A new lawsuit claims Target misled shareholders about the financial risks of its diversity and inclusion initiatives, and now billions are on the line.
Target’s ongoing DEI controversy just took a legal turn. The retail giant — along with CEO Brian Cornell and its current and former board members — is facing a class action lawsuit accusing them of misleading investors about the financial risks tied to the company’s diversity, equity, and inclusion (DEI) initiatives.
The class action lawsuit filed by the City of Riviera Beach Police Pension Fund in Florida claims that Target issued “false and misleading” statements regarding its DEI, environmental, and social policies. According to Reuters, the shareholders’ filing also states that the company defrauded them into paying inflated stock prices and unknowingly supported leadership’s “misuse of investor funds to serve political and social goals.”
The lawsuit also references Target’s controversial 2023 LGBT Pride Campaign. As previously reported by theGrio, the retailer found itself at the center of a culture war when it debuted its Pride-themed merchandise, only to later pull select items after in-store confrontations raised safety concerns. This, of course, sparked even more outrage — both from those who opposed the collection and those who felt betrayed by its removal.
“For more than a decade, Target has offered an assortment of products aimed at celebrating Pride Month,” Target said in May 2023, per ABC News. “Since introducing this year’s collection, we’ve experienced threats impacting our team members’ sense of safety and well-being while at work. Given these volatile circumstances, we are making adjustments to our plans, including removing items that have been at the center of the most significant confrontational behavior. Our focus now is on moving forward with our continuing commitment to the LGBTQIA+ community and standing with them as we celebrate Pride Month and throughout the year.”
Despite its public statements, investors claim that the decision led to a significant decline in its stocks and that Target failed to disclose the backlash that caused Target’s share price to fall 22% on Nov. 20, 2024, wiping out about $15.7 billion of market value.
The lawsuit comes amid a broader corporate retreat from DEI commitments. Earlier this year, major brands — including Walmart, Meta, and McDonald’s—began scaling back DEI efforts following political scrutiny, particularly from conservative circles. Now, with investors pushing back, the future of corporate DEI strategies remains uncertain.
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