Like many other corporate boards, directors at AT&T are trying to determine what to do when shareholders have questions about the company’s DEI policies. The telecommunications conglomerate recently discovered that preventing investors from accessing information about diversity policies or preventing votes on shareholder proposals involving diversity issues is probably not a good idea.
Reuters recently reported that four New York City pension funds sued AT&T for attempting to block shareholders from voting on a proposal to require the company publicly disclose a racial, ethnic and gender breakdown of its 133,000-person workforce. The lawsuit claimed that failure to disclose could cause “irreparable” damage to shareholders, opening the company up to incalculable risk.
Recent pressure from anti-DEI forces on boardrooms across America likely influenced AT&T to quickly settle the lawsuit and agree to allow the proposal to be voted on at its 2026 annual meeting. Given the circumstances, that was probably the best decision the company could have made. AT&T avoided wasting valuable resources fighting a lawsuit that could have financial consequences, when allowing the vote could yield a result in the company’s favor. Additionally, allowing the vote is a concession to shareholders that might gain management a small measure of favor in future negotiations.
In an environment where many corporate boards have been pressured to dismantle or modify DEI policies—and the federal government has signaled that it may initiate civil litigation against companies based on claims that their DEI policies may be discriminatory—boards of all companies should be proactively reviewing how they intend to ensure fairness and equality of opportunity while allowing for diversity in their organizations. Directors can expect shareholder interest in diversity information to increase, and therefore, shareholder proposals regarding diversity could potentially rise. Given this possibility, boards may want to consider the following:
Proactively engage shareholders regarding DEI policies and practices. Diversity should be on the board agenda in 2026, so finding out the views of your largest shareholders should be a priority. Directors should find out if shareholders have issues with current diversity policies, determine if any shareholder proposals are forthcoming and make attempts to negotiate policy changes or adjustments before disputes become public and proposals are filed.
Be transparent about the company’s position on diversity issues and policies. Many of the shareholder proposals filed are seeking greater transparency regarding diversity efforts at companies. Volunteer as much information as possible with explanations for why the policies and practices are legal. Make sure language used is “bullet-proof,” avoiding the perception of quotas or preferences. Run final drafts of diversity policies by legal experts and trusted shareholders if possible.
Monitor changes other companies are making in the wake of the current anti-DEI environment. Be open to adopting adjustments that peer organizations have made when confronted by anti-DEI forces. As more companies settle disputes over DEI policy, acceptable practices may become clearer. Companies will have the opportunity to make similar adjustments to their policies, avoiding lawsuits and other risks.
