Sustainable Finance Newsletter: Workplace diversity data lives! - Ross Kerber

Northrop Grumman

26/08/2026 12:00

By Ross Kerber
Aug 26 (Reuters) - The opinions expressed in this column are those of the author, a correspondent for Reuters.
"You can't manage what you can't measure," goes the business aphorism at the heart of countless corporate diversity discussions. Soon there may be fewer measurements to manage.
Since 1966, companies have detailed to the U.S. government their workforce demographics by job title, sex and race, a requirement stemming from the Civil Rights Act of 1964. Lately many companies made the information public under pressure from investment activists.
This data would no longer be collected, according to plans by the U.S. agency that enforces laws banning workplace discrimination, known as the Equal Employment Opportunity Commission. Two of its three members were nominated by U.S. President Donald Trump and they voted in July to scrap the practice known as EEO-1 reporting based on the forms that companies with 100 or more employees currently submit.
The change is no surprise, and connects to culture-war issues. The Trump-aligned Heritage Foundation's Project 2025 policy document called for ending the data collection lest it "be used to support a charge of discrimination... This could lead to racial quotas to remedy alleged race discrimination," the document states.
"Crudely categorizing employees by race or ethnicity fails to recognize the diversity of the American workforce and forces individuals into categories that do not fully reflect their racial and ethnic heritage," reads the document, in a section written by Jonathan Berry, now Trump's Solicitor of Labor.
You might expect executives to welcome less reporting. But business leaders want to move with care, according to some of the comment letters on the proposed change that were due on August 24.
Marc Freedman, a vice president for the U.S. Chamber of Commerce, the top business lobbying group, wrote that it supports ending EEO-1 reporting but said employers often use workforce demographic data "for wholly lawful, business-related, and quality-control purposes" such as pay reviews or legal compliance. It asked the EEOC for more clarity on when businesses can collect and use such data.
"Employers will want to know they can continue to collect this data consistent with the administration's concerns around DEI activities," Freedman said in an interview.    
The National Retail Federation similarly praised the end of EEO-1 reporting but asked the commission to "recognize employers may continue to collect, retain, analyze, and use workforce demographic data for lawful compliance, self-audit, pay equity, validation, litigation defense, investigation response, and compliance with applicable state and local laws."
     
"DATA IS NOT THE PROBLEM"
Leaders of The Institute for Workplace Equality, whose members include large employers like Charles Schwab, SCHW.N Coca-Cola, KO.N Microsoft MSFT.O and Northrop Grumman, NOC.N went further and said there is no evidence companies have used the data to create quotas, as critics fear. They suggested officials look to different reforms.
"The data is not the problem. Eliminating it does not eliminate discrimination. It eliminates our ability to see it," wrote Barbara Moskowitz, the institute's director.
Of the 2,580 comments shown on Regulations.gov as of Tuesday, 88% opposed the proposed change, according to a random sampling of 150 comments conducted by Donald Tomaskovic-Devey, a University of Massachusetts sociology professor. 
In an interview, Tomaskovic-Devey said the EEOC's data has become the key measure for judging how companies promote equal opportunity in employment and pay equity. He made similar points in a comment letter co-signed by 44 other academics. Without the data, "The EEOC will be effectively flying blind in its reporting and regulatory obligations," they wrote.
"There's nothing about this that was mobilized by business opposition to the EEOC. This is not normal politics," Tomaskovic-Devey said.
Jenny Yang, who was EEOC Chair from 2014 until 2017, said executives worry their long-established human resources reviews of areas like hiring or pay equity could make them targets for the administration, given rhetoric like that of Project 2025.
Businesses "want to be able to continue to evaluate their own practices," she said.
        
RACIAL STEREOTYPES AT WORK
A representative for the EEOC did not address what if any rulemaking changes might result from the comments received.
EEOC representative Victor Chen provided a statement from Chair Andrea Lucas accompanying the proposed rulemaking, which made no mention of using demographic data in a positive manner. Instead she cited potential harms from the current demographic reporting requirement.
These include pushing employers to prevent discrimination only against minorities and women, promoting racial stereotyping at work, and "incentivizing employers to unlawfully treat employees differently based on race or sex in order to 'correct' perceived imbalances in employee representation."
Meredith Benton, principal of Whistle Stop Capital, a research firm that has supported clients' shareholder resolutions seeking diversity data disclosure, said whatever the EEOC decides, companies she speaks with will keep tracking diversity data.
Executives want it both to manage their workforces and as a defense against future charges of discrimination. "That part of the story hasn't changed," she said in an interview.

(Reporting by Ross Kerber; Editing by David Gregorio)
((ross.kerber@thomsonreuters.com; (617) 412 0093;))