Across the United States, major corporations– from tech giants like Google and Meta to retail leaders such as Amazon, Walmart, and Target– are pulling back on their Diversity, Equity, and Inclusion (DEI) programs (1). These rollbacks, driven by political pressures and a barrage of anti-DEI rhetoric, have sparked a fierce debate about the future of DEI in the U.S. workplace. The debate has spread to Europe, with 20% of Europe’s private industry expressing worry about implementing DEI programs (2,3). The question now looms: will European companies follow the U.S.’s lead, or can they seize this moment to reimagine DEI for the modern workplace?

Shortcomings of DEI initiatives

Critics in the U.S. contend that DEI initiatives have become outdated and ineffective; accusing them of fostering reverse discrimination, lowering meritocratic standards, and even harming overall organizational performance (4). While such arguments oversimplify the issue, legitimate criticisms do exist. The McKinsey report, How Diversity Matters, which sparked countless DEI initiatives by claiming a direct correlation between diversity and financial performance, has been debunked (5). Recent analyses suggest that while diverse teams can enhance decision-making and innovation, simply increasing diversity does not automatically lead to better financial outcomes. In fact, decades of research indicate that many mainstream DEI efforts have failed to deliver measurable change (6).

A recent European DEI Index found that only 7% of organizations are genuinely building a diverse and inclusive culture. Almost every country failed, on average, to reach a passing grade on workplace inclusion with only Switzerland scraping a pass of 6.0. The Netherlands scored a 5.65. The study also revealed that European management is notably less diverse than the non-managerial workforce: only 40% of managers belong to underrepresented groups (a mere 16% when excluding gender diversity), compared to 61% of non-managers (31% excluding women). Moreover, less than half of non-managerial employees rate their company’s performance on cultural, LGBTQIA+, or socioeconomic diversity as “satisfactory”. With approximately 30% of employees experiencing discrimination or bullying – and nearly half of such incidents going unreported – European companies face a disconnect between leadership’s DEI commitments and the lived reality of their workforce (7).

Opportunities for reinvention

The simplistic business case for diversity has been disproven: claiming that increased diversity in the workplaces drives better decision-making and economic performance lacks robust empirical support (8). Simply “adding” diversity without changing the organizational culture or power dynamics will not yield meaningful financial or operational gains. However, although DEI may not be directly linked to financial growth, organizations that lead on DEI demonstrate tangible benefits: these companies, which invest on average 25% more in DEI, report higher employee satisfaction, innovation and productivity (7). An example of this is Marriott International Inc., which found in a 2022 study that the company’s commitment to workplace diversity played a significant role in retaining skilled employees and enhancing their individual performance (9).

Business case studies such as these underscore the tangible benefits of investing in meaningful DEI strategies. In practice, this means moving beyond one-off training sessions and instead implementing long-term structural changes. This is called a systems-based approach (10). By treating DEI as an ongoing organizational transformation rather than a set of isolated programs, companies can create workplaces that are truly inclusive, where diversity is reflected at all levels (7, 10). Here are two examples of key opportunities for reinventing DEI in Europe:

1. Inclusive innovation

The most forward-thinking companies are shifting their focus from diversity as a compliance requirement to diversity as a strategic advantage: one that fuels creative problem-solving, product innovation, and global competitiveness (11,12).

A key way to achieve this is through inclusive innovation. This is a practice that involves intentionally bringing diverse perspectives into the design and decision-making process (13). For example, some companies have established innovation labs that specifically include employees from underrepresented backgrounds to co-create new products and services. Others have implemented co-design sessions with customers from diverse demographics to ensure their offerings meet the needs of a broader audience (7, 13). Zalando has led the way in embedding inclusive design principles into their business strategies. Their Adaptive Fashion collection, designed to increase accessibility to the platform and its products, involved members of Ottobock (a manufacturer of wheelchairs and prosthetics) in customer research panels. Now, over 300 adaptive products have been launched across 2023 and 2024, increasing Zalando’s accessibility and market reach (14, 15).

By viewing DEI as a tool for creativity, companies can ensure that diversity efforts are deeply integrated into their innovation pipelines. This shift not only makes DEI more resilient to political and cultural shifts but also helps organizations stay competitive in an increasingly diverse global market.

2. Leadership accountability and transparency

Another persistent challenge in DEI efforts has been the gap between corporate commitments and real, measurable change. Many organizations have published ambitious DEI statements but struggle to translate these promises into action. One of the most effective ways to bridge this gap is to embed leadership accountability and transparency into DEI efforts (11).

A growing number of European companies are linking executive support to DEI progress, ensuring that senior leaders have a tangible incentive to drive change. Some firms, for instance, now require leadership teams to meet specific diversity targets or demonstrate progress in areas like pay equity and talent retention. Companies that take this approach tend to see stronger results, as executives become actively engaged in making DEI a core part of business strategy rather than an afterthought (6).

One standout example is Ingka Group, the owner of IKEA, which committed to achieving gender parity more than a decade ago. By implementing structured mentorship programs, gender-neutral salary reviews, and local initiatives like on-site childcare, the company has reached 50/50 gender and pay equity across all operations. Crucially, data-driven DEI goals were embedded into leadership evaluations, ensuring sustained progress at the executive level. With plans to expand its efforts to support trans and non-binary employees, Ingka Group demonstrates how accountability and long-term commitment can turn DEI ambitions into measurable success (16). Data-driven approaches not only help companies measure their progress but also fosters a culture of continuous improvement. By shifting from vague commitments to clear accountability structures, businesses can ensure that DEI efforts remain sustainable, effective, and resistant to political shifts (12, 13).

Looking forward: an inclusive future

The business case for reinventing DEI in Europe is clear. By shifting away from the expectation that DEI initiatives must drive higher profits, we can instead recognize the meaningful ways these transformations enhance innovation, improve employee satisfaction, and foster continuous improvement– all while upholding the principles of equality and human dignity. As the U.S. retrenches from traditional DEI practices amid political pressures, Europe stands at a crossroads. This is not a moment to retreat from inclusion but to reinvigorate it. It is an opportunity for European industry to become a global leader and create meaningful impact. Shall we?

This article is part of The Outside World, ftrprf’s very own research center.

For organizations, it’s pivotal to thoroughly understand what is happening in society. We help companies generate comprehensive insights into societal change and its potential effects on their strategy and operations, both negative and positive. With actionable societal insights, courageous plans, and a can-do mentality, we connect the outside world to your company's strategy. For these outside-world insights, we use a rigorous methodology that includes data processing, quantitative and qualitative analysis, and a thorough review process to ensure the accuracy and consistency of our findings.

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