The Hidden Costs of Stepping Back: Why Retreating from DEI Creates More Risk Than Staying the Course
How do you sail through these waters? It requires careful navigation and not throwing your crewmates overboard…
Because of outsized pressure from the current political administration, many organizations are grappling with whether to maintain, modify, or retreat from their diversity, equity, and inclusion (DEI) initiatives. While the headlines focus on the legal challenges facing DEI programs, new research reveals a compelling truth: stepping back from inclusive practices may create more risks than moving forward thoughtfully.
The Data Tells a Clear Story
Recent groundbreaking research from Catalyst and the Meltzer Center for Diversity, Inclusion, and Belonging surveyed 2,500 US employees to understand the real implications of DEI retreat. The findings should give any leader pause.
The talent retention crisis is real. More than three out of four employees (76%) say they're more likely to stay with their employer long-term if their company continues supporting diversity, equity, and inclusion. Even more striking, 43% of employees say they will quit if their employer doesn't continue to support DEI—with rates climbing higher among women, Gen Z, and millennial employees.
This isn't just about keeping people happy. It's about keeping your workforce intact during a period when talent acquisition and retention remain critical business challenges.
Universal Values, Widespread Support
Perhaps most revealing is the near-universal support for the core principles underlying DEI work. When stripped of political rhetoric, the values are clear:
99% of respondents agree that "All workers should feel respected and welcomed at work, regardless of their background or identity"
99% of respondents agree that "It's important that my organization supports fair treatment for its workers, including equitable pay"
The research also found substantial support for specific programs typically associated with DEI efforts:
93% support employee resource groups (ERGs)
92% support creating more inclusive work environments (nursing rooms, childcare, accessibility features)
90% support programs to increase representation through internships, mentorship, and leadership training
88% support training on bias, allyship, and inclusion
These aren't divisive concepts—they're workplace fundamentals that resonate across demographic lines.
The Financial Reality
The economic implications of retreat extend beyond retention costs. Consumer behavior is increasingly aligned with values-based purchasing decisions. The research found that 69% of respondents are more likely to purchase from organizations that support diversity, equity, and inclusion. Additionally, 36% plan to boycott organizations that are downsizing or eliminating DEI programs.
Consider the purchasing power at stake: women control an estimated $31.8 trillion in worldwide spending, while Gen Z wields $360 billion in spending power in the US alone. Among these influential groups, 74% of women and 78% of Gen Z say they make purchasing decisions based on company DEI policies.
The Legal Landscape: Risks in Both Directions
One of the most nuanced findings challenges the assumption that retreating from DEI reduces legal risk. The research reveals that organizational leaders recognize legal exposure exists regardless of their chosen path:
68% of C-suite leaders and 65% of legal leaders said moving away from DEI would create more legal risk for their organization
64% of C-suite and 62% of legal leaders said there's greater risk of litigation from traditional plaintiffs (people of color, women, LGBTQ+ individuals) than from non-traditional plaintiffs
This suggests that the legal calculus isn't as simple as "retreat equals safety." Organizations that step back from creating fair, inclusive workplaces may find themselves facing discrimination claims from employees who experience unfair treatment.
The Path Forward: Strategic Evolution, Not Retreat
The research doesn't suggest that organizations should ignore the current legal and social landscape. Instead, it points toward a more sophisticated approach: strategic evolution rather than wholesale retreat.
Smart organizations are recognizing that the question isn't whether to engage with issues of workplace fairness and inclusion, but how to do so in ways that create sustainable value while managing risk appropriately.
This means:
Conducting thorough risk assessments that consider all stakeholders and potential outcomes
Engaging legal counsel to understand the full spectrum of legal considerations
Listening to employees whose lived experiences provide crucial insights into workplace dynamics
Focusing on core values that transcend political rhetoric: respect, fairness, and equal opportunity
Measuring impact to ensure efforts create meaningful change rather than superficial compliance
The Bottom Line
The data reveals a fundamental truth: in today's complex environment, there are risks associated with both advancing and retreating from DEI initiatives. However, the research suggests that the risks of retreat—talent loss, customer alienation, potential legal exposure, and reputational damage—may outweigh the risks of thoughtful, strategic continuation.
Organizations that succeed will be those that navigate this landscape with nuance, focusing on the universal values that unite rather than divide, while building workplaces where all employees can contribute their best work.
The choice isn't between risk and safety—it's between different types of risk. The organizations that thrive will be those that choose their risks wisely, with full awareness of the costs and benefits of their decisions.
This analysis is based on "Risks of retreat: The enduring inclusion imperative" by Pollack, A., Glasgow, D., Van Bommel, T., Joseph, C., & Yoshino, K. (2025), published by Catalyst & Meltzer Center for Diversity, Inclusion, and Belonging. For more information about this research, visit catalyst.org.
