Investing in Diversity & Inclusion

LGBTQ-Friendly Companies: Growing in Number and Understanding

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The Human Rights Campaign (HRC) is a national organization dedicated to the promotion of equal rights for people who identify as LGBTQ. Since 2002, HRC has released the Corporate Equality Index (CEI), which identifies large LGBTQ-friendly companies.

Collecting Data, Ranking Participants

HRC’s 2017 CEI rated 887 organizations out of the 2,106 that were invited to participate. Of these, 515 companies received a CEI rating of 100%, up dramatically from 13 in 2002. This demonstrates that an increasing number of employers are dedicated to LGBTQ inclusion. Inclusion is not universal, however.

While many enterprises are excited for the opportunity to demonstrate their status as an employer of choice for LGBTQ people, others refuse to participate—156 members of the Fortune 500 have never responded to the HRC survey.

Nonparticipants still receive ratings, as the index’s analysts look at other sources of data, including case law, tax filings for business foundation gifts to anti-LGBTQ groups, and news accounts of allegations of discrimination on the basis of sexual orientation and/or gender identity or expression. They will also consider information reported to the HRC by individual employees or unofficial LGBTQ employee groups.

Improved Understanding Leads to Survey Changes

But what does it really mean for a workplace to be LGBTQ friendly?

The 2017 CEI assigned companies a score based on five criteria: equal employment opportunity, employment benefits, organizational LGBT competency, public commitment, and whether or not an employer has made any official or public large-scale anti-LGBT comments recently.

The CEI’s criteria have changed over the years, in part because of changes in federal law and in part because employers are (or should be) developing more sophisticated understandings of inclusion. For example, questions about and commitments to transgender people have become more significant. In the 2017 CEI, 73% of companies surveyed had health care plans that include transgender people, including half of Fortune 500 companies. This is up from 0% in 2002. In addition, 86% of current CEI-rated companies have training and education programs that deal with gender identity.

The average 2017 CEI score for Fortune 500 companies is 66%, indicating that there is still room to progress. However, it should be noted that Fortune 500 companies that participated in the survey had a higher average score—91%—that was offset by the 14% score averaged by Fortune 500 companies that did not participate.

The CEI does not look at financial outcomes of the companies it surveys, but given that it “names names,” the information can be used as part of an investor screen. When building a portfolio, companies that have low rankings (or that have refused to participate) may be removed. However, a more powerful stance may be to specifically funnel capital toward companies with strong commitments to LGBTQ inclusion.

Competitive Advantages of LGBTQ-Friendly Companies

Being inclusive to LGBTQ people may be good for companies and for people, per a study by the World Bank. Companies can lose out when they exclude talented employees based on sexual orientation or gender identity. But the reverse may also be true: that companies that practice inclusion can gain an advantage.

When weighing opportunities and offers from different employers, a good ranking could make all the difference for a quality employee. Regardless of their own sexual orientations or gender expressions, many people want to be in places that support all employees, just as many employers would benefit from the different ideas and points of view that a diverse workforce can bring to the organization.

Furthermore, as LGBTQ people experience higher rates of poverty, inclusive companies can help alleviate economic disparities and increase the well-being of LGBTQ populations.

As data benchmarking grows even more sophisticated, it will be even easier to define and measure what an LGBTQ-friendly company is. Through this identification, it will also become easier to identify where and how to push inclusion efforts further. Although the fight for LGBTQ inclusion is far from over, the CEI proves that things are changing for the better. By specifically supporting companies with high CEI ratings, consumers and investors can continue the march toward inclusion and equality.

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