This year has seen an unprecedented wave of anti-trans legislation, coupled with LGBTQI-related controversies for companies as varied as Disney, Anheuser-Busch, Target and Starbucks. Pride Month has become a flashpoint for consumer brands, with supporters and opponents of LGBTQI rights both demanding that corporations take sides.
Despite the intense publicity, it can still be challenging for investors, and consumers, to differentiate between companies that are LGBTQI-friendly and those engaged in some form of “rainbow-washing.” Before this year, Pride Month was a low-risk way for companies to signal support for the LGBTQI community, without necessarily having to back up those temporary signals with more lasting policies. Now that Pride Month itself has become controversial, it’s worth a look at the full range of policies and practices companies can use to differentiate themselves as true supporters of LGBTQI rights.
One of the most straightforward policy signals a company can send about its support for the LGBTQI cause is through its employee benefits. Specifying the inclusion of benefits for same-sex domestic partners, as well as benefits for the many different ways partners can start families, regardless of sex, both demonstrate an understanding of the needs of LGBTQI employees. Coverage for gender transition services, including care not deemed “medically necessary,” is likewise a major indicator that a company is serious about LGBTQI rights.
In 2023, non-discrimination policies that explicitly cover sexual orientation should be a given. But companies can go further, for instance by addressing sexual orientation-based equality measures in onboarding and management training. Establishing affinity groups makes a strong statement of welcome and support for LGBTQI employees, while improving job satisfaction and reducing turnover. Collecting and reporting optional, anonymized data on sexual orientation (for instance via employee or board surveys) can show a company’s desire to better understand its workforce and meet employees where they are.
Beyond internal policies, companies with inclusive supply chains can help support LGBTQI businesses in states or countries with restrictive legislation. International corporations can become safe spaces for LGBTQI individuals who would otherwise be persecuted, and can advocate both publicly and behind the scenes for new and better laws. In the most repressive places, simply maintaining a welcoming approach to LGBTQI individuals can make a dramatic statement.
While such efforts and policy positions are critical for investors who care about LGBTQI rights to understand, doing the research is no small task. In this regard, the Human Rights Campaign’s Corporate Equality Index is invaluable. Established more than 20 years ago, the index now scores over 1,200 corporate respondents to its annual survey, along with the entire Fortune 500, while cross-checking the survey responses it does receive with actual corporate policies. Scores cover several of the areas mentioned here, and more; the result is a robust resource for institutional and individual investors who wish to better understand the strengths and risks in their portfolios from the perspective of LGBTQI rights.
Pride Month still matters. As the current environment makes clear, bold corporate statements in support of LGBTQI rights are not without risk, and the companies that make them are doing the right thing. But celebrating LGBTQI people is more than a PR exercise. When internal and external policies support a company’s clear, public stance in support of LGBTQI rights, it is then we believe the case for an LGBTQI-friendly investment is truly complete.