Companies increasingly disclose human capital initiatives, such as diversity, equity, and inclusion (DEI) and non-DEI initiatives. Yet, DEI initiatives have become a focal point of debate, raising questions about whether investors view them as appropriate uses of company resources. Across two experiments, we examine how nonprofessional investors perceive DEI versus non-DEI initiatives. Drawing on equity theory, we propose that investors' fairness-based perceptions of an initiative's appropriateness depend on their underlying preferences for what companies should prioritize, and that these perceptions influence their investment willingness. Experiment 1 finds that investors perceive DEI (versus non-DEI) initiatives as less appropriate, and this difference is exacerbated when investors are more shareholder-oriented than stakeholder-oriented. Furthermore, the mediating effect of perceived appropriateness on investment willingness is stronger when company financial performance is unfavorable than when it is favorable. Building on these findings, Experiment 2 tests a boundary condition of our theory by examining whether explicitly stating merit-based selection criteria attenuates shareholder-oriented investors' stronger negative perceptions of DEI initiatives. We find that when DEI initiatives are explicitly presented as merit-based, investors' negative perceptions of appropriateness of DEI (versus non-DEI) initiatives are attenuated, and the exacerbating moderating effect of shareholder (versus stakeholder) investor orientation also diminishes. Our findings demonstrate how investors' fairness-based perceptions of appropriateness can explain divergent responses to DEI disclosures, offering timely implications for companies and regulators concerned with human capital reporting.