Target Sued Over DEI Initiatives and Shareholder Claims

US retail giant Target faces a shareholder lawsuit over alleged misrepresenting risks associated with its diversity, equity and inclusion (DEI) initiatives. The lawsuit, filed on January 31, 2025, accuses the company of defrauding investors by inflating stock prices while management allegedly misused investor funds for political and social agendas.

The lawsuit comes as Target announced plans to end its DEI programs in 2025, following an executive order from President Donald Trump halting such initiatives within federal agencies and government contractors. Other major corporations, including Google, Amazon and Walmart, have also made similar moves.

Target’s response to the lawsuit

Target has yet to issue an official response to the lawsuit. However, in a recent memo addressing its DEI policies, the company stated: “We remain focused on driving our business by creating a sense of belonging for our team, guests and communities through a commitment to inclusion. Belonging for all is essential to our team and culture, helping fuel consumer relevance and business results.”

A history of social and DEI commitments

Target has been at the forefront of corporate social initiatives, committing to several DEI-focused programs, including:

• Increasing Black workforce representation by 20%
• Spending over US$2bn with Black-owned businesses
• Pledging US$100m to support Black-led nonprofits and scholarships at historically Black colleges and universities

A 2023 McKinsey report indicated that the DEI market was expected to double between 2020 and 2026, demonstrating a broader corporate trend beyond Target’s initiatives.

Belonging at the Bullseye: Target’s DEI framework

Target’s Belonging at the Bullseye initiative was built on three key pillars:

1. Team: Recruiting and retaining employees reflective of its communities, ensuring access to opportunities and professional growth.
2. Guests: Creating inclusive and joyful shopping experiences through diverse product offerings.
3. Communities: Strengthening long-term relationships with the communities Target serves.

Changes to target’s DEI strategy

As part of its 2025 transition, Target announced several changes to its DEI commitments, including:

• Concluding its three-year DEI goals
• Ending its Racial Equity Action and Change (REACH) initiatives
• Refocusing Employee Resource Groups on mentorship and professional development
• Re-evaluating corporate partnerships to align with business growth strategies
• Halting participation in external diversity-focused surveys
• Renaming its ‘Supplier Diversity’ team to ‘Supplier Engagement’ to reflect a more inclusive global procurement approach.

Shareholder lawsuit: Key allegations

The City of Riviera Beach Police Pension Fund has filed a class-action lawsuit against Target, its CEO and 12 current and former Board members. The lawsuit claims Target misled investors about the financial risks of its Environmental, Social and Governance (ESG) and DEI initiatives.

Impact of DEI-related controversies

Target has previously faced public backlash over its DEI and ESG commitments. In May 2023, the company’s LGBT Pride Campaign sparked controversy, with:

• Boycotts from customers
• Social media misinformation suggesting certain products were marketed toward children
• Political and activist pressure leading to further scrutiny

Following these events, Target’s Q2 2023 earnings report revealed that sales were negatively affected, causing a decline in stock price — a key claim in the lawsuit.

What’s next for Target?

As the lawsuit unfolds, the retail giant faces growing pressure from investors and policymakers. The outcome could set a precedent for corporations navigating social responsibility and financial performance in the evolving business landscape.

While Target aims to balance corporate values with shareholder interests, the case highlights the increasing tension between business strategy and political influences. The retail industry — and the broader corporate world — will be closely watching how this legal battle plays out.

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