Key facts
- Companies that maintained Diversity, Equity, and Inclusion (DEI) policies after Donald Trump's January 2025 executive order performed financially as well as those that rescinded them.
- Research by Jacob Grumbach of UC Berkeley analyzed S&P 500 companies' stock performance using 'abnormal returns'.
- Firms that kept DEI policies showed better stock market performance in the immediate aftermath of the executive orders.
- The study found no negative financial impact for companies that resisted pressure to end DEI practices.
- The findings suggest US corporations have the capacity to resist executive branch pressure without adverse financial consequences.
Conservative backlash against Diversity, Equity, and Inclusion (DEI) policies, fueled by the 'go woke, go broke' narrative, was expected to lead companies to abandon such practices. This sentiment intensified in 2023 with boycotts against brands like Bud Light and Target, and legal challenges following the Supreme Court's ruling on race-conscious admissions. The situation escalated in January 2025 when Donald Trump issued executive orders ending DEI within the federal government and signaling potential targeting of companies that continued these policies. Consequently, major firms like Google, Goldman Sachs, McDonald's, and Walmart announced the cessation of their DEI initiatives.
However, new research by Jacob Grumbach, an associate professor at the University of California at Berkeley, challenges this outcome. Analyzing the stock performance of S&P 500 companies using 'abnormal returns'—the difference between expected and actual stock performance—Grumbach found that companies which resisted pressure and maintained their DEI practices, such as Costco, Apple, and Delta Air Lines, performed financially just as well as their competitors who scaled back. In fact, in the days immediately following Trump's executive orders, companies that retained their DEI policies saw better stock market performance.
David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion and Belonging at NYU's law school, noted that many companies adjusted their DEI principles due to the legal and regulatory climate, often making subtle changes rather than outright eliminations. He observed that some companies that publicly stood firm on DEI, like Apple, may have had a clearer understanding of their consumer base's tolerance compared to companies like Tractor Supply, which withdrew its policies. The research suggests that large US corporations possess the capacity to resist executive branch pressure and maintain their policies without suffering negative financial consequences, illustrating a broader point about organizational resilience against authoritarian policies.