The short version
- Analysis of S&P 500 data indicates companies retaining diversity policies achieved financial results similar to those that eliminated such programs after January 2025 executive orders.
- Firms that resisted political pressure to drop diversity initiatives sometimes saw superior stock market performance in the immediate aftermath of the policy changes.
- Experts suggest many corporations adopted a hybrid approach, adjusting language and scope rather than fully abandoning or fully maintaining previous diversity commitments.
A recent analysis of major American corporations challenges the prevailing assumption that adherence to diversity, equity, and inclusion mandates carries significant financial risk. Research conducted by Jacob Grumbach, an associate professor at the University of California, Berkeley’s Goldman School of Public Policy, examined the performance of S&P 500 companies following a series of federal executive orders issued in January 2025. These orders effectively ended diversity initiatives within the federal government and signaled potential consequences for private sector entities that continued to support similar frameworks.
The study utilized a metric known as abnormal returns, which measures the difference between expected stock performance and actual results, to isolate the specific impact of corporate decisions regarding diversity policies. The findings revealed that firms which maintained their existing diversity practices or successfully voted down shareholder resolutions aimed at dismantling them performed just as well financially as competitors who withdrew such programs. In some instances, companies that stood firm on these policies actually outperformed those that capitulated to political pressure in the days immediately following the executive orders.
This data emerges against a backdrop of intense political and cultural conflict over corporate social responsibility. The so-called go woke, go broke movement gained significant traction in 2023, fueled by conservative backlash against companies perceived as supporting progressive causes. High-profile incidents included sales declines for Bud Light after featuring a transgender influencer, public fury directed at Target over pride month merchandise, and a prolonged dispute between Florida Governor Ron DeSantis and Disney regarding state legislation on LGBTQ+ discussions in schools.
Legal developments further complicated the landscape for corporate leaders. The U.S. Supreme Court’s 2023 ruling that race-conscious admissions policies in higher education were unconstitutional opened avenues for similar legal challenges against workplace diversity programs. David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion and Belonging at New York University Law School, noted that this judicial shift created widespread fear and panic within corporate America, accelerating the retreat from diversity initiatives when Donald Trump assumed office for his second term.
Despite the high-profile announcements by companies such as Google, Goldman Sachs, McDonald’s, and Walmart ending their diversity programs, the reality on the ground appears more nuanced. Glasgow observed that many organizations did not simply scrap their commitments entirely but instead made adjustments to align with new legal and regulatory environments. This often involved a messy middle ground where firms retained certain principles while deleting others, reframing language, or rebranding initiatives to avoid political scrutiny.
The research methodology accounted for these complexities by analyzing news coverage, tracking anti-diversity shareholder proposals and their voting outcomes, and utilizing data from DEI Watch, an activist group that monitors corporate diversity practices. Grumbach emphasized that regardless of the specific measurement technique used, the conclusion remained consistent: holding onto diversity promises had no discernible negative impact on financial performance. This suggests that the perceived economic threat to companies maintaining such policies may have been overstated.
Consumer demographics and brand loyalty likely played a role in these outcomes. Grumbach pointed out that companies like Apple and Costco, which maintained their diversity efforts, may have possessed sufficient market resilience to weather political storms that would have devastated smaller or more regionally focused competitors like Tractor Supply. The ability to withstand backlash appears to vary significantly based on a company’s specific customer base and brand positioning.
The implications of this study extend beyond corporate strategy into broader questions about civil society and authoritarian pressure. Grumbach suggested that the findings demonstrate how large organizations can resist executive branch mandates during periods of heightened political fear without suffering economic retribution. The research indicates that major U.S. corporations retain significant leeway to engage in noncompliance with politically motivated directives while maintaining financial stability.
As the business landscape continues to evolve, these findings offer a counter-narrative to the idea that diversity initiatives are inherently detrimental to profitability. While some companies faced reverse backlash for withdrawing support—such as Target being dropped as a sponsor by the Twin Cities Pride parade—the overall data suggests that maintaining inclusive policies is not a financial liability. The study provides empirical evidence that corporate leaders can navigate political pressures without sacrificing economic performance.
Future research may need to explore long-term effects and sector-specific variations in how diversity policies impact business outcomes. However, the current analysis provides a clear snapshot of the immediate aftermath of the 2025 executive orders. It underscores the resilience of companies that chose to uphold their diversity commitments despite significant external pressure, challenging the notion that such stances inevitably lead to financial ruin.
Sources behind this briefing
Go to the original reporting
- The Guardian US↗US firms that kept DEI policies despite ‘go woke, go broke’ threats thrived
