Landmark Lawsuit Says Target's DEI Projects 'Harmed Sales'
US retail giant Target has been sued for allegedly concealing the risks of its social and diversity initiatives.
The lawsuit, filed on 31 January 2025, alleges the company defrauded shareholders into paying inflated prices for its stock and unknowingly supporting management's "misuse of investor funds to serve political and social goals”.
This year, Target has also said it would end DEI initiatives in 2025, joining the likes of Google, Amazon, Walmart and more after an executive order from President Donald Trump to halt programmes in federal agencies and government contractors.
Target has not responded to requests for comment on the lawsuit, but said in a memo on its DEI initiatives: “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 an essential part of our team and culture, helping fuel consumer relevance and business results.”
Target’s history of social initiatives
Increasing its Black workforce by 20%, spending more than US$2bn with Black-owned businesses and pledging US$100m to support Black-led nonprofits and scholarships for students at historically black colleges and universities were just some of the company’s initiatives.
A 2023 study from McKinsey shows Target was not alone – it predicted that the global market for DEI would more than double between 2020 and 2026.
Target’s Belonging at the Bullseye programme is rooted in three pillars:
- Team – recruiting and retaining team members who represent the communities it serves and fuel a culture where everyone has access to opportunities and growth
- Guests – creating joyful experiences through the products and services it provides that help all guests to feel seen and celebrated
- Communities – building deep and lasting relationships with the communities it serves.
What DEI changes is Target making?
“Throughout 2025, we’ll be accelerating action in key areas and implementing changes with the goal of driving growth and staying in step with the evolving external landscape. We will continue to monitor and adjust as needed,” Target said in a memo on its Belonging programme.
Its pull-back from DEI includes:
- Concluding its three year DEI goals
- Concluding its Racial Equity Action and Change (REACH) initiatives in 2025 as planned
- Ensuring its employee resource groups are fully focussed on development and mentorship
- Further evaluating its corporate partnership to ensure they are connected to its roadmap for growth directly
- Stopping all external diversity-focussed surveys
- Changing its ‘Supplier Diversity’ team to ‘Supplier Engagement’ to “better reflect our inclusive global procurement process across a broad range of suppliers”.
The lawsuit against Target
Institutional investor City of Riviera Beach Police Pension Fund filed the class action lawsuit against Target, its CEO and 12 current and former members of its Board of Directors on 31 January 2025.
The lawsuit alleges that the defendants defrauded investors by issuing false and misleading statements on its ESG and DEI mandates.
In May 2023 Target faced backlash over its LGBT Pride Campaign where some customers boycotted the retailer and misinformation on social media that some items were marketed to children caused some politicians and activists to put pressure on the company.
The lawsuit says that the company’s Q2 2023 earnings report revealed sales were harmed by the campaign and its stock price fell.
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