Retreating From DEI Initiatives Could Cost Businesses Billions

In recent months, a troubling trend has emerged in corporate America: a small but well-known group of companies are retreating from their diversity, equity, and inclusion (DEI) initiatives. This retreat, following last year’s Supreme Court decision on affirmative action, which ended race-conscious admissions in higher education, and then a spike in pressure from conservative activists, threatens to undo years of advancements to address discrimination and further equality in the workplace. But less often discussed is the fact that companies have spent years investing in best-practice DEI policies because DEI is good for their bottom line. Effective trainings reduce the risk of litigation, and diverse businesses have been proven to be more innovative and effective. Backing away from this progress is not just short-sighted, but it’s also a significant business mistake—one that could cost businesses billions.

Investing in inclusion builds a stronger, more resilient economy that works for everyone. This is particularly evident in the automotive industry—thrust into the spotlight following recent backpedaling by Ford Motor Company and Toyota, both of which ceased submitting information to Human Rights Campaign Foundation’s Corporate Equality Index, a 22-year-old workplace inclusion survey. The automotive industry is a sector that has driven innovation, shaped culture, and served as the backbone of the American economy. With key players in the American automotive industry making the decision to roll back commitments to DEI, the sector is set to demonstrate to the broader business community the dollars and cents case for inclusion—these numbers, driven by coveted Gen Z and increasingly diverse consumers, tell a compelling story.

In an analysis released this month of the S&P Global New Vehicle Registration Database on new vehicle registrations in the United States, Human Rights Campaign Foundation researchers found that African American, Latino, and Asian Americans (LGBTQ+ and non-LGBTQ+ combined) purchased more than 17 million new vehicles since the start of 2020. That’s over 31% of all new vehicles purchased in the last five years, at a combined spend of $685 billion.

This is not a niche market—it’s the auto industry’s future majority consumer, and it’s growing fast. Take, for example, one segment of that market, the LGBTQ+ community. The number of U.S. adults who identify as LGBTQ+ has doubled over the past 12 years to at least 20 million American adults. This community represents $1.4 trillion in buying power, a figure that’s set to surge as Gen Z (24% identify as LGBTQ+) and Millennials (15% identify as LGBTQ+) age into the workforce and influence business decisions. These aren’t just statistics—they represent real people and real economic power.

Data from the HRC Foundation 2024 Annual LGBTQ+ Climate Survey shows that 80% of LGBTQ+ adults are willing to boycott a company if they walk away from inclusion initiatives. LGBTQ+ consumers accounted for 5.6% of all Ford vehicles purchased in the last five years. This means, according to HRC Foundation’s analysis, that Ford could lose nearly $2.4 billion in sales in 2025 alone. In October, a group of LGBTQ+ Michiganders, including Ford owners, dropped off nearly 35,000 letters from concerned consumers across the nation who oppose this DEI retreat. This is not a risk any company that cares about its bottom line should be willing to take.

For all business sectors, it’s not just about avoiding losses—it’s also about recognizing the risk of inaction and about capitalizing on gains. Studies show that LGBTQ+ consumers are fiercely loyal to brands that support them. As 49 members of Congress recently pointed out in a letter to Fortune 1000 companies, growing numbers of American consumers support businesses that champion inclusion. Companies that maintain strong DEI commitments are better positioned to attract and retain these loyal customers. Just ask Subaru, a brand that has long recognized and embraced its LGBTQ+ customer base.

The business case for inclusion goes even further. When the LGBTQ+ community thrives, so do companies. Since becoming legal, same-sex weddings have boosted our economy by $3.8 billion and counting. Hundreds of companies didn’t just support their employees in the fight for marriage equality; they urged the Supreme Court to strike down bans. It was the right thing to do, yes. But it wasn’t difficult to figure out that it was also the smart thing to do.

Moreover, the LGBTQ+ community’s impact extends far beyond consumer spending. By 2030, Gen Z is expected to make up 30% of the workforce. In the middle of a labor shortage, these are our future construction workers and bus drivers, engineers and accountants, salespeople and C-Suite executives. And a whole lot of them are queer. But one-third of LGBTQ+ employees say their productivity would suffer in a less-inclusive work environment, and 20% would consider quitting. In an industry already grappling with talent shortages, can companies afford to alienate this crucial demographic?

Critics argue that DEI programs are unfair and that everyone should have equal opportunities. But DEI programs ensure that companies can tap into the full spectrum of talent available, regardless of race, gender, sexual orientation, or other factors that have historically led to discrimination. These programs also mitigate turnover by ensuring that companies have the tools to recruit top talent—and also to retain it. The U.S. Equal Employment Opportunity Commission reported a 10% increase in workplace discrimination charges in fiscal year 2023. As EEOC Chair Charlotte Burrows said in an AP interview, DEI programs are “in so many ways an antidote to the kinds of practices that lead us to have to go to court.” In other words, these programs are not just about fairness—they’re also about creating better workplaces for everyone, which can save companies from expensive lawsuits and reputational damage.

So here’s the bottom line: retreating from DEI initiatives isn’t just a retreat from progress, it’s also economically disastrous and exposes businesses to additional risks, including litigation. The numbers don’t lie. DEI is a necessity for any company that wants to succeed in today’s diverse, globalized economy and to future-proof its business.

Kelley Robinson is President of the Human Rights Campaign. She is a member of the 2024 TIME100.

Contact us at letters@time.com.