LGBTQ+ inclusivity and corporate performance

Anna Triponel

January 26, 2024
Our key takeaway: Is there a link between LGBTQ+ inclusive companies and their financial performance? Open For Business says yes and emphasises the positive correlation between the two. In fact, companies who are more transparent about LGBTQ+ issues report stronger performance, reputation, brand preference, and also attract the best talent. Investors are increasingly demanding that potential or actual investee companies implement LGBTQ+ inclusive policies and practices. Human rights, alongside access to finance and access to healthcare, is a top material issue for two-thirds of the companies reviewed. And human rights risks and impacts disproportionately affect the LGBTQ+ community. So what can businesses do? The report recommends that companies: 1) implement LGBTQ+ inclusive policies and practices across their workforce and value chain; 2) extend impact beyond the workplace by supporting LGBTQ+ rights and access to essential services like finance and healthcare; and 3) measure and publicly report on their LGBTQ+ inclusivity efforts to drive accountability and continuous improvement in the private sector.

Open For Business released Investor Guide to LGBTQ+ Inclusion: Enhancing business performance through LGBTQ+ Inclusive ESG Strategies, which analysed 290 companies across 4 countries (January 2024):

  • The business case for LGBTQ+ transparency: The report highlights the strong connection between company LGBTQ+ transparency and financial performance: “The Companies with the top 25 LGBTQ+ Transparency Scores are 2.3 times more profitable than the bottom 25.” Greater company LGBTQ+ transparency is also linked to stronger reputation and brand preference, access to LGBTQ+ consumer spending, and better diversity outcomes. In relation to the latter, workplaces that are inclusive of the LGBTQ+ community tend to attract the best talent. Moreover, a majority of companies (92%) reviewed see diversity, equity and inclusion (DEI) as a material issue for the business: “92% of companies therefore believe that poor performance on DEI could threaten the long-term viability of their business and social license to operate."
  • The ’S’ in ESG disproportionately impact the LGBTQ+ community: The report states that human rights, access to finance and access to healthcare are listed as top material issues for companies in their materiality assessments. Human rights, for example, is recognised as a material issue by two thirds of the companies reviewed. These issues have a significant and disproportionate impact on the LGBTQ+ community. For instance, they face criminal prosecution and death in many countries: “LGBTQ+ people face criminal prosecution in 66 countries, with 12 imposing death penalties for consensual same-sex activities.” They also make up a large percentage of the homeless population: “In the US up to 40% of homeless youth identify as LGBTQ+ and in the UK they make up 24% of the youth homeless populations.”
  • What can companies do?: The report recommends that businesses: 1) “Implement Inclusive Policies and Practices” across their workforce. They should also “incorporate inclusion along the value chain, engage meaningfully with LGBTQ+ Civil Society and advocate publicly for LGBTQ+ inclusion”; 2) “Extend Impact Beyond the Workplace” because businesses are in a position to affect positive change for the LGBTQ+ community. Actions may include “initiatives to improve LGBTQ+ rights and access to essential services like finance and healthcare”; and 3) “Monitor and Disclose Progress.” More specifically, companies “should measure and publicly report on their LGBTQ+ inclusivity efforts, driving accountability and continuous improvement.”

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