Corporate America’s retreat from ESG and DEI accelerates under Trump
As political pressure mounts, companies slash diversity programs and abandon responsible investing.
Since Donald Trump took office as U.S. president, corporate America has retreated from diversity, equity, and inclusion (DEI) and environmental, social, and governance (ESG) programs in a move reminiscent of “death by a thousand cuts”—a gradual and systematic dismantling of policies that have dominated the past five years.
Driving this shift is a growing wave of opposition, led by Trump himself, who has called these initiatives "dangerous" and "degrading" while expressing impatience with anything associated with identity politics. This backlash is, in fact, a counter-movement responding to the social awakening that began as a protest against Trump himself, dating back to his first election in 2016.
In 2024, approximately $20 billion flowed out of ESG funds, marking an all-time high. The trend accelerated in the last quarter of the year, coinciding with Trump's electoral victory, when $10 billion was withdrawn—more than double the redemptions of the previous quarter and the fifth consecutive quarter of outflows.
By comparison, in 2023, ESG fund redemptions totaled $13 billion. The shift has also led to more ESG-focused funds closing than opening. According to Morningstar, most existing ESG funds have simply removed the term from their names in response to the trend and growing pressure from institutional investors.
Over a three-year period, only 37% of ESG funds delivered returns in the top half of mutual fund performance, according to Morningstar. The relatively weak performance continued in 2024. However, Morgan Stanley reported that ESG funds generated a median return of 12.6% in 2023, significantly higher than the 8.6% median return of traditional funds.
The corporate retreat from DEI programs has been equally swift. On his first day back in office, Trump signed an executive order eliminating diversity programs within the federal government and threatening penalties for public companies, nonprofits, and universities that continue to use them.
Several major corporations have already scaled back or abandoned their DEI efforts. Retail giant Target announced it would eliminate its DEI programs and discontinue hiring targets for women and black employees. Facebook parent company Meta canceled its DEI initiatives and laid off staff responsible for them. Walmart shuttered its Center for Racial Equity, which it had established in 2020 with a $100 million, five-year commitment.
Other companies—including Pepsi, GM, Disney, GE, Intel, Chipotle, Comcast, and PayPal—have removed all references to DEI from their annual reports. Some have shifted to investment policies that focus primarily on maximizing profits and avoiding controversial social issues.
Amazon, Google, Boeing, Deloitte, PBS, Ford, Harley-Davidson, John Deere, and JPMorgan have made similar changes, reinforcing the broader trend toward a return to more traditional corporate policies. JPMorgan CEO Jamie Dimon, in explaining the bank’s DEI cuts, remarked, “I saw how we were spending money on some of this stupid shit, and it really pissed me off,”
In recent years, DEI and ESG initiatives gained momentum, becoming symbols of corporate engagement with social justice and environmental sustainability. Many corporations took moral stances on issues such as LGBTQ+ rights, race relations, and climate change. However, these efforts have increasingly come under fire from political and economic critics, who argue they divert companies from their primary mission—maximizing shareholder value.
Corporate social engagement surged following Trump’s first election in 2016, gaining further traction with the #MeToo movement and accelerating in the wake of George Floyd’s death and the Black Lives Matter protests of 2020. During Trump’s first term, many companies not only voiced support for social causes but also made substantial investments in environmental sustainability, diversity in leadership, and, in some cases, direct opposition to conservative state legislation.
This wave of corporate activism has sparked a heated debate about the nature of capitalism. Critics argue that prioritizing social impact over profit maximization undermines shareholder interests and corporate responsibility. Others contend that social responsibility does not necessarily come at the expense of financial returns.
However, as political polarization has intensified, so has criticism of DEI and ESG. Both frameworks, once seen as complementary, prioritize social values alongside financial ones—ESG, for example, encourages investment decisions based on factors like carbon emissions and affirmative action rather than purely economic returns. Yet political pressure, combined with economic headwinds such as inflation and high interest rates, has led many companies to reassess their policies and adopt a more conservative approach, wary of regulatory and reputational risks. 2024 was the most challenging year yet for ESG, with record fund withdrawals signaling a dramatic shift in investor sentiment.
Ultimately, this shift marks a significant turning point in corporate America's role in public and social discourse. While companies previously sought to balance profit with social responsibility, they now appear to be refocusing on financial performance and distancing themselves from political activism.
The question remains: Will this retreat continue in the long term, or will external pressures—such as investor demands, regulatory shifts, or renewed social movements—force companies to reengage with broader corporate responsibility? Some believe this is more of a rebranding effort than a complete departure from DEI and ESG values. Despite the rhetoric, regulatory constraints, investor expectations, and public pressure may ensure that many of these initiatives persist, albeit under different names and with less overt political framing.
