Supreme Court decisions often ripple across segments of society beyond the parties actually before the Court. Financial institutions may experience this with respect to the 2023 U.S. Supreme Court decision in Students for Fair Admissions v. Harvard.¹ This decision effectively ended consideration of race as a plus factor in college admissions, a practice that had shaped higher education for decades.²

For many, the SFFA decision presents a possible existential threat to DEI initiatives throughout society – a pendulum swinging back to knock down the carefully layered bricks of an inclusive infrastructure. Since then, businesses across the economic spectrum, including banking in all its variations, have wrestled with the impact of the SFFA decision on their own policies in support of diversity, equity and inclusion. They have reshaped those policies to still pursue the benefits of a diverse and inclusive workforce and customer base.

The SFFA decision engendered declines in admissions numbers for minority students across the nation. Institutions no longer ask students to “check a box” identifying their race. However, institutions still value a diverse student body and have begun giving students the option to submit diversity statements allowing students to share their experiences and perspectives without a direct racial correlation. In response, some states have enacted legislative efforts to ban such statements.³

The SFFA decision also prompted changes in hiring practices and processes in non-education employment spaces as a precautionary measure. Non-education organizations have faced litigation against their efforts to give an advantage to minorities.⁴ As a result, organizations have re-evaluated and revised their programs to insulate against litigation risks. Common financial institution initiatives that provide set-asides favoring minorities (such as internship programs) or racially based goals aimed at increasing workforce diversity will be subject to scrutiny.⁵

To minimize the risk of litigation for their DEI initiatives, financial institutions should consider the following “Do’s and Don’ts”:

• Set clear business-related objectives and policies for recruiting, retention and related diversity and inclusion efforts. Make the business case for diversity.
• Evaluate current diversity or inclusion initiatives to identify and then remove litigation triggers, such as racially based gating criteria or quotas. Link eligibility and objectives to the business case.
• Revamp DEI expectations and training to focus on the benefits to the business from a diverse workforce and customer base.

This list, of course, provides only a handful of considerations and will need to be supplemented for your particular circumstances.

While the Supreme Court’s decision may have altered the landscape of diversity-related initiatives in education, its implications for corporate DEI efforts are not definitive. Financial institutions can be leaders in showing that these values can be part of an organization’s success strategy.