The ongoing business case for investment in EDI: insights from a rapid evidence review

Blog posts

12 Jun 2025

Joseph Cook, Research Fellow
Cristiana Orlando, Associate 

In light of the recent backlash against Equality Diversity and Inclusion (EDI or DEI) practices globally, and the withdrawal of participation and commitment to widening diversity from an increasing number of large employers as previously discussed by IES, we now reflect on findings from a recent project for the Youth Futures Foundation that looked at evidence on what promotes employer action and behaviour change in relation to EDI. This blog focuses on the ongoing business advantages for UK organisations of investing in EDI initiatives and programmes, especially the drivers that motivate employers and the enablers that sustain such investments.

Organisational drivers

EDI initiatives are not only a moral or compliance-driven imperative; they are increasingly central to business sustainability and performance. Despite fears of ‘anti-woke’ political agendas and some organisations taking steps back on EDI, it is telling that recent research found that 34% of UK employers are actually increasing their EDI efforts. Alongside traditional arguments around legal requirements, including increased focus on ethnic and disability disparities in the forthcoming Equality (Race and Disability) Bill,  market competitiveness and stakeholder expectations are creating increased pressure for organisations to demonstrate inclusive practices. Today, clients, investors, and the public scrutinise corporate values more closely, with trust and legitimacy often tied to visible action on diversity and inclusion.

Operationally, EDI efforts align with long-term workforce and productivity strategies. In a tight labour market, the ability to access wider talent pools is essential. Inclusive hiring and workplace cultures help attract and retain diverse talent, particularly in sectors reliant on innovation and problem-solving. Diverse teams have been shown to generate higher levels of creativity, offer broader perspectives, and improve decision-making—all of which contribute to competitive advantages for employers, in terms of talent retention, workforce productivity, and financial returns.

A further key aspect is that younger generations entering the workforce are placing greater importance on values-based employment. IES research into career attractiveness in the construction industry notes pervasive gender stereotypes and perceptions of it being a male-dominated sector, that potentially discourages female entrants and exacerbates skill shortages. Organisations demonstrating authenticity and inclusivity are better positioned to appeal to this talent.  

Organisational enablers

To translate commitment to EDI into practical action, enablers that embed inclusion into the fabric of an organisation must follow initial drivers of change. These include culture, leadership, HR infrastructure, and employee voice and participation practices.

Organisational cultures that promote participative strategy or decision making processes incorporate multiple views when considering organisational changes, facilitating collaboration across a diverse range of employees at varying levels of experience and expertise. However, evidence from our partner organisation, the Involvement and Participation Association (IPA), highlights a concerning trend: while participation is linked to improved well-being and motivation, UK employers are offering fewer opportunities for meaningful participation. An inclusive team environment creates psychological safety that enables employee participation. 

The role of leadership in driving and sustaining EDI goals is also crucial. Adopting approaches like ‘complexity leadership theory’ that recognises front-line employees and mid-level managers as the heart and driving force behind implementation, and fosters interconnectivity, creativity, leading to improved employee engagement and confidence in decision-making. This results from a more decentralised approach to leadership, as evidenced in case studies of large corporate brands such as Spotify. Complexity leadership creates environments where top-down mandated approaches shift to those where inclusive behaviours emerge naturally from the teams driving change, resulting in more meaningful support and action for EDI action from employees themselves.

HR structures, policies and processes are also a route to enabling wider participation for diverse groups. In recruitment processes, flexibility can be incorporated in the recruitment and placement of staff. Taking a candidate-focused approach where the employee is an active participant in the creation of a job has been evidenced through ‘job carving’ and working with employers to create sustainable roles that benefit both employers and employees. For example, young people who struggle in meeting standard job descriptions due to disability or lack of experience can benefit from carved roles that focus on an individual task or skill, enabling participation in employment and development of additional skills. Providing these tailored approaches to hiring and job creation can improve employee retention, especially for more disadvantaged groups such as disabled people who are more at risk of leaving their roles, and reduce the costs of implementing change when effectively utilising services like Access to Work.

Reset and reinvest or retreat?

EDI is not a passing trend or a problem to solve, but a business-critical solution. While some organisations may be tempted to retreat in the face of political pressure or economic uncertainty, the evidence is clear: sustained investment in equality, diversity and inclusion delivers tangible benefits for innovation, resilience, and long-term performance. As seen in recent stories about organisations ‘sunsetting’ their EDI approaches, including Rolls-Royce in the UK and US retailers Target and Walmart, there are risks of undermining employee trust, losing competitive edge, and alienating the very talent businesses need to thrive.

For UK employers, this moment should serve as a catalyst to re-energise and embed inclusion more meaningfully. Inclusive organisations are more resilient: they adapt faster, manage risk better, and are more attuned to customer needs. Disinvestment or complacency in this area risks undermining both internal culture and external performance, while sustained attention and investment like undertaking evaluations of EDI effectiveness or building inclusive leadership capacity among executives are likely to guarantee long-term returns for business growth, sustainability and profitability.

To speak to us about how to support your EDI journey from moving beyond compliance to real Inclusion, contact us by writing to meenakshi.krishnan@employment-studies.co.uk.