Business can and should lead the global effort to achieve equal rights for LGBT people. Through their global footprints, multinational companies are uniquely positioned to expand equality and access to opportunity for LGBT people worldwide. Each year more and more companies are seizing this historic opportunity, recognizing that global LGBT inclusion, particularly at the most senior level of executive leadership, is not only the right thing to do, but also powerfully and positively affects business results.
There are three main pillars to capturing this opportunity: business, talent and equality.
The global LGBT market opportunity is estimated to be worth more than $3 trillion, and as such, global business has come to recognize LGBT-identified consumers as a powerful market force. Research has found that 71% of LGBT adults will remain loyal to a brand that costs a little more, if that brand is LGBT-supportive.
In addition, Out Leadership research has shown that the Ally Marketplace presents enormous opportunities. As the global LGBT community grows in size and influence, so does the size and influence of the market comprised of LGBT people’s families and friends. This market has expressed itself by rejecting brands like Barilla who have declared themselves against LGBT equality. When Chick-Fil-A’s CEO Dan Cathy spoke out against LGBT people, the company’s brand favourability index fell from 76 to 35.
Coming out as an LGBT leader requires authenticity, self-knowledge and courage – qualities highly valued by the world’s most forward-thinking companies. With the LGBT population accounting for 5-10% of the global talent pool, companies that want to remain competitive in the 21st century must embrace inclusive policies and practices that attract and retain this talent.
Compounding the positive benefits of accessing the LGBT marketplace, LGBT inclusive companies benefit from increased employee productivity overall. It is a significant loss to productivity when 41% of LGBT people, and alarmingly 72% of senior LGBT executives, are still in the closet at work. Studies have estimated that employees covering their identities can have a negative impact of up to 10% on productivity, costing a country like India up to 1.4% of national output. Similarly, a report found that the United Kingdom could be losing £11.2billion ($17billion/€15.6billion) in annual GDP due to bullying and pressures on lesbian, gay, bisexual and transgender engineers in the workplace.
In the ever-escalating global war for talent, discriminatory or non-inclusive workplaces are a mistake no company that wishes to be competitive can afford. Seventy-three percent of closeted employees are more likely to leave their companies in the next year; on average, the cost of replacing employees lost for this reason can be up to 3 times their salary.
For multinational companies, mobility of top talent is crucial. However, in 79 countries, homosexuality is criminalized, posing significant barriers to the movement of top talent.
The stocks of companies with LGBT-inclusive policies outperform the market generally. Denver Investments’ EQLT Fund has demonstrated that the stocks of companies that adopt inclusive policies for LGBT people outperform their industry peers both 5 and 10 years later. We believe that LGBT inclusion is a bellwether for inclusion generally, and the benefits of creating opportunity for women and underrepresented minorities are clear: a 2015 McKinsey & Co study found that if companies in the top quartile for gender diversity are 15% more likely to have returns above the industry median. For racial diversity, it’s 35%.
However, inclusive policies alone are not sufficient to protect LGBT employees in countries with anti-LGBT laws. Leaders from multinational companies have a major opportunity to leverage their “soft-power” in countries where they operate to help drive change locally – as evidenced by global corporate support for local LGBT equality movements in countries from the United States to Singapore.
In the past five years, Out Leadership has engaged more than 145 CEOs and 3,500 leaders of the global business community from more than 20 countries around the world. While we have repeatedly witnessed the power of business leaders making the case for LGBT equality, Beth Brooke-Marciniak, Global Vice-Chair of Public Policy at Ernst and Young, has perhaps put it best: “There is nowhere in the world today where we can tick the global LGBT inclusion box as ‘done’. There is still much more to do.”
The forward-looking business and government leaders who engaged in these discussions at Davos earlier this year have the power to meaningfully and positively impact the lives of LGBT around the world. They should take the opportunity to do so, because equality builds business.