The Strategy Skills Podcast: Strategy | Leadership | Critical Thinking | Problem-Solving

559: Professor of Finance at London Business School, Alex Edmans, on Why ESG and DEI Data May Contain Lies

Jun 11, 2025
In this engaging discussion, Alex Edmans, a Professor of Finance at London Business School and author, critiques the narratives around diversity, equity, and inclusion (DEI). He highlights how flawed data interpretations and biases skew corporate strategies. Edmans warns against reliance on correlation-based studies, emphasizing issues like reverse causality and omitted variable biases. He advocates for a broader view of diversity that incorporates unique experiences over superficial traits, while also addressing the challenges faced by dissenters in academics and consulting.
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INSIGHT

Confirmation Bias Fuels DEI Belief

  • Confirmation bias causes many to accept pro-DEI claims uncritically because they want them to be true.
  • People avoid criticism fearing reputational and job risks, which silences dissent.
INSIGHT

Flaws in DEI Performance Studies

  • McKinsey's DEI study cherry-picks EBITDA, a short-term profit metric, ignoring other profit measures and long-term shareholder value.
  • Causality is likely reversed: good performance often precedes higher diversity, not the opposite.
INSIGHT

Context Matters in Research Applicability

  • Applying studies from Western, educated, industrialized contexts to other settings overlooks important cultural and socio-economic differences.
  • Social science findings are highly context dependent compared to physical sciences.
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