Companies That Kept DEI: What New Research Reveals

The Shifting Landscape of Corporate DEI

The past six years have brought significant, substantive changes to how companies talk about and enact diversity, equity, and inclusion (DEI) initiatives. As recently as 2020, many companies were proclaiming their commitment to ending systemic racism and promising to devote hefty sums to undoing longstanding racial disparities. But the tide began changing fairly quickly as companies responded to backlash against DEI initiatives and programming.

In 2025, the federal government formally weighed in, with an Executive Order (EO) labeling diversity and inclusion programs “illegal and immoral,” and mandating their termination in federal government agencies. Though this EO did not specify that private sector companies had to take heed, the change was clear, and many moved on their own to shutter DEI offices and curtail programs.

Companies That Stayed the Course—and Those That Didn't

Anecdotally, there are examples of companies that walked back their DEI activity, and others that chose to stay the course. In retail, Target and Costco represent perhaps two of the most well-known cases of companies that took different paths.

Target, notably, retreated from its DEI commitments, leading to a boycott that caused significant reputational damage. In contrast, Costco chose to maintain its DEI efforts, arguing that they were an essential component of its business growth and operational strategies.

In isolation, these accounts don’t tell us much, other than that different companies take different approaches. But a new paper gives more systematic, detailed information about this issue.

What the New Study Found

Political scientists Hanna Folsz and Jake Grumbach examined whether firms that disregarded prohibitions against DEI showed worse financial performance than those that complied. To answer this, the authors looked at the stock performance and revenues of companies in the S&P 500, which allowed them to compare similar firms and observe financial outcomes for those that maintained DEI commitments versus those that did not.

Notably, Folsz and Grumbach did not find evidence that firms which kept DEI programming in place reported lower earnings. These companies did not pay a penalty in either stock declines or lower earnings. Their results suggest that consumers do not penalize firms for maintaining their DEI activity, and that maintaining this commitment does not hurt companies’ bottom lines.

In other words, the feared financial consequences of staying the course did not materialize among the large public companies studied—a finding with direct relevance for organizations now deciding how to approach DEI.

What This Means for Companies Weighing DEI

In an era where many organizations are weighing how they want to approach DEI, Folsz and Grumbach’s results have important implications. They suggest that thus far, companies that want to continue their DEI work can take note of the fact that other firms have been able to do so without incurring adverse financial costs for doing so.

Additionally, organizations like universities, law firms, press outlets, and others that have faced pressure to retreat from DEI commitments might want to consider these findings and weigh whether the costs that come with upholding DEI are perhaps less severe than anticipated.

The study found no evidence that firms which kept DEI programming in place reported lower earnings, and these companies did not pay a penalty in either stock declines or lower earnings. Its results suggest that consumers do not penalize firms for maintaining their DEI activity, and that maintaining this commitment does not hurt companies’ bottom lines.