Your People Care About Inclusion. Does Your Business?

Both of those things are true at the same time. And for SME leaders trying to do the right thing without a huge HR department behind them, it raises a question worth sitting with: where does your business actually stand?

What the Data Is Telling Us

Two pieces of research published in the past year paint a striking picture of a workforce divided from its leadership on the question of inclusion.

A survey of 1,000 UK working adults by IRIS Software Group found that 59% of employees would consider leaving their job if their employer rolled back its EDI commitments. That figure rises to 68% among Gen Z workers and 64% among millennials. Among respondents from Black, Asian and minority ethnic backgrounds, it climbs to 70%.

This is not a fringe concern. It is a mainstream expectation, particularly among the generations that are shaping the future of the labour market. And it is even more strongly felt by the people who are most directly affected by whether inclusion is taken seriously or treated as optional.

Meanwhile, research by law firm Freeths found that 54% of UK businesses have changed their approach to EDI over the past year, with 28% reducing or abandoning their initiatives altogether. The study identified the US-led rollback of diversity programmes as a direct influence on UK corporate decision-making.

So nearly three in ten employers are moving in one direction, while nearly six in ten of their employees are saying the opposite. That is not a gap. It is a fault line.

Why Some Businesses Are Pulling Back

It would be easy to assume that the businesses dropping EDI are doing so out of hostility or indifference. In reality, the picture is more complicated. Some are responding to what they have seen in the US, where high-profile companies dismantled diversity teams and rebranded programmes virtually overnight. Some are nervous about being seen as political or are unsure whether their EDI work is delivering tangible results. Others are simply overwhelmed by the volume of legislative and regulatory change happening at the same time.

There is also a language shift happening. Some organisations have not abandoned the substance of their inclusion work but have moved away from the terminology, replacing "EDI" with phrases like "belonging," "inclusive leadership," or "people strategy." This may be a pragmatic choice, but it carries its own risk: when the language fades, the accountability often follows.

Why Stepping Back Is a Real Business Risk

The retention data alone should give any employer pause. Losing even a small number of good people because they feel your business has deprioritised inclusion is an expensive outcome - particularly for SMEs, where every team member counts.

But the risk goes beyond retention. UK employment lawyers have been clear that scaling back EDI policies could increase legal exposure. The Equality Act 2010 still requires employers to prevent discrimination, harassment, and victimisation. Without policies, training, and genuine cultural work to back it up, the statutory defence available to employers when things go wrong becomes, in the words of one legal commentator, "hopeless."

The Employment Rights Act 2025, which came into force in April 2026, has strengthened worker protections further. Whistleblowing protections now explicitly cover disclosures about sexual harassment. The new Fair Work Agency is actively enforcing compliance. The legal direction of travel in the UK is towards more protection, not less.

And then there is the broader business case. A poll of over 600 UK businesses by the Institute of Directors found that 71% do not plan to alter their EDI approach in response to the US rollback, with just 10% expecting to scale down. The majority of UK business leaders are choosing to hold firm - and there are good reasons for that.

What This Means for Small and Medium-Sized Businesses

If you run a small business, this might feel like a conversation happening above your head - something for corporates with diversity teams and global headquarters. But these trends affect you directly.

Your employees are reading the same headlines. They are watching what you do, not just what you say. And in a tight labour market, the businesses that retain and attract the best people will be the ones that make inclusion feel real - not the ones that quietly remove it from the agenda.

That does not mean you need a glossy strategy document or a dedicated EDI budget line. For most SMEs, meaningful inclusion comes down to a few practical things:

• Making sure your policies are up to date and reflect the law as it stands today.
• Training your managers to handle conversations about discrimination, harassment, and reasonable adjustments with confidence rather than avoidance.
• Listening to your team. If you have not asked your employees how included they feel at work, start there.
• Being honest about where you are. Perfection is not the standard. Effort, transparency, and a willingness to learn are.

The Real Question

The data is clear. Most UK employees expect their employer to take inclusion seriously. Most UK business leaders agree. And the legal framework in this country continues to reinforce that expectation.

The businesses pulling back are betting that no one will notice, or that it will not matter. The evidence suggests otherwise. The cost of disengagement, turnover, and legal risk will almost always outweigh the cost of doing the work properly.

Inclusion does not have to be complicated. But it does have to be intentional. And in 2026, it is not something you can afford to be quiet about.

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