Maybe. Where it's just contacting the handle, it should be fine short of grit getting in there (which is a probability in some environments). The main issue comes at the retention point. If the retention is a gentle slope on a wide area then that's less of an issue than if it's all on a small point, especially if that point is sharp.
Probably not very helpful, but it really does depend on a few things. If the knife doesn't have a metal guard to put the retention on or wear on the handle is unacceptable, I'd probably go with leather. If the only obvious retention point is small, I'd definitely go with leather.