Affirmative Action Down, is ESG Next?

The Supreme Court’s recent ruling to ban the use of race as part of the college admissions is expected to bleed over into the culture wars and the ESG movement.

What happened: Last week, the US Supreme Court released a landmark decisions that effectively ended affirmative action for college admissions. The court ruled on two similar cases, including one at Harvard, that race could no longer be taken into consideration when it to comes to handing out college admissions.

• Affirmative action in colleges dates way back to a 1978 Supreme Court decision that allowed schools to consider race as a factor for admissions. The court’s ruling was not meant to correct for racism’s legacy, but to ensure a diversity of people and viewpoints in the classroom.

The impacts of last week’s mandate won’t be felt right away, but there are signs of what to expect.

Previous rulings: In 1996, after California barred racial preferences in public institutions, the number of Black college freshmen dropped by half just two years later. And while this means less diversity for the Van Wilder college keggers (hard seltzers now??), it also means less diverse representation in Corporate America.

The impact of a ’90s ban on affirmative action in California

In this year’s court hearings, nearly 70 companies, including General Electric, Google, and Jet Blue, warned that without affirmative actions in college, they’ll lose access to “a pipeline of highly qualified future workers and business leaders”.

*ESG has entered the chat*

While the Supreme Court’s ruling doesn’t directly address environmental, social, and governance (ESG) targets, affirmative action and ESG are connected like they’re Seth Rogan and James Franco.

The social impact: Colleges are governed under a different set of laws than private institutions. Schools that receive public funding are covered under Title VI of the Civil Rights Act, while private sector workplaces are under Title VII… but they’re still related.

• According to employment specialist Daniel Pyne III at the law firm Hopkins Still speaking on the two sets of laws, “many of the thought processes and the basic legal principles” are the same.

Given that the social component of ESG is front and centre of the culture wars right now, it’s widely expected there will be court challenges specifically targeting diversity, equity, and inclusion (DEI) programs included inside ESG.

Lawyers from Morgan Lewis wrote that the Supreme Court’s decision could affect “how courts analyze diversity, equity, and inclusion and environmental, social, and governance strategies well beyond education admissions, including in employment-related practices such as recruiting, hiring, and promotion”

Zoom out: Companies like Apple routinely conduct “racial equity audits” to ensure a diversity in their workforce and management, something the majority of Americans believe is a good thing. That being said, according to an ABC poll, most Americans also agree with the Supreme Court’s ruling. 

It’s likely just be a matter of time until ESG and DEI initiatives make their way in front of the Supreme Court.

The silver lining: In response to the ruling, student groups are now challenging legacy college admissions that considers an applicant’s family and their school donations for admissions. If everything follows, at least the VP’s trust fund kid won’t be the token summer intern anymore.

+Bonus infographic: Women in the Energy Sector and What Is Changing