Beauty & Wellness Briefing: DEI is changing — here’s what brands and retailers need to know now

Over the past few weeks, headlines about the fate of the Fearless Fund venture capital firm have been discussed in publications including Forbes, Fortune, WaPo, NPR and AP News. The story has become a case study in the changing DEI landscape in the U.S. and poses an important question for beauty business insiders: How can brands and retailers best prepare for an eventual ruling in this landmark case? 

The Fearless Fund is an Atlanta-based venture capital firm started in 2019 to finance BIPOC-owned brands to help correct funding disparity. Black founders raised less than 1% of all venture funds distributed last year, a number down from 1% in 2022 and 1.3% in 2021.

The fund was started by entrepreneurs Arian Simone and Ayana Parsons and backed by Bank of America, JPMorgan Chase and Mastercard, among others. It provided $3 million grants to businesses including Thirteen Lune and Live Tinted, and invested in Bread Beauty Supply, The Lip Bar and ShearShare.

Political and social turmoil during the pandemic created a groundswell of support for diversity, equity and inclusion back in 2020, but it also caught the attention of conservative groups set on ending DEI programs across sectors. After collecting a win in the Supreme Court ending affirmative action in college campus admissions last year, the American Alliance for Equal Rights turned its focus to the Fearless Fund’s $20,000 Strivers Grant Contest. It filed a suit against the fund just weeks after ending affirmative action. 

“AAER alleged that the Strivers Grant Contest violated 42 U.S. Code 1981, which prohibits discrimination on the basis of race when enforcing contracts. It sought a preliminary injunction, barring the Fund from excluding non-Black women from the contest,” Kelly Bonner, Esq., attorney at Duane Morris, told Glossy. 

In October, AAER won an injunction to have the Fearless Fund’s Fearless Strivers Grant suspended. In June of this year, Fearless Fund lost an appeal in a Georgia court to have last year’s decision reversed, causing another flood of news stories about the future of DEI across sectors. 

Many retailers operate public-facing DEI programs, but only some outline race as a requirement in their application process. They include Ulta Beauty’s MUSE program. Other programs, such as Sephora’s Accelerate program, Target’s Forward Founders and Walmart’s Start, focus their marketing on BIPOC founders but do not explicitly mention race as a requirement in the application process. 

“It’s important to remember that the Fearless Fund ruling is still a temporary ruling,” Bonner told Glossy. “There are avenues that the Fund can still pursue, such as seeking a reversal of the 11th Circuit order from the U.S. Supreme Court.”

As the industry waits to see how this case will play out, and whether or not it will make its way to the Supreme Court, brands and retailers may heed lessons from the proceedings. “It’s fair to say that programs focused on race may be scrutinized more closely, and we can expect to see more lawsuits along this vein, particularly when grants can be construed as contracts under Section 1981,” Bonner said. 

As many pundits have predicted, the case is just one part of a chilling effect across DEI programs, including within the beauty industry, although many argue it’s only a temporary backlash. So how can brands and retailers stand by their values while mitigating risk within their own DEI initiatives? 

“The Fearless Fund decision isn’t binding on the nation as a whole or necessarily reflective of the thinking of other federal circuits,” Bonner said. “That said, I can see [brands and retailers] that emphasize a desire to promote diversity, or aid those with disadvantaged backgrounds, opening their programs to a broader pool of applicants rather than on more narrow, protected-class grounds.”

“The Supreme Court case involving college admissions was an important decision on the legal landscape,” Kevin Zwetsch, Esq., attorney at Brick Business Law, told Glossy. “Discrimination law is kind of evolving; I see it as an evolution of the law and application of the laws under certain circumstances.” 

Legal experts agree that seeking counsel is wise to determine which DEI programs could or should be reconciled against the changing landscape. “These issues [found in industries like beauty] are pinpoint-specific, especially at an organizational level,” said Zwetsch. That means how risk-averse a company is should impact internal decision-making, as should how DEI fits into a company’s mission. 

“To some extent, there may be less of a specific focus on race [in future DEI programs], and more of a focus on diversity or promoting traditionally excluded or neglected voices,” Bonner said. That is, they may be based on socioeconomic status, access to higher education, location and other factors not considered protected classes under the law.

Executive moves: 

• Sebastian James, the president and managing director of Boots, will step down in November of this year, Reuters reported. His successor has yet to be named.
• BoF has reported that Michelle Brett will be exiting her role as CEO of Ren Clean Skincare to take on a new role within Unilever Prestige, Ren’s parent company since 2015. 

News to know:

• Jo Malone London has launched a limited-edition Orange Marmalade cologne inspired by Paddington Bear, the fictional character introduced in the 1950s and known for his affinity for marmalade sandwiches. 

• Glossier has become the first official beauty partner of USA Basketball — the sponsorship will kick off during the Summer Games in Paris this month. As part of this partnership, Glossier will gift the 2024 USA Basketball Women’s National Team with products and will provide glam services for events such as the opening ceremonies on July 26. A yet-to-be-seen Glossier campaign will feature social media content, out-of-home advertising and community engagement activations, details of which will be announced closer to the Games. Glossier became the first-ever beauty partner of the WNBA in 2020.
• Beauty tech company BoldHue has raised $3.37 million in seed funding. As reported by Beauty Independent, the brand’s “Keurig for makeup” cosmetic mixing machine has a 40,000-person waitlist. BoldHue plans to use the funding to fulfill its first 10,000 orders this year.
• Forum Brands, which owns health- and family-focused brands including Lola and Nuvadermis, has acquired skin-care brand Ever from Stella & Dot.

• Luna Daily, a line of microbiome-focused body care sold DTC and in Sephora, has secured an undisclosed amount of seed funding from Unilever Ventures, the conglomerate’s venture arm.
• Fragrance manufacturer juggernaut Givaudan is expanding its reach in the beauty industry by acquiring B.Kolor, an Italian manufacturer of finished cosmetics and skin-care products across the indie, luxury and consumer packaged goods sectors. 

Stat of the week:

Neutrogena conducted a survey focused on the sun-care habits of Gen-Z individuals aged 15-21 and found that 45% of participants prioritize a tan over skin protection. The survey found that misunderstandings about sun protection are common among this age group, including how the SPF numbering system works and whether or not a base tan helps protect skin. For example, 48% of participants believe that obtaining a base tan can help prevent sunburn, and 58% believe that the higher the SPF, the less they need to reapply.

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Listen in: 

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