Companies that dropped DEI: Where is the business payoff?

The Brief

Companies that dropped DEI have not demonstrated a universal business advantage from doing so.
Research on S&P 500 firms found no average financial penalty for maintaining DEI.
Target acknowledged customer backlash as a business headwind, but could not calculate its separate impact.
Target’s subsequent recovery and Walmart’s growth complicate claims that every rollback brought financial punishment.
Employers should assess what happened to fair access, career support and accountability after changing their programmes.

Companies that dropped DEI should be asked to produce the same thing they demand from every other business decision: results.

What improved after the targets disappeared, the teams were renamed, or the programmes were cut?
Did recruitment become better?
Did employees stay longer?
Were customers reassured?

A shorter list of commitments is easy to publish. Evidence that abandoning them helped the business is harder to find.

That question deserves attention now that the first wave of announcements has become history. The corporate DEI rollbacks of 2025 told us what companies were changing. The follow-up should examine what those decisions delivered, including the consequences that never featured in the announcement.

There is a forceful case for inclusion here. It becomes more convincing when we resist pretending that every company which retreated subsequently failed.

Target discovered that retreat could provoke a backlash

Target’s January 2025 changes included concluding its three-year DEI goals and ending participation in external diversity surveys. Its updated account also says employee resource groups continued and that, in early 2026, it fulfilled its commitment to invest $2 billion in Black-owned businesses. Describing this as the disappearance of every inclusion initiative would be inaccurate. [1]

Nevertheless, the response was substantial. Pastor Jamal Harrison Bryant’s Target Fast began on 5 March 2025 and, according to the campaign’s account, concluded on 11 March 2026. A protest initially conceived around Lent lasted roughly a year. [2]

The commercial consequences entered Target’s own discussion with investors. In May 2025, then chief executive Brian Cornell identified reactions to the January changes alongside declining consumer confidence and tariff uncertainty as headwinds. He said the company could not reliably estimate their separate effects. [3] Comparable sales fell 3.8% in the first quarter of 2025. [4]

That leaves a documented business problem without a defensible dollar figure for the boycott. Claims that assign an entire fall in market value or sales to DEI withdrawal go beyond what Target itself could establish.

The subsequent record also matters. Target reported 3.8% comparable-sales growth in the second quarter of 2026, with comparable traffic up 3.6%. [5] Its recovery belongs in this story, even if it complicates the argument.

A company can recover while still having made a costly misjudgment. Target’s experience shows why reducing exposure to one political constituency can create a problem with another: customers who understood the earlier commitments as part of the relationship.

Walmart’s growth demands an honest comparison

Walmart confirmed changes to some diversity policies in November 2024, before Trump’s second inauguration. These included changes to training, external rankings and supplier-related practices. [6] The timing matters when considering how US DEI policy influences corporate decisions: the retreat was already underway.

Walmart’s later financial performance does not fit a story of automatic punishment. In its second quarter of fiscal 2027, reported in August 2026, revenue grew 5.9%, and global e-commerce sales rose 23%. [7]

Those figures do not establish that reducing DEI produced growth. They do establish that a company can roll back commitments and still grow. Equally, a successful quarter cannot tell us whether employees lost opportunities, whether particular programmes became more effective, or whether the business would have performed differently had it retained them.

Using Target as proof that retreat always fails would be as careless as using Walmart to prove that retreat works. Both arguments ask a company-wide result to explain a decision whose effects have not been separately measured.

Did companies have to abandon DEI to protect performance?

Research by Hanna Folsz and Jacob M. Grumbach offers a broader test. Their September 2026 paper, Markets Do Not Punish Firms for Maintaining DEI, compares S&P 500 firms’ responses to the January 2025 executive order. It finds that companies maintaining DEI performed as well, on average, in stock-market returns and revenue as comparison firms. [8]

The authors use several measures of commitment and examine returns adjusted for market factors. This is an observational research paper, not a randomised experiment or proof about every programme. Its conclusion challenges the assumption that maintaining DEI necessarily carried a financial penalty; it does not establish that every rollback caused a loss.

Political pressure was real. Trump’s January 2025 order revoked Executive Order 11246 and directed action concerning private-sector practices characterised as unlawful discrimination. A further March 2026 order addressed racially discriminatory DEI activities by federal contractors. [9][10] These developments warrant programme-specific legal review. Neither an acronym nor its replacement settles whether a particular practice is lawful.

For a board, the business question remains: which risk did the company reduce, and what evidence shows that the benefits exceeded the costs? Political discomfort alone is an incomplete investment appraisal. The review should also consider employees’ experience of workplace discrimination, rather than judging success solely through public statements.

The losses a quarterly result cannot show

For women, the practical consequences depend on what actually disappears. A renamed team may continue useful work. A deleted budget may remove the person responsible for checking promotion decisions, supporting returners or making development opportunities accessible.

The 2025 Women in the Workplace findings from Lean In and McKinsey give that concern substance. Some participating companies had reduced diversity investment. The research also found an association between employees seeing their workplace as fair and inclusive and being more motivated, less burned out and less likely to consider leaving. [11] It does not measure the effects of a named company’s rollback, but it identifies outcomes employers cannot sensibly ignore.

An organisation can lose the ability to spot a problem before the problem becomes visible in resignations. If nobody reviews who receives substantial assignments, a manager’s familiar shortlist can become the leadership pipeline by default. If support for returning employees becomes discretionary, its quality may depend on the manager they happen to get.

These are operational risks to examine, not measured losses we can attach to Target or Walmart. They also explain why women’s access to corporate leadership needs more scrutiny than a headcount alone provides.

Equity requires attention to barriers that make apparently equal opportunities harder to use. A development programme scheduled outside paid hours, for example, can be open to everyone while remaining difficult for carers to attend. Moving it into the working day is a practical design decision. It deserves assessment on access, usefulness and results.

Keep the scrutiny. Keep the work that earns its place.

No DEI programme should be immune from evaluation. An expensive workshop with no clear purpose deserves challenge. A target unsupported by fair processes can encourage superficial reporting. Companies should improve weak interventions and seek qualified advice on legal risks.

But the decision to cut needs its own evidence. Employers should record what changes, what remains, who assumes responsibility and which outcomes will be reviewed. Otherwise, “embedding inclusion across the business” can leave nobody answerable for it.

A useful review would compare hiring, progression and voluntary departures before and after the change, examining relevant groups and roles where lawful and statistically meaningful. It should also check whether employees still understand how to raise a concern and obtain a response.

Listen beyond senior management. Women returning from leave, frontline workers and unsuccessful promotion candidates may identify consequences that a programme owner has missed. Protect confidentiality, and avoid presenting small samples as sweeping conclusions.

For Indian employers, this requires local judgement. Changes at an American headquarters should prompt questions about the work being altered in India, the barriers it addresses and applicable obligations. Importing a new label is much easier than evaluating whether a new policy serves the workforce.

The CIC View on the companies that dropped DEI

Companies once demanded a business case for inclusion. They should now produce a business case for retreat with equal seriousness. What improved, what deteriorated, and who remained responsible for fair access to work and advancement?

A weak programme can be replaced. A fashionable acronym can be retired. Employees still need decisions they can understand and opportunities they can use. Removing the systems that make those possible, without a credible replacement, leaves a company with less knowledge of its workforce and fewer ways to correct its own mistakes. That is a management failure worth challenging, whatever the next quarterly result says.

Editorial Note

This follow-up draws on company disclosures, an earnings-call transcript, published research, campaign records and contemporaneous reporting reviewed on 15 October 2026. It distinguishes reported outcomes from causation and CIC’s analysis of potential risks. No original interviews were conducted. Policy references provide context, not a comprehensive account of litigation or legal advice. Company results cover different reporting periods and are not a like-for-like ranking.

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