The backlash against Diversity, Equity and Inclusion: and what it means for businesses in the UK and Australia

Recent political developments in the United States have sent shockwaves through the corporate world. The Trump administration’s decision to place all federal employees working in Diversity, Equity and Inclusion (DEI) on paid leave, alongside a requirement for those organisations to submit termination plans, signals a significant rollback in workplace diversity efforts.

This shift has already had global repercussions, with major organisations such as Accenture announcing reductions in their DEI programmes. The move raises an important question: if businesses know that diverse teams outperform homogeneous ones, why are some retreating from DEI commitments?

"Inclusive workplaces are six times more likely to foster innovation" (Deloitte)

The evidence supporting DEI initiatives is overwhelming. Research shows that diverse teams increase shareholder value, enhance resilience and sustainability, improve service delivery and ensure organisations better reflect the communities they serve. Companies with strong DEI strategies consistently outperform their competitors, yet these latest developments suggest that some businesses may be prioritising short-term political or financial pressures over long-term success.

How will the US rollback affect the UK and Australia?

While this shift is occurring in the US, businesses in the UK and Australia cannot assume they are unaffected. Global organisations operating across multiple regions may feel pressure to scale back their DEI commitments, influenced by leadership decisions or changing investor priorities.

However, both the UK and Australia have legal frameworks that require companies to take DEI seriously.

Australia has a stronger regulatory environment, ensuring that diversity and inclusion remain a corporate priority. Under the Gender Equality Act 2012, employers with 100 or more employees must report on key gender diversity metrics, including whether they have a formal DEI strategy.

The ASX Corporate Governance Council has also proposed a gender-balanced 40:40:20 model for company boards (40% men, 40% women, 20% any gender), pushing businesses towards greater accountability in leadership diversity.

Additionally, Australian regulations have begun linking gender inequality to workplace harassment risks, reinforcing the need for proactive DEI measures, for example the requirement to report on an organisations policies to address sexual harassment. Businesses failing to meet these standards may find themselves non-compliant with emerging legal requirements.

The UK has long-established legal protections under the Equality Act 2010, which prohibits workplace discrimination and requires employers to take active steps to promote fairness and inclusion. Additionally, gender pay gap reporting obligations ensure greater transparency and accountability.

However, unlike Australia, DEI initiatives in the UK are not legally mandated for most businesses. If organisations choose to follow US trends by rolling back DEI programmes, progress could slow significantly, particularly in industries still grappling with diversity challenges.

Rolling Back DEI is a reputational and financial risk

Stepping away from DEI initiatives is not just a political stance, it is a decision that can harm businesses in multiple ways.

"Diverse companies are 36% more likely to outperform their less diverse competitors" (McKinsey)

Workplace harassment and discrimination cost businesses millions each year in legal claims, absenteeism and lost productivity. Companies that withdraw from DEI efforts risk:

• Damaging their reputation – Employees, customers and investors increasingly expect businesses to uphold social responsibility commitments. A public retreat from DEI could lead to backlash.
• Struggling to attract and retain top talent – Employees today, particularly younger generations, actively seek out workplaces that prioritise inclusion. Without strong DEI initiatives, businesses risk missing out on the best talent.
• Missing out on market opportunities – A diverse workforce helps organisations better understand and serve their customer base, making businesses more competitive and adaptable.

DEI is a cost-saving strategy, not an expense

One of the biggest misconceptions about DEI is that it is a costly extra, when in reality, it saves businesses money in the long run. Organisations that integrate DEI into their culture experience:

• Lower turnover rates – Inclusive workplaces retain staff longer, reducing costly recruitment and training expenses.
• Fewer workplace complaints – Investing in bystander training and anti-harassment programmes reduces the risk of costly legal disputes and reputational damage.
• Higher productivity – Employees in diverse, inclusive workplaces report greater engagement and job satisfaction, leading to better performance.

What organisations can do

Regardless of global trends, organisations in the UK and Australia must remain committed to DEI, not just for compliance but for long-term success.

At Enmasse, we work with organisations to build strong, measurable DEI strategies through:
🔹 Workplace training – Empowering employees to build inclusive workplaces through practical, real-world learning.
🔹 Leadership development – Equipping leaders with the skills to drive cultural change and embed DEI at all levels.
🔹 Culture transformation programmes – Helping businesses move beyond compliance to create sustainable, inclusive workplace cultures.

If your organisation is looking to strengthen its DEI strategy in 2025, we’re here to help.
Get in touch today to explore how we can support your business in building a workplace that is inclusive, productive and future proof | enquiries@enmasse2.com | enmasse2.com