The conservative backlash against the gay rights index: How it was once embraced by Walmart and others but is now being targeted by conservatives.

• The largest retailer and private employer in the U.S., Walmart, announced that it would no longer share data with the LGBTQ+ group Human Rights Campaign for its annual Corporate Equality Index.
• It followed suit with other businesses, such as Ford and Lowe's.
• The widely accepted benchmark for evaluating companies' policies and benefits for LGBTQ+ employees is now being criticized by some of the same companies that once boasted about their ratings.
• The corporate shift towards diversity, equity, and inclusion efforts is reflected in these decisions.

As Pride Month drew to a close, issued a statement that alerted LGBTQ+ rights proponents.

The farm-focused retailer announced that it would cease sponsoring events such as pride celebrations and discontinue positions related to diversity initiatives. Additionally, Tractor Supply would no longer provide data to the LGBTQ+ organization Human Rights Campaign for its annual Corporate Equality Index.

The Corporate Equality Index lost several companies, including Tractor Supply, as businesses began to stop submitting data for the two-decade-old benchmark.

On Nov. 25, Walmart, the largest retailer and private employer in the U.S., announced that it would stop sharing data with the Human Rights Campaign (HRC). Prior to this announcement, Walmart had discussions with Robby Starbuck, the director-turned-conservative activist.

Starbucks has been a vocal supporter of this change, launching campaigns against companies he believes have not met their diversity goals. In an interview with CNBC, he stated that he is intensifying these efforts and will be focusing on retailers during the holiday season.

The Human Rights Campaign has become the center of a politically charged battle over its DEI initiatives, which extend beyond LGBTQ+ policies. This shift has prompted some allied groups and LGBTQ+-identifying consumers to speak out.

In 2022, Tractor Supply and others marked a significant shift in policy, as the retailer published a press release stating it had received a perfect score for the 19th straight year.

Despite reaching out to the companies mentioned in the article, CNBC did not receive any additional comments or details on the changes they made.

"We are thrilled and humbled to receive a 100 percent ranking from the HRC for our LGBTQ workplace equality practices and policies, as stated by Dave Osswald, chief people and diversity officer for MillerCoors subsidiary Molson, in the 2022 release. Despite the recognition, we understand that our efforts to create a welcoming and inclusive environment must continue."

The rising concern about the federal judiciary's potential ruling on diversity cases has prompted companies to reevaluate their internal policies, according to experts. Right-wing activists' continued pressure to abolish initiatives such as supplier quotas and carbon goals has intensified the heat, they added.

The latest tide change among some of America's most well-known brands on this index is a political flashpoint for white-collar diversity efforts, as multiple business professors told CNBC. This adds to a broader picture of corporate America backtracking on this work less than half a decade after the numerous promises made in the wake of George Floyd's murder.

Kenji Yoshino, a New York University Law professor, stated that companies that make public statements, such as Lowe's and Ford Motor Company, are making an unforced error.

Companies change course

Several companies have withdrawn from the index after years of involvement and promoting their scores.

In August, Jack Daniel's parent announced that they would stop submitting data for the index, four months after being included in Forbes' "2024 America's Best Employers for Diversity" list.

In its 2023 annual report, the company announced that it had earned a perfect score for 12 consecutive years. Additionally, Brown-Forman launched an initiative in 2022 to increase the number of LGBTQ+ salaried employees in the U.S.

In August, Ford announced internally that it would stop participating in workplace rankings, including the index, despite having a perfect rating for 14 years.

Ford's commitment to diversity and inclusion is because we believe it strengthens our company, as stated by Meeta Huggins, Ford's former chief diversity officer in a 2017 statement.

In August, Lowe's announced that it would no longer participate in the index's survey and would also cease sponsorships for community events such as parades and fairs. Three years ago, Lowe's boasted on its LinkedIn page about earning a perfect score for the second consecutive year.

"Our commitment to diversity and inclusion is rooted in the strong values of our employees and is reflected in every aspect of our business," the company stated in the post.

In 2022, Walmart's human resources chief Donna Morris expressed pride in the company's recognition as a top workplace for the sixth straight year on X.

Additionally, Harley-Davidson has joined the list of companies that will no longer provide data for the ranking system.

'Like a rubber band'

The HRC's index, launched in 2002, evaluates companies based on factors such as benefits equity and corporate social responsibility. The HRC uses a variety of sources, including company surveys, tax filings, legal cases, and news reports, to assess firms.

Experts in business and law agree that there is no single factor driving the shift in sentiment. Instead, they attribute it to a combination of political pressure and legal concerns.

The increasing difficulty to ignore right-wing pressure online has been highlighted by Stephanie Creary, an assistant professor at the University of Pennsylvania's Wharton School. According to Creary, public shaming of companies for their diversity practices has been occurring prior to Starbucks taking up the issue.

"Politicization of this tool has increased significantly, as Creary stated, with people running for office leveraging it in a way that was not previously done."

According to Creary, businesses that don't support LGBTQ+ rights can easily be found on the internet, making it easier for people to protest against them. However, this backlash has caused some companies to view this as a "reputation enhancer" no longer worth touching.

Recent legal rulings and cases have put companies, universities, and other organizations on edge, according to NYU's Yoshino.

In June 2023, the Supreme Court ruled that affirmative action policies at Harvard University and the University of North Carolina, which considered a student's race as a factor, were unconstitutional. The majority opinion stated that these programs "unavoidably use race in a detrimental way, involve racial profiling, and lack clear objectives."

"Yoshino stated that the Supreme Court's decision in that case provided a clear insight into its thinking on race and discrimination. He believes that it is only a matter of time before this way of thinking will be reflected in laws that impact the private sector."

He stated that providing information about the number of LGBT individuals in your organization, your support for LGBT rights, or your inclusion of LGBT individuals would not violate the law.

Adina Sterling, an associate professor at Columbia Business School, stated that ultimately, companies are reneging on their diversity pledges made following George Floyd's murder by a police officer, which sparked a broader movement for racial equity in 2020.

According to Sterling, when companies withdraw from diversity indexes or abandon other diversity initiatives, it implies that they were not sincerely committed to the work. Instead, many corporations were merely trying to gain favorable publicity during a time when diversity was viewed positively in corporate America.

""Organizations often return to their previous state like a rubber band, but I wish it didn't have to be that way," Sterling said."

'Far off course'

Some companies have attempted to distance themselves from Starbucks' activism, but he revealed that he typically has discussions with executives after researching their businesses.

In response to Starbucks' campaigns and pressure on corporate diversity programs, companies have taken varying actions. Some, such as Tractor Supply and Harley-Davidson, issued public statements. In contrast, Ford sent an internal memo to employees that was obtained and shared online by Starbucks. Notably, several companies have emphasized that they were already working on revamping their diversity initiatives before Starbucks started applying public pressure.

Starbuck initially focused on companies with conservative-leaning customers, but he is now expanding his focus. He aims to hire more researchers to investigate employee claims. After receiving 5,000 complaints from whistleblowers within companies, Starbuck's team "stopped counting."

Starbuck stated that he felt compelled to work on this issue because he believes that certain corporate diversity policies are "illegal and violate our existing civil rights laws." He clarified that he does not dispute the importance of laws that guarantee equal protection for employees from marginalized backgrounds, but he believes that some companies' current initiatives have resulted in instances of discrimination against white people.

"Starbucks CEO Howard Schultz stated in an interview that public companies must operate differently to serve everyone, as they are expected to do so. He believes that the company has strayed from its course."

Starbuck stated that he believes the incoming Trump administration will bring about "a lot of good" in this area.

Advocates push back

LGBTQ+ advocacy groups, including the HRC, are pushing back against what they perceive as a lack of concern for their issues in the public sphere. The groups have emphasized that consumers are more likely to support businesses that embrace the LGBTQ+ community. Specifically, four out of five LGBTQ+ consumers are choosing to boycott companies that are rolling back initiatives, and more than half will encourage others to do the same.

The LGBT community in the U.S. has a significant impact on the American economy, with an estimated purchasing power of $1.4 trillion annually, which is equivalent to the combined GDP of Mexico and Spain, according to Worldometer.

"According to HRC President Kelley Robinson, consumers are twice as likely to purchase from brands that support their community. This, Robinson emphasized, is the most beneficial approach for businesses, and it's why there is a growing pushback from employees, consumers, and shareholders against certain decisions."

According to CNBC, companies that withdraw from the Human Rights Campaign's Corporate Equality Index will face a reduction in their scores. Prior to Walmart's announcement, each company received a 25-point deduction on their scores out of 100. The HRC has confirmed to CNBC that Walmart's score is currently being reviewed.

The HRC emphasized that corporations can be rated regardless of whether they submit data, and pointed out that overall participation in the index is increasing. The HRC was joined by several other civil rights groups in a co-written letter to Fortune 1,000 companies, urging them to recommit to diversity, equity and inclusion (DEI) efforts.

"The letter from HRC and more than a dozen organizations, including the NAACP and UnidosUS, stated that these capitulations weaken businesses and the American economy more broadly, and make our workplaces less safe and less inclusive for hard-working Americans."

In addition to the HRC index, several dozen Democrats in Congress wrote a letter to Fortune 1,000 businesses advocating for diversity, equity, and inclusion (DEI). The letter did not mention the HRC index, but a press release stated that it was a response to companies being influenced by a conservative media campaign.

Starbuck stated that his work has made companies realize that the HRC is not as influential as they thought. He posted on X that the changes at Walmart were his biggest accomplishment and should have a significant impact on corporate America. Additionally, Starbuck recently shared a meme featuring a grim reaper approaching doors with the names of "woke" companies.

Despite the removal of Tractor Supply as a member of the Tennessee Pride Chamber, the company was still nominated for the organization's corporate partner of the year award in 2024 and had been slated to sponsor a networking event for the group the following month.

The Tennessee Pride Chamber stated in a press release that the issues at hand are not about politics, but rather human rights and environmentally responsible business practices.

According to executive director Stephanie Mahnke, Tennessee Pride received only a few hours' notice from a contact within Tractor Supply that the company's statement was coming. She had previously been informed by Tractor Supply representatives that there were some safety concerns related to the event they were hosting, so they were taking steps to improve security.

"We were completely caught off guard," Mahnke said.

Other companies swiftly took over the July event after Tractor Supply withdrew its sponsorship, according to Mahnke. In discussions, Tennessee Pride members remain devoted to the group and its principles, but they are more cautious about discussing diversity and inclusion matters due to the current climate, she stated.

Ashe Taylor-Austin, a former Tractor Supply customer, was grateful to have alternatives when purchasing supplies for their horse after the retailer's announcement. They knew that LGBTQ+ shoppers in more rural areas likely wouldn't have such options.

""I started shopping from a small business after hearing about Tractor Supply, and I believe it shows who I am," said Taylor-Austin."