Despite Trump’s pressure, companies that maintained their DEI programs did just fine
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Whether you love DEI, despise it or view it with uninterest, there’s no question that President Trump’s relentless assault on the principle threw a ticking bomb into the upper echelons of corporate and institutional managements.
Businesses, universities, law firms and nonprofits felt themselves bound to consider how bucking Trump’s anti-DEI policies might translate into lost revenues, contracts and government grants. Many decided that capitulation was the safe choice.
Now there’s evidence that many need not have worried. According to researchers at UC Berkeley and Stanford, firms that maintained their diversity, equity and inclusion programs in the face of the Trump attacks paid no financial price.
‘Was getting rid of DEI actually a business necessity? The data says no.’
— Researchers Jacob Grumbach and Hanna Folsz
Specifically, wrote Jacob Grumbach, an associate professor of public policy at Berkeley, and Hanna Folsz, a graduate student at Stanford, “S&P 500 firms that maintained their DEI programs performed just as well as compliant firms, both in terms of stock market returns and revenue.”
The initial trigger for institutional concerns about their DEI efforts was an executive order Trump issued on his Jan. 20, 2025, inauguration day. Titled “Ending Radical and Wasteful DEI Programs and Preferencing,” it ordered all federal agencies to terminate all their DEI programs. The next day, he instructed the Department of Justice to take steps to “encourage” the private sector to “end illegal discrimination and preferences, including DEI.”
In that executive order, he specifically targeted for investigations “publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars.”
In accordance with those orders, “many companies rolled back their programs, arguing it was a business necessity,” Grumbach wrote on LinkedIn. “The perceived risk in corporate boardrooms was substantial. President Trump had expressed a willingness to seek ‘retribution’ against political opponents. But was getting rid of DEI actually a business necessity? The data says no.”
Before examining the real-world ramifications of Trump’s campaign, a few words here about DEI as a concept. Generally speaking, it applies to programs aimed at expanding the pool of participants in social, economic and political life to include groups that have been traditionally excluded or underserved. Its critics typically are those who fear ceding their own traditional advantages to others.
In truth, however, DEI is a shibboleth, like “critical race theory” or those recent accusations that members of the Democratic Party are “communists” or “socialists.”
Plummeting sales at Target show that DEI is a lot more popular than businesses think.
As I’ve written before, the effectiveness of a shibboleth doesn’t depend on an understanding of its meaning — in fact, any such understanding undermines its effectiveness as a partisan dog whistle. Its very ambiguity allows listeners to apply their own definition; how many people really understand what “DEI” is, or “critical race theory,” or, indeed, “communism”? The partisan core needs only to be convinced that these things must be sinister.
The anti-DEI movement had been something of a sideshow in Republican politics for years in the hands of GOP culture warriors such as Florida Gov. Ron DeSantis. Then Trump yoked it to his lust for personal and political retribution, and the C-suite had to consider whether challenging his whims might actually bring real-world consequences on their heads.
As a result, Trump’s second term has provided a sort of laboratory test of institutional behavior under political stress. To a certain extent, the results have been dispiriting.
Many corporations, universities and law firms have taken the craven way out, rolling back or eliminating their DEI programs or paying tribute to the administration running into the tens or hundreds of millions of dollars to deflect Trump’s assaults and accusations.
We know these attacks were illegal or unconstitutional because judges have told us so: The law firms that took Trump to court won their cases. And just last month, a federal judge in Boston threw out a Trump lawsuit against Harvard aimed at rescinding $1 billion in federal grants based on a fatuous claim that the university turned a blind eye to antisemitism on campus. Last year, a different federal judge overturned Trump’s cuts of more than $2.6 billion in research grants, finding that the cuts were tantamount to illegal retaliation for Harvard’s resistance to Trump policies.
Some companies feared not only Trump but public pressure from right-wing activists. The prime specimen is Target, which backed down from its diversity initiatives just four days after Trump’s anti-diversity orders. The company announced it was “concluding our three-year diversity, equity and inclusion goals” and that it was withdrawing from “all external diversity-focused surveys,” including a widely followed Corporate Equality index sponsored by the Human Rights Campaign, which tracks corporate policies on LGBTQ+ rights and inclusion.
Walmart, Ford and John Deere have scaled back their DEI efforts under conservative pressure, but Costco is resisting.
Many of America’s leading institutions of higher education folded under the Trump onslaught. They included Columbia (from which I hold a graduate degree), which agreed to pay $221 million to “resolve” government allegations that it has violated federal antidiscrimination laws.
At the University of California, the faculty and staff won a major victory over Trump in November, when federal Judge Rita Lin blocked a $1.2-billion fine and some $600 million in funding cuts after concluding that the fine and cuts were part of a White House campaign to force universities “to change their ideological tune.” I reported at the time, however, that neither the university itself nor the state of California participated in the lawsuit.
Some of these institutions appeared to pay a price for their cowardliness. Target suffered a 5.7% drop in same-store sales in the first quarter of 2025, which Chief Executive Brian Cornell attributed in part to “the reaction to the updates we shared ... in January” — that is, its backing off from DEI. Among the nine major law firms that made appeasement deals with Trump, some lost major clients or high-profile firm members, according to a survey by the Wall Street Journal.
That brings us back to the paper by Grumbach and Folsz. They focused on large public companies — those in the Standard & Poor’s 500 index — and compared how those that complied with Trump’s onslaught by reducing or dismantling their programs fared in the financial marketplace with those that maintained or even reaffirmed their commitment to diversity.
The response within the S&P 500 was heterogeneous: Costco firmly reaffirmed its program (as I reported in 2025), but Target and Walmart did not. Apple stood fast, but not IBM.
The researchers found that there was no difference in either the stock market performance or revenues between the two responses. “Firms that kept DEI policies in place performed just as well as firms that complied” with the Trump administration’s executive orders.
That showed that “consumers, on balance, did not punish firms for maintaining DEI.” They also found that Trump’s follow-through on threats against firms with DEI policies in place has been rare, implying that those that complied with Trump may have overestimated the cost of resistance.
Rick DeSantis and other conservatives are crowing about having killed off “woke” policies. But their celebration is way premature.
It’s fair to note that large public corporations can wield considerable political influence on their own behalf. “Large corporations may face hostile regulatory action or threats to federal contracts,” Grumbach told me, “but shareholders and consumers stand in the way.”
Indeed, as he and Folsz point out, during the 2025 proxy season, conservative groups submitted anti-DEI resolutions at 38 S&P 500 companies; every one was opposed by corporate boards, and they were all rejected by margins averaging 98%.
It’s true that big corporations — especially those with a devoted customer base — may constitute a special class when it comes to resisting Trump.
Universities and law firms, Grumbach acknowledges, “are probably more vulnerable than large corporations to hostile action from the executive branch,” since it’s “faster and easier for the executive branch to punish law firms by revoking lawyers’ federal security clearances or to punish universities by killing federal grants for scientific research.”
But there’s also strength in numbers. “Whether it’s business, universities, law firms, universities, religious organizations, or any other civil society organization,” Grumbach says, “it’s clear that resisting in a coordinated way is more viable than going it alone.”
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Ideas expressed in the piece
- The article argues that President Trump’s executive orders attacking diversity, equity and inclusion created a climate of fear across corporate America, yet new empirical work by UC Berkeley and Stanford researchers shows S&P 500 firms that kept DEI programs in place performed just as well as those that scaled them back, in both stock returns and revenue.[2][3]
- It contends that DEI has been turned into a partisan shibboleth, similar to terms like “critical race theory,” deployed by political actors to mobilize supporters without regard to the actual content of such programs, which are aimed at widening participation for historically excluded groups.
- The article maintains that many companies, universities and law firms responded “cravenly” to Trump’s threats, dismantling DEI programs or paying large settlements and fines to appease the administration, even as federal courts later ruled several of the government’s retaliation efforts unlawful.[9]
- It highlights Target as a cautionary tale, noting that the retailer quickly announced it was ending DEI goals and withdrawing from external equality indices, and subsequently reported declines in comparable sales, revenue and operating income that outside coverage links in part to backlash over the retreat from inclusion.[7][8][10]
- By contrast, the piece points to firms such as Costco and other large brands that publicly reaffirmed their commitment to DEI in the wake of the executive orders and did not experience discernible financial penalties, a pattern echoed in broader reporting on companies that quietly continue diversity initiatives despite political pressure.[4][9]
- The article emphasizes that shareholders and consumers can act as a counterweight to political interference, underscoring research showing that anti-DEI shareholder resolutions at major firms have been overwhelmingly rejected and that markets do not systematically punish companies that maintain robust DEI commitments.[2][3]
- It ultimately suggests that coordinated resistance across corporations, universities, law firms and other civic institutions is more viable than isolated compliance, arguing that collective action can mitigate the risks posed by hostile executive-branch policies and help preserve DEI as part of mainstream governance and business strategy.[2][5]
Different views on the topic
- Coverage of Trump’s executive actions reflects a strong opposing view that many DEI efforts constitute unlawful preferences or “radical” ideology, with the orders framed by supporters as necessary to end what they see as discrimination embedded in corporate and institutional diversity programs.[12][13]
- In this perspective, companies that scaled back or eliminated DEI argue they did so to avoid regulatory investigations, litigation and potential loss of federal contracts or grants; reports detail how firms such as Google, Meta, Boeing, Target and major financial institutions moved to curtail diversity targets and training in direct response to the new federal directives.[12][13]
- Business leaders wary of DEI backlash contend that visible diversity campaigns can make brands lightning rods for partisan conflict, exposing them to consumer boycotts and reputational damage; analysis of corporate retrenchment describes how some executives see withdrawal from public-facing DEI as a pragmatic way to limit social-media-driven crises and protect revenues.[9][12]
- Rather than viewing these moves as simple abandonment, several studies and industry reports describe how large companies are reframing or rebranding DEI—reducing explicit mentions of “DEI,” “racial” or “gender” in filings, cutting back disclosed diversity metrics, and embedding inclusion work under broader governance or “belonging” initiatives to minimize legal exposure and political scrutiny.[1][5][6]
- Some corporate governance specialists argue that boards must balance inclusion objectives against fiduciary duties to shareholders, and note that DEI-linked incentive metrics have recently lost momentum after earlier growth, reinforcing a view that tying executive pay to diversity goals can introduce risk if such programs are later challenged in court or by regulators.[6][11]
- In sectors like higher education, media and professional services, administrators facing investigations or threats to research funding and credentials assert that compliance with anti-DEI orders is a form of institutional self-preservation; reporting shows universities and broadcasters suspending or dissolving DEI offices while citing the need to protect core programs and avoid prolonged legal battles.[9][13]
