DEI Rollback Doesn’t Necessarily Lead to Better Financial Results

Many U.S. companies rolled back their diversity, equity and inclusion (DEI) initiatives after the Trump administration released executive orders in late 2025 that banned DEI policies in federal agencies and scrutinized the related policies of private employers, particularly those with federal contracts. New research, though, reveals companies that maintained their commitments toward equitable and diverse workplaces performed financially as well as (or better than) counterparts that responded to the political (and resulting social) pressure.

The study, published in August by the University of California-Berkeley’s Democracy Policy Lab, examined S&P 500 companies and highlighted the performance of companies that maintained their DEI commitments (e.g., Apple, Cisco, Costco, Delta Airlines, Dollar Tree, JPMorgan Chase, Microsoft, Pfizer), compared to those that scaled back (e.g., Citigroup, Dollar General, IBM, Target, Walmart).

“We went into this study without a strong sense of what the results would be, since there are multiple competing reasons why maintaining or getting rid of DEI could help or hurt a company financially,” said Jake Grumbach, an associate professor at California-Berkeley’s Goldman School of Public Policy and one of the study’s authors. “How consumers would respond, or how the Trump administration would enforce its executive orders — all of this was, at the time, pretty unpredictable.”

As for the driving forces behind DEI action, the study cited the concern that defiance would:

• Trigger legal retaliation by the government; and,
• Incur detrimental financial costs for the organization (fines from the government, and reduced revenue from investors and consumers).

While a handful of federal contracting firms were targeted with Department of Justice lawsuits (e.g., Deloitte, which paid $21.5 million to settle its case), the researchers concluded that, for the most part, corporate fears were overstated.

The researchers looked at both revenue and abnormal stock returns (the difference between how a stock was expected to perform versus how it actually performed) in order to measure corporate health. Both metrics pointed to on par or heightened financial performance for organizations that retained their DEI programs.

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DEI Program Popularity

The financial impact — or rather, lack thereof — may be good news for employers since, as Grumbach stated, initiatives focused on equitable and diverse workplaces remain an accepted and popular business practice in the U.S. The Democracy Policy Lab study showed that:

• When activist groups submitted anti-DEI resolutions to 38 S&P 500 firms during the 2025 proxy season, company boards and shareholders overwhelmingly rejected them; and,
• More than two-thirds of U.S. adults believe it’s important for companies to support DEI.

“I was a bit surprised by how popular corporate DEI remains among the American public,” Grumbach said. “When I listened to pundits in 2025, they made it seem like DEI was universally unpopular — but the data shows that majorities of Americans actually support it.”

According to Grumbach, the data shows American consumers, in general, either support DEI at the places they shop, or they don’t really care either way.

Sue Holloway, a content director at WorldatWork, sees positives in the research findings for HR and Rewards professionals.

“DEI remains an important workforce issue, even as some organizations adjust their approach, language or program structure,” she said. “Public discussion around DEI has become more polarized, but many employers continue investing in inclusive workplace practices that support talent attraction, employee development, engagement and retention.”

Holloway cited:

• A Gallup study that revealed that engaged, gender-diverse teams average 52% higher net profit than single-gender teams; and,
• A McKinsey & Company Diversity Matters report that shows ethnically diverse companies outperform their nondiverse counterparts by 30%.

She said that, increasingly, organizations are focused on connecting DEI and other workforce initiatives to measurable business and talent outcomes.

Grumbach agreed that companies are eyeing the results in their decisions, stating, “An important takeaway is that large companies are incredibly powerful entities that have a lot of leeway in American society. [Even with the threat of government action and activist group boycotts,] companies, for the most part, can chart their own path on issues like DEI.”

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Equitable and Diverse Workplaces
• Organizational Performance