Walmart's sweeping rollback of its diversity policies is the strongest indication yet of a profound shift taking hold at U.S. companies that are re-evaluating the legal and political risks associated with bold programs to bolster historically underrepresented groups.

The changes announced by the world's biggest retailer on Monday followed a string of legal victories by conservative groups that have filed an onslaught of lawsuits challenging corporate and federal programs aimed at elevating minority and women-owned businesses and employees.

The retreat from such programs crystalized with the election of former President Donald Trump, whose administration is certain to make dismantling diversity, equity and inclusion programs a priority. Trump's incoming deputy chief of policy will be his former adviser Stephen Miller, who leads a group called America First Legal that has aggressively challenged corporate DEI policies.

"There has been a lot of reassessment of risk looking at programs that could be deemed to constitute reverse discrimination," said Allan Schweyer, principal researcher at the Human Capital Center at the Conference Board.

"This is another domino to fall and it is a rather large domino," he added.

Among other changes, Walmart said it will no longer give priority treatment to suppliers owned by women or minorities. The company also will not renew a five-year commitment for a racial equity center set up in 2020 after the police killing of George Floyd. And it pulled out of a prominent gay rights index.

Schweyer said the biggest trigger for companies making such changes is simply a reassessment of their legal risk exposure, which began after U.S. Supreme Court's ruling in June 2023 that ended affirmative action in... Read More