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The concept of DEI (Diversity, Equity, and Inclusion) first took root in the U.S. civil rights movement of the 1960s and has steadily continued to build in the past few decades, becoming a central focus for Canadian businesses for both ethical and economic reasons. 

Experts say it isn’t just a “nice-to-have” piece, noting that organizations that invest in DEI frequently see real benefits for their culture, performance, and long-term sustainability. They say companies that embrace DEI position themselves to better mirror the society they operate in which can lead to stronger connections with customers and communities.

DEI can drive creativity and innovation, and teams composed of individuals with different backgrounds and perspectives tend to approach problems differently, generating richer solutions and more innovative ideas.

But it’s a concept that can often be misunderstood as companies and organizations grapple with a variety of frameworks while striving to remain competitive and profitable in an everchanging economic landscape.

DEI is not about meeting quotas

“DEI is often oversimplified. Many organizations focus narrowly on diversity metrics without fully addressing the ‘E’ and ‘I’, equity and inclusion, which are about fair systems and day-to-day workplace experiences,” says Nada Basir, PhD, Associate Professor of Strategic Management at the Conrad School of Business and Entrepreneurship, University of Waterloo.

“For example, you may have equal representation of women and men in an organization, but still see persistent gaps in pay, promotion, or access to leadership roles. This can change by distinguishing representation (the ‘D’) from equitable processes and inclusive practices. In other words, diversity is essential, but insufficient on its own and must be supported by fair systems and inclusive workplaces.”

Canadian business operators do hold misconceptions about the implementation and value of DEI, and these misunderstandings can significantly affect how it is approached in practice. For example, Nada says some may believe DEI is primarily about meeting quotas rather than improving fairness and decision-making, or that it lowers standards rather than strengthening them through more consistent and transparent processes.

“These misconceptions often stem from incomplete or poorly implemented efforts,” says Nada, adding some companies or organizations consider DEI an HR initiative rather than a leadership and governance issue and essentially a business decision.

DEI under fire by Trump administration

The concept recently has come under fire south of the border after U.S. President Donald Trump and his administration approved policy that focuses on dismantling DEI programs across the federal government and related contractors/grantees, viewing them as discriminatory and undermining merit, while promoting a strict binary definition of sex and merit-based opportunity. But so far north of the border, Nada says there has been no clear evidence of widespread DEI practices being rolled back in Canada.

“That said, Canadian companies, especially those with U.S. operations, are likely facing increased uncertainty and some complexity due to the political and legal developments in the U.S.,” she says. “As a result, we are seeing some indication that organizations are being more cautious in how they publicly disclose or frame DEI.”

A recent report released by law giant Osler, Hoskin & Harcourt, entitled 2025 Diversity Disclosure Practices, outlined that a percentage of companies reporting on key diversity data points, such as the number and percentage of women on boards and in executive roles, has fallen compared to 2024.

Employee voices need to be heard

“There is the possibility that DEI initiatives have decreased, but again, we don’t have any evidence of this. What’s happening in the U.S has likely created uncertainty for companies, leading many to take a more cautious approach to voluntary DEI disclosure,” says Nada. “At the same time, the broader politicization of DEI has probably reduced the perceived upside of detailed public reporting. When the external environment is so uncertain, organizations often take a more cautious approach to public reporting while continuing internal efforts.”

In effort to boost those efforts, she recommends that organizations ‘get real’ about what DEI actually looks like inside the company.

“That means going beyond hiring numbers to examine who is promoted, who leaves, whose voices are heard in meetings, and how opportunities are allocated,” says Nada. “On the surface, many organizations appear to be doing well on diversity, but this kind of deeper look often reveals gaps in equity and inclusion.”

But equally as importantly, she recommends organizations build formal mechanisms for employee voices.

“Without structured ways for employees to raise concerns, share experiences, or challenge practices, organizations lack early signals that a workplace may not feel inclusive, safe, or equitable,” says Nada. “Research consistently shows that when voice is absent or ignored, problems remain invisible until they surface as attrition, disengagement, or formal complaints.”

Practical steps companies can take:

Secure leadership commitment and accountability

A foundational step is to ensure top leadership genuinely supports DEI in words and visible actions and accountability. Leaders should:

• Publicly articulate DEI as a business priority.
• Set measurable DEI goals tied to performance metrics for executives.
• Allocate resources (budget, staff time, and expertise) to advance DEI initiatives.

Develop a clear DEI strategy with measurable goals

Every organization should craft a detailed DEI strategy that includes both short- and long-term goals. This includes:

• Creating a vision statement that reflects the organization’s commitment to inclusion and equity.
• Identifying specific priorities and actions, such as recruiting from underrepresented groups or improving promotion pathways.
• Setting benchmarks and KPIs (e.g., diversity in candidate pools, representation at leadership levels, pay equity).

Enhance recruitment and hiring practices

A significant part of boosting DEI lies in attracting and retaining diverse talent. Canadian employers can:

• Use inclusive job descriptions that avoid biased language.
• Conduct structured interviews and include diverse hiring panels to reduce unconscious bias.
• Engage in targeted outreach to underrepresented communities and institutions.

Create inclusive culture and psychological safety

A truly inclusive workplace is one where employees feel safe and valued. To foster this:

• Support and fund Employee Resource Groups (ERGs) that give voice to diverse perspectives and advise on policy.
• Promote open communication and regular feedback mechanisms, such as surveys or town halls.
• Encourage leaders and managers to model inclusive behaviour and address issues promptly.

Invest in learning and development with purpose

Training should be ongoing and practical. Instead of traditional standalone unconscious bias sessions, businesses can:

• Offer workshops that link DEI concepts to daily work and real situations.
• Incorporate DEI topics into leadership development programs.
• Equip managers with tools and language to support inclusive teams.

Monitor, evaluate, and adjust initiatives

Collecting and analysing data is crucial to understanding what’s working and what isn’t. Canadian companies should:

• Conduct diversity audits and regularly review representation across all levels.
• Track equity indicators such as pay equity or promotion rates.
• Use surveys and feedback to measure employee perceptions of inclusion.

Communicate transparently and celebrate progress

Transparency builds trust. Employers should share DEI metrics and progress with employees and stakeholders. This includes:

• Publishing annual updates on DEI goals and outcomes.
• Recognizing teams or individuals who contribute to inclusion goals.

Engage with the broader community

Finally, boosting DEI extends beyond the workplace. Companies can:

• Partner with community groups and educational institutions to support pipelines for underrepresented talent.
• Participate in events and initiatives that advance inclusion both within and outside the organization.