Scholars have suggested that leader diversity ideologies are imbued with ethical or normative content (e.g., Nkomo & Hoobler, 2014). We advance this literature by examining the ethical consequences of leader diversity ideologies. Specifically, we integrate the ethical leadership framework and the theory of recognition to suggest that leaders who communicate about diversity by acknowledging individuals' racial/ethnic identities (i.e., use identity-conscious ideology) are deemed by followers as more ethical than leaders who do not (i.e., use identity-blind ideologies). We further suggest that this effect is stronger for followers who are higher in institutional discrimination awareness (defined as those who are more likely to view racial/ethnic identities as consequential within society). Finally, we assert that this interactive effect on ethical leadership will subsequently influence follower engagement in discretionary, proactive behavior directed toward the organization. We found support for our predictions across two experiments and a field study. Overall, our findings illustrate the ethical consequences of leader diversity ideologies.