Target sued for misleading shareholders about risks of its DEI policy

The Target chain faces a lawsuit accusing it of defrauding shareholders about the risks of its corporate DEI (diversity, equity and inclusion) policies, which sparked a backlash that led to customer flight and a plunge in the Minneapolis-based retailer's stock price.

In the class-action lawsuit, filed Friday and obtained by Reuters, the shareholders - led by the City of Riviera Beach Police Pension Fund in Florida - explained that Target defrauded them by paying inflated prices for their shares and unknowingly supported management's "misuse of investor funds to serve political and social objectives."

In that regard, the lawsuit noted that the retailer, along with its CEO Brian Cornell and other executives, failed to report the risk of consumer boycotts due to the company's sustainability, social responsibility, diversity, equity and inclusion initiatives.

For example, the legal document highlighted that negative response to its Pride Month campaign in May 2023 was concealed, leading Target to withdraw certain LGBT-themed products.

It was also revealed that the plaintiffs are seeking compensatory damages for Target shareholders for the period from August 26, 2022 to November 19, 2024.

The end of DEI policies at Target

The lawsuit comes just after news broke that last month, Target joined the ranks of companies scaling back their DEI (diversity, equity and inclusion) initiatives. The company's decision came after others - such as Amazon, Walmart and Facebook, also announced the end of their DEI initiatives.

The move was announced in a fact sheet on its corporate site titled "Target's Belonging to Target Strategy," which lists some of its actions.

"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" the document said.