A study finds that businesses that resisted Trump’s anti-diversity pressure paid no price. Are the law firms and universities that capitulated listening?
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.
— Grumbach and 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.”
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 like 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.
Consequently, 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 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.
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 anti-discrimination 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.
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.”
