Being transparent about LGBTQ+ corporate inclusion and staffing could lead to better company profitability, according to a report published on Thursday.
The Investor Guide to LGBTQ+ Inclusion found that the companies with the top LGBTQ+ transparency scores were 2.3 times more profitable than the bottom 25.
Analysing the 290 largest listed companies in the United States, Britain, Germany and Australia, the report looked at how they integrate LGBTQ+ inclusion into their environmental, social and governance (ESG) strategies and reporting.
It was produced by Open for Business, a coalition of global companies making the case that inclusive and diverse societies are better for business and economic growth.
"(This) demonstrates a clear link between LGBTQ+ inclusion and higher returns for investors," said Dominic Arnall, chief executive of Open For Business.
But LGBTQ+-friendly companies have also come under pressure in some markets, particularly over advertising campaigns.
Drinks brand Budweiser faced a barrage of criticism last year for running an ad campaign for Bud Light fronted by Dylan Mulvaney, a popular social media star and a transgender woman.
Conservatives called for a boycott and parent company Anheuser-Busch InBev's sales fell by more than 10%, with the overall cost to the company estimated at almost $400m in lost revenues compared with the year before.
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U.S. retailer Target faced a similar backlash after it stocked Pride-themed merchandise last year: three-month sales dropped by 5.4% following a backlash that saw sales staff threatened and the company eventually withdrawing some of its Pride stock and moving it to the back of stores.
However, Ken Janssens, former chief data officer at JP Morgan and one of report's authors, said that research suggested LGBTQ+-friendly marketing could yield positive results.
"Fifty-nine per cent of consumers say they will buy more from brands who launch campaigns focused on diverse communities, such as LGBT," said Janssens, citing a 2023 survey by Bospar and Propeller Insights.
The Open For Business report focused on LGBTQ+ reporting and inclusion rather than marketing trends. Janssens, who is now head of social impact at Windō, said it was also important to note that the period covered did not include the events of 2023.
Investor demand for LGBTQ+ funds remained high, he added, particularly among younger investors.
"Sixty-seven percent of Gen Z investors want investment products and strategies that advance LGBT inclusion," Janssens told Openly, referencing a recent Morgan Stanley report.
The Open for Business report also pushed back against the notion that ESG is politically motivated.
"Many ESG issues directly hit the bottom line - it is therefore commercial imperatives that drive company engagement with them, not political ideology," it said.
"This report shows that corporate LGBTQ+ inclusion is about more than Pride flags and rainbow logos - it's about what it means to run a good business."
