The Cost of Caving: DEI, ROI, and the Shareholder Stand Against Trump

Last week, the financial world sent clear signals about the business consequences of caving to Trump on diversity, equity, and inclusion (DEI).  The message is this:  when a company backs off DEI, especially with regard to gender, it will be punished. The impact will go well beyond reduced sales to affect the firm’s stock price and, as a consequence, its ability to raise capital and credit, whether short or long term.

The results are in: first quarter 2025 financials show Target badly hurt from dropping its diversity, equity, and inclusion programs and Costco being rewarded for standing up to Trump.

            The clearest illustration comes from two giants of retail and grocery:  Target and Costco. These are two companies in the same sector, subject to the same economic influences (specifically, concerns about tariffs), who primarily serve female shoppers.  But one of these companies, Target, abandoned its DEI efforts at the first sign of political pressure from the Trump administration (rolling over a mere four days after the inauguration). In contrast, Costco stood firm. The outcomes show where Americans actually stand on this hot topic:  Target is taking a beating and Costco is flourishing.

            At Target, management, not investors, made the decision to cave in to Trump’s belligerence. To make matters worse, they foolishly announced the decision publicly, blathering about responding to political “headwinds” against DEI—clearly trying to avoid the lawsuits being threatened by Trumpy groups:  think tanks, MAGA organizations, and right-wing lawyers.

            Unfortunately for Target, their cowardly announcement also sent a signal to their core customer base.  The pivot went against Target’s historical positioning as a progressive brand—and thus was more likely to offend their own shoppers than the people who frequent other stores.  It felt like it would if Ben & Jerry’s suddenly went all MAGA.  Quite newsworthy.

            No surprise, perhaps, that in the first quarter of Trump’s reign, Target sales dropped about $680 million. On top of that (and, really, this is where the real damage lies), Target’s stock price dropped 30% during the quarter.

Target appeals to a design sensibility, which can lead observers to think it is an elite store, but it offers trendy styles at reasonable prices.  So, their base is pretty mainstream: white women in their late 30s with moderate incomes ($80,000 a year) typify the Target shopper.  In America overall, females drive 70% to 80% of consumer purchasing, including both direct and household spending, with particularly strong impact in retail, clothing, and grocery.  (Like. . . that’s what Target sells, folks.)  For Target, that number is lower, but still high, at 63% of their shoppers being female.

When your customer base is primarily female, and you make an abrupt public pivot against their economic inclusion, don’t be surprised when the cash register goes quiet. And let’s be clear:  women’s spending amounts to $14 trillion a year; for perspective, that’s half of US GDP. 

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It’s worth noting here that women, not racial minorities, are the group most affected by a reversal of diversity initiatives and they still have a long way to go to reach equality in the workplace (right wing propaganda notwithstanding).  Further, all women, not just white women, were and are affected by the long list of gendered economic constraints that DEI legislation and rulings aimed to lift. In short, women are the biggest target and there are more ways to hit them with discrimination.  (I have detailed all this in a Substack post.). That's why they will be the group most affected.

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            Apparently, Target’s top management also couldn’t do the basic demographic math.  Women, racial and ethnic minorities, and LGBTQ+ people are the groups affected by the retraction of DEI—and they collectively represent a whopping 82% of Americans.  That’s because, though they are claiming to represent a sea change in the majority view, white, male, Christian, cis-gender males are only 18% of the citizenry.  Why would you choose to alienate practically everybody in America?

            Furthermore, there is no data to suggest that the slim margin by which Trump won the popular vote (a mere 1.5% percentage points) was connected to a rebellion against DEI, even among men. Indeed, a variety of polls leading up to the election had shown that the vast majority of Americans, including the men, support gender equality and the diversity efforts made to achieve it. Far from wanting to abandon gender diversity, 57% of Americans say efforts to achieve women’s equality haven’t gone far enough.  True, the support is lower for men (49%) than women (63%), but still quite strong among males—and let’s not forget who does the shopping.   

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There’s a widespread myth that American men resent women’s progress—claiming they believe female gains have come at their expense. The right uses this falsehood to justify anti-woman policies. Worse, mainstream and even progressive media echo it, giving MAGA talking points more weight and letting Trump act like he has a mandate. But it's not true. This survey—conducted months before the election and released just two weeks before the vote—shows vast majority of American men do not believe women’s progress hurts them. Repeating this lie only isolates women and confuses men, eventually making the myth look real.

______________________________________________________________ Despite all the hand-wringing about Gen Z men being more conservative, the data usually is reported in way that exaggerates the claim:  for instance, saying that, OMG, 27% of Gen Z men think gender equality efforts have gone too far—when the bigger picture is that a whopping 73% of young men say it hasn’t gone far enough!  Indeed, despite right wing claims and the rants of weirdos on the internet, more than three quarters of American men said, in a Pew poll just weeks before the election,  that women’s gains in the economy have not come at the expense of men.  In truth, going after DEI is very unpopular and Trump had no mandate for it. 

Threatened Lawsuits Going Up in Smoke

Even if Target had lost lawsuits, it wouldn't have cost them as much as they are now going to pay in the capital markets. And, anyway, the MAGA lawsuits either never materialized or are now going up in smoke from lack of evidence.

Those in Target management who argued for retreating to a dark hole probably pointed to the risk of lawsuits.  In early 2025, multiple shareholder lawsuits were indeed filed against Target. Plaintiffs alleged that the company failed to disclose the potential financial risks associated with its DEI initiatives, leading to significant stock value losses.  Now the retailer’s stance against DEI has caused even greater losses, which will destroy the plaintiffs’ argument.

          Oops.  Never mind, your honor.

In any case, it’s important to realize that the cost of losing big lawsuits pales in comparison to a disaster in the financial markets.  A company that sustains the kind of blows Target has had will have difficulty raising both short-term and long-term capital, as well as getting credit. That 30% drop in stock price is a big red flag that investors will remember for a long time.

Shareholder Support for DEI Saved the Day—All Across American Business!

            Costco, on the other hand, didn’t issue any dramatic public announcement about DEI. The company just quietly refused to abandon it. When anti-DEI shareholders proposed eliminating Costco’s equity programs in early 2025—only three days after Trump’s swearing-in—the board recommended a “no” vote—and shareholders agreed. The proposal failed, and the company reaffirmed its DEI commitments by a whopping 98% to 2% vote among the people who actually own the company.  Now, the first quarter results have vindicated their judgement— Costco sales up 11% and the stock price has boomed.

Since Trump was inaugurated, it has been shareholders who held up DEI at the major firms all across America. That's right, those who actually own the firms have been overwhelmingly in favor of inclusive policies, with votes at or around 98% "for" DEI to 2% "against" every time. Not a single anti-DEI proposal brought to a shareholder meeting has passed.

            Most people don’t know—because the media doesn’t cover it—that shareholders in other companies have now echoed that Costco vote, including Levi-Strauss, Pfizer, Goldman Sachs, John Deere, Coca-Cola, Visa, and Apple, each of them confirming their support for DEI in numbers approaching 100%.  (Apple, 97% to 3% in favor of continuing DEI; Levi-Strauss, 99% to 1%; Pfizer, 98% to2%; Goldman Sachs, 98% to 2%; Coca-Cola, 99% to 1%; Disney, 99% to 1%; John Deere, 99% to 1%; Visa, 99% to 1%). In fact, John Deere’s management had to reverse a previous decision to roll back DEI because their shareholders wouldn’t stand for it.

            The knee-jerk critique of corporations among the press and the public is that corporations will abandon their principles for profit.  And there is obviously some truth to that (though, in my experience, it is less true than people think).  So why would the shareholder response upholding DEI come so quickly and so strongly—and at a list of companies diverse enough to include John Deere, Goldman Sachs, and Apple?  

Evidence Says Gender Equality is Good Business—So Abandoning DEI is Bad Business

            Investors had no crystal ball here, but they had plenty of data that would have pointed them in the direction of supporting DEI—numbers from authoritative sources show that DEI, specifically gender equality, is good for company performance—and therefore good for those who own their stock.  

The level of shareholder support for DEI has been nearly unanimous, but the press virtually never makes note of that, preferring to allow a pervasive sense that the US is turning against women and minorities to grow and fester.

            The financial world has multiple studies and gender indices that measure the performance of gender-friendly companies versus not-so-nice companies.  The most prominent one is the Bloomberg Gender-Equality Index, a group of about 500 companies in more than 10 sectors selected for their gender friendliness.  That index has at least equaled and sometimes outperformed the MSCI World Index.  According to Bloomberg Intelligence, companies with gender-diverse leadership teams deliver 2–5% higher annual returns. A Black Rock analysis found that investing in companies with more women in senior roles improved portfolio performance by 72 basis points annually. As I have detailed in my book, The Double X Economy, other research shows that companies with women in leadership are more diligent, transparent, and accountable.  They are also more careful about risk assessment, something Target could have used in this instance.

            With this data in mind, it was likely that the stock prices of both Target and Costco would reflect their cowardice or courage:  Target’s shares dropped an eye-watering 30% during the first quarter, while Costco’s grew.  Target’s leadership also blamed tariffs for the poor performance (but admitted DEI rollback was a main cause), but tariffs should have applied more or less across the whole economy—and certainly would have applied equally to a competitor like Costco, which beat the market by a lot.  So, as compared to indexes that reflect market averages, like S&P 500 (which dropped 4.6%) or NASDAC (sank 10.5%), Target underperformed the overall financial market and Costco overperformed.

Anti-DEI Efforts in the Corporate Sector Have Failed Spectacularly

            Meanwhile, anti-DEI shareholders were actively promoting their agenda, but without success.  In 2022, shareholder proposals attacking DEI were only 6% of all DEI initiatives.  That number rose to 23% in 2024.  In the first quarter of 2025, since Trump was elected, fully 40% of DEI proposals from shareholders have attacked diversity efforts.  And how many of these efforts to destroy diversity programs have been successful?  None.  

            That’s right.  I said zero. No proposal against DEI has been successful at any major firm in America since Trump took office.

            Oh, and did I mention that nobody has sued Costco?  

The Bottom Line:  Don’t Cave

The evidence suggests that maintaining DEI initiatives is not only ethically sound but also financially prudent. Investors and consumers alike are signaling that diversity and inclusion are thought integral to business success.

But most people don’t know this is happening because good news on DEI is not attractive clickbait in the mainstream press (or certainly the conservative press).  Yet the citizens need to know how this stuff is really playing out, since the propaganda about it on both sides is suspect. 

So, if you care about these issues, now is the time to share this story, continue boycotts when appropriate, divest of errant investments, and keep the pressure on in every way you can. The press may have moved on, but the financial signals are getting louder.

PS: There will be a Medium post, a Substack breakdown, and a couple of TikToks on this topic coming out this week. Stay tuned—and spread the word.