors and employers. “There’s a lot of tension between what you’re required to collect and report in Europe and what you’re allegedly prevented from collecting and reporting in the U.S. We tell our clients there’s no risk-free option when you’re international, so you’ve got to pick your poison.”

Three years after the launch of its own DEI code for investment professionals in Canada and the U.S., the CFA Institute has added hundreds of signatories from around the world, each committing to provide annual progress reports on the voluntary code’s six metrics-based principles. Sarah Maynard, the organization’s global head of inclusion, says just one firm has formally backed out of the project in the last year, though it’s still actively engaging on the issue.

“This is a space where there is an opportunity to do good, meaningful work that enhances the business. The work that has a sensible foundation . . . will, I think, have longevity, but the performative stuff is likely to go. And I can’t say I’m sorry about that.”

Michael McKiernan is a freelance writer.

Download a PDF of the 2025 Top 40 Money Managers Report.