Attacks on Corporate DEI Intensify With Boeing Supplier Probe

Texas Attorney General Ken Paxton’s recent request for Spirit AeroSystems Holdings Inc.’s diversity, equity, and inclusion documents after serious defects were found in airplane parts it manufactured for Boeing Co. nods to a newer strategy to challenge corporate DEI policies.

Spirit, which manufactures the fuselages for Boeing’s 737 series jets, had until April 17 to provide documents for the investigation Paxton announced in late March. Boeing’s safety record has been under intense scrutiny since the National Transportation Safety Board found that four bolts were missing from the door panel that blew off an Alaska Airlines jet mid-flight in January.

The Republican attorney general, who was recently acquitted in an impeachment trial over corruption allegations, instructed Spirit to release documents on its DEI commitments for an investigation that will examine “whether those commitments are unlawful or are compromising the company’s manufacturing processes.”

Paxton’s foray into investigating Spirit’s DEI program is part of a bigger conservative movement to question corporate DEI practices and discourage companies from continuing them. Such attacks on DEI efforts in settings from universities to corporations have gathered speed since the US Supreme Court’s June 2023 decision curtailing affirmative action in college admissions.

The conservative organization America First Legal sent the US Equal Employment Opportunity Commission a barrage of letters requesting probes into DEI practices at more than 30 major companies. The attacks have also taken the form of litigation that has prompted changes in eligibility requirements for DEI fellowships and programs, including those at pharmaceutical giant Pfizer Inc. and law firm Morrison & Foerster LLP.

The Paxton investigation and some of the other recent attempts to dismantle corporate diversity programs rely on the belief that DEI results in lower quality of workers which in turn negatively impacts a company’s performance. It marks “a higher level of aggressive action against DEI,” said Douglas Chia, president at Soundboard Governance.

“I think it is largely theater,” Chia continued. “But it’s not theater that they can just ignore. I think it definitely would raise the issue in the boardroom of ‘could we be next?’”

Paxton’s office didn’t respond to queries on whether Spirit met the attorney general’s deadline to provide documents. Spirit spokesperson Joe Buccino declined to comment on the ongoing investigation, but said the supplier is “wholly focused on providing the highest quality products to all our customers, to include the Boeing Company.”

Employee Performance

Paxton’s investigation fits into a broader anti-ESG strategy by Republican attorneys general to “intimidate, threaten, and otherwise impact corporate behavior even if they have no legal basis” to do so, said Karl Racine, a former attorney general in the District of Columbia who now works at Hogan Lovells.

While attorneys general have very broad authority to conduct investigations, Paxton’s queries about diversity “appear to have zero merit,” Racine said.

Paxton asked Spirit to produce any documents it relies on to substantiate claims that a diverse workforce improves product quality or enhances performance, as well as demographic information of employees before and after Spirit enacted its DEI policy.

Paxton said he has the authority to conduct this investigation under Texas law, including the Texas Business and Organizations Code Section.

“Part of this trend of challenges to DEI programs was kind of the background assumption that DEI used by employers or colleges and the like involves hiring unqualified people,” said Michael Selmi, a professor at the Sandra Day O’Connor College of Law at Arizona State University.

In response to the Silicon Valley Bank collapse in March 2023, Florida Governor Ron DeSantis (R) said on Fox News that the bank’s focus on DEI diverted its attention away from its core mission. Former Trump advisor Stephen Miller posted on X, formerly known as Twitter, that House Republicans should subpoena SVB to learn “how many hours & dollars were spent on equity/DEI/ESG/climate scams.” ESG refers to companies’ environmental, social and governance initiatives.

More recently some Republicans blamed diversity, equity, and inclusion efforts for the March 26 collapse of the Francis Scott Key Bridge in Baltimore, implying that prioritizing DEI distracts from other priorities like safety.

Michael Foreman, a professor at Penn State Law, said that in order for Paxton’s investigation to be meaningful, it would require a very detailed analysis that shows either the company’s production or its work as a whole has suffered because of its DEI initiatives.

“There’s been a lot of studies on diversity programs across the board,” Foreman said. “There is absolutely no analytical data out there that in any way supports requiring people to produce this information to prove that it’s enhancing performance or not enhancing performance. That data doesn’t exist, so it’s a bit of a witch hunt on that front.”

Terrill Wilkins, an employee-focused attorney at Abrahamson, Rdzanek & Wilkins LLC, said he’s seen an uptick in minority employees that have told him they are feeling an increased pressure to perform, and feel unsupported because corporate DEI has become such a hot button issue.

“I’ve had people tell me, for example, ‘I feel like ever since I got that promotion, ever since I got that raise, that there’s been a target on my back because there are people I work with that don’t think I deserve it and they don’t like it and I know that my company is starting to worry about this DEI program because of this outside noise,’” he said.

Pressure Points

America First Legal—headed by Miller—has sent over 30 requests to the EEOC to investigate DEI policies at companies like Southwest Airlines Co, Major League Baseball, and Macy’s Inc. Some companies, including Pfizer Inc., have altered the eligibility language of their DEI programs following lawsuits claiming the practices and policies are illegal and discriminatory against White men.

Several companies, including JetBlue Airways Corp., Molson Coors Beverage Co., and Leidos Holdings, Inc., have also listed DEI as a “risk factor” in their securities filings, citing company potential vulnerability for taking too much or too little action on diversity.

“From the company’s perspective, I assume, having 50 different states start looking at what you’re doing, including your hiring practices, that just seems to be unprecedented,” said Selmi, the Arizona State University law professor, referring to the potential for additional states to ramp up anti-DEI efforts.

Attorneys say it remains unclear if Spirit will release the information requested by Paxton, and there is a possibility that the matter will need to be settled by Texas state courts.

Foreman said that either way, the Texas attorney general’s efforts serve as a warning shot for other corporations who “don’t want to be spending time and money responding to Paxton’s requests for all this data.”

“The forces at play politically that are in these various legal efforts to tamp down DEI, they’re starting to figure out where the pressure points are,” Wilkins said. “This is just one more example of another strategy that’s being used to essentially whittle down or potentially altogether eliminate these types of policies.”