As organizations across the country navigate an increasingly complex legal, political, and social landscape, new research from Catalyst and the Meltzer Center for Diversity, Inclusion, and Belonging offers a clear warning: stepping back from diversity, equity, and inclusion (DEI) initiatives carries significant business risks.
The Risks of Retreat report, based on a survey of 2,500 U.S. employees and business leaders, arrives at a pivotal moment. Over the past 18 months, companies have navigated advocacy-driven lawsuits and increased scrutiny, and – most recently – federal executive actions and inquiries that intensified national debate. As a result, some employers are choosing to quietly pause programs, rebrand efforts, or scale back entirely.
Four Risks Every Leader Should Watch
While public discourse often frames DEI as controversial, the research points to broad employee and customer support, and significant vulnerabilities for organizations pulling back. Data shows retreating is not the safe or neutral act, in fact, it introduces new vulnerabilities across talent, consumer behavior, legal and reputational exposure.
Talent Risk: Employees Are Paying Attention
A substantial majority of employees, 76%, say they’re more likely to stay with an employer that maintains its commitment to DEI. Nearly half say they would consider leaving if their employer retreated. The signal from future talent is even sharper: younger workers and women are disproportionately likely to weigh DEI commitments in their career decisions. In a competitive talent market, retreating has real implications for retention and recruitment.
Financial Risk: Values Are Driving Purchasing Power
Consumers are increasingly using their spending to express their values. According to the report, 69% prefer to buy from organizations that show a meaningful commitment to DEI — a trend most pronounced among women and Gen Z. These audiences carry significant influence:
- Women drive an estimated $31.8 trillion of worldwide spending
- Gen Z already wields $360 billion in U.S. spending power
Retreating introduces the possibility of alienating key customer segments and eroding trust.
Legal Risk: Retreating Creates Its Own Exposure
While headlines have focused on anti-DEI litigation, the report reveals a different concern emerging among C-suite and legal leaders. 68% say that eliminating DEI programs increases the likelihood of discrimination claims from marginalized groups. In other words, overcorrection can create the very legal risk organizations aim to avoid.
Reputational Risk: The Perception of Retreat
Many leaders believe they’re reframing or refining DEI initiatives instead of reducing them. Employees largely disagree, perceiving shifts in language and involvement as a withdrawal.
This perception gap threatens internal trust, external reputation, organizational culture, and an employer’s ability to attract next-generation talent, especially in the age where social media amplifies misalignment. The reputational cost of retreat can outlast any legal cycle.
A Path Forward
Insights from the Greater Houston Partnership’s Inclusive Sourcing Roundtable reinforce a critical takeaway from the Risks of Retreat research: organizations don’t need to abandon inclusion to manage risk, they need to operationalize it differently.
Across industries, companies are evolving their inclusive sourcing and procurement practices to reduce exposure while strengthening business performance. Rather than relying on centralized DEI offices to manage supplier diversity, many organizations are shifting responsibility to cross-functional sourcing and procurement councils. This approach embeds inclusion into core business decision-making, where cost, quality, resilience, and innovation already matter—while avoiding the perception that these efforts sit outside of strategy.
Language and metrics are shifting as well. Organizations are moving away from framing inclusive sourcing as social impact and toward a business case grounded in competitiveness, resilience, and growth. Instead of highlighting standalone diversity spend goals, leaders are prioritizing local and regional sourcing benchmarks that measure real economic value: supplier capacity built, supply risk diversified, import dependence reduced, and dollars retained in regional economies. These measures intertwine inclusion with sourcing outcomes that executives already track while minimizing reputational and visibility risk.
The same evolution is occurring across talent and leadership practices. Employers are reaffirming that hiring, promotion, and procurement processes are merit-based, while continuing to expand access to opportunity by strengthening pipelines and reducing structural barriers. Rather than programs available only to specific cohorts, organizations are investing in inclusive leadership capabilities, a shift that mirrors the “finesse” approach highlighted in Risks of Retreat.
Houston businesses have long recognized inclusive growth is synonymous with economic growth. Competitiveness and diversity go hand in hand, especially in America’s most diversity city.
The Partnership’s 2025 Houston Regional Assessment reinforces this reality. While the external environment has shifted, the data shows that Houston-area employers are not abandoning inclusion efforts, they are reframing them. Many organizations are moving away from highly visible programs and toward more focused, results-driven approaches that tie inclusive leadership directly to talent development, innovation, and risk management.
View 2025 Houston Regional Assessment Summary Slides
Even as language and operating models evolve, the underlying commitment to advancing opportunity, strengthening leadership pipelines, and building resilient organizations remains intact.
Get Involved
Advancing inclusive leadership and economic opportunity remains a core priority for the Partnership. Through its Inclusive Leadership & Opportunity efforts, the Partnership convenes employers around practical, business-aligned strategies that strengthen talent pipelines, leadership development, and organizational performance.
Leaders committed to building strong workplaces that expand opportunity can engage directly through this initiative, which brings together companies, institutions, and nonprofits to advance inclusive talent development across the region.
To learn more about participating in this work, contact [email protected]