Pulling Back on DEI Isn’t Neutral: It’s a Potential Risk

A new study by Catalyst and NYU’s Meltzer Center confirms what many already suspected: companies that scale back Diversity, Equity, and Inclusion (DEI) initiatives aren’t just making political statements ...

they’re increasing their legal, financial, and reputational risks.

🔹 Eighty-eight percent of senior leaders and legal decision-makers indicate that DEI retrenchment increases the risk of workplace discrimination lawsuits. 

🔹 Companies that downplay DEI experience lower employee engagement and higher turnover rates, particularly among Gen Z and millennial talent. 

🔹 Customers are also paying attention — brand loyalty is directly linked to perceptions of inclusion and equity.

This isn’t just a U.S. issue.

In Canada, we’re already observing the ripple effects. Subtle pullbacks, delayed commitments, and internal programs being deprioritized — all occurring without the same level of political pressure evident in the U.S. But make no mistake: the risk calculus remains the same.

Why this matters for Canadian and U.S. businesses

1. Talent is global, mobile, and values-driven.

   Retrenching on DEI is a surefire way to lose your future workforce.

   
   

2. Legal exposure doesn’t stop at the border;

   Canadian companies are equally vulnerable to the consequences of failing to uphold fair workplace practices.

   
   

3. Consumers notice when inclusion becomes performative

   Whether it’s a diverse campaign or internal culture, hollow signals do more harm than good.

What leaders should do instead:

✔️ Double down on what works: DEI programs that are tied to accountability, transparency, and measurable impact.

✔️ Treat DEI as risk mitigation, rather than a casualty of a culture war.

✔️ Stay consistent: Short-term political changes shouldn’t dictate long-term brand and workplace strategy.

Bottom line: Pulling back on DEI isn’t a neutral act. It’s a strategic liability. Canadian and U.S. companies that want to thrive — with talent, customers, and communities — must continue to engage and do the work.