S&P 500 Firms Keeping DEI See No Stock or Earnings Penalty

For CHROs and talent leaders, the report flips the compliance conversation: rolling back DEI was often framed as protecting shareholder value, but the S&P 500 data suggests that rationale does not hold. HR teams can now make an evidence-based case that maintaining inclusion programs neither hurts earnings nor stock performance, while retreating from DEI creates brand, culture, and talent risks. The high-profile rollbacks at T-Mobile and Target may need fresh justification.

A newly surfaced academic paper reported by CBS News concludes that S&P 500 companies that maintained their diversity, equity, and inclusion commitments have not faced a financial penalty compared with companies that pulled back. The paper, 'Markets Do Not Punish Firms for Maintaining DEI,' co-authored by Jacob Grumbach, an associate professor at the University of California, Berkeley's Goldman School of Public Policy, found that firms keeping DEI initiatives performed just as well on stock market returns and earnings reports as firms that retreated. That finding directly challenges the notion that DEI programs create an earnings or market-performance drag, and it arrives at a moment when corporate DEI policy has become politically charged.

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Companies such as Costco, Apple, and Delta Air Lines maintained their DEI initiatives without showing relative financial harm, while the source's editorial framing points to Target as a company that retreated and now faces reputational criticism.

The context is regulatory fear. Shortly after taking office in January 2025, President Donald Trump issued an executive order banning DEI initiatives in the federal government and public universities. The administration quickly began targeting universities it said were still running what it called illegal DEI programs. That created acute uncertainty for private employers, many of which feared less favorable treatment from the executive branch, hostile tax audits, or trouble getting mergers approved by the Federal Trade Commission or the Federal Communications Commission. Grumbach told CBS News that the fear was legitimate because enforcement intentions were unclear. That fear produced visible retreats: T-Mobile abruptly ended its DEI initiatives ahead of a merger that needed FCC approval, and FCC Chair Brendan Carr said in 2025 that a company's approach to DEI would be one of the factors the FCC reviewed before approving a merger.

What makes the reported study significant is that the market did not reward those retreats. Companies such as Costco, Apple, and Delta Air Lines maintained their DEI initiatives without showing relative financial harm, while the source's editorial framing points to Target as a company that retreated and now faces reputational criticism. The available coverage does not provide detailed regression outputs, specific percentage differences, or dollar figures; it conveys a binary finding that keeping DEI did not cause underperformance. That is an important analytical caveat: the absence of a detectable market penalty is not the same as proof that DEI programs improve financial results or that every company can ignore regulatory pressure.

For human resources and corporate strategy leaders, the practical implication is that the shareholder-value rationale for rolling back DEI has weakened. If S&P 500 companies that stayed the course performed just as well on earnings and stock, then boards and executives need a different justification for cutting inclusion work, such as a clear legal obligation or a specific merger-approval risk. The study does not eliminate legal risk: companies in regulated or merger-heavy situations may still face scrutiny from the FCC, FTC, or hostile tax auditing. But it suggests that broad, proactive rollbacks were not financially necessary across the board.