New York impact advisor Cornerstone offers up ways for wealth managers to improve LGBT inclusion in the workplace.
The LGBTQI community has benefited from “a sweeping change in attitude across the US”, but with no national body policing workplace inclusion or standardized reporting to root out regressive companies, it's up to corporations and investors to keep their foot on the gas.
These are some of the assertions in a report by the impact advisory firm Cornerstone Capital Group released this week on how far the industry has come on LGBT workplace inclusion, and where wealth management can do more.
The Two Lenses, One Vision: Investing for LGBTQI and Gender Equity report acknowledges that current progress is largely down to “advocacy and engagement by people who care about LGBTQI equity, including institutional and individual investors and shareholders.” (LGBTQI stands for lesbian, gay, bisexual, transgender, queer and intersex).
Such reports reflect how diversity in the workplace is getting more attention in countries such as the US at a time when this goal is regarded as good in its own right and also effective in acquiring and retaining clients, including those from the younger generation where attitudes on gender may be different.
Positively, the research found that 85 per cent of Fortune 500 companies now have established workplace policies framed to prevent discrimination based on sexual orientation and gender identity or expression. But lawmakers paint a mixed picture. In 26 states, it is still legal to fire someone on the grounds of their perceived sexual orientation or gender identity, according to research by the Movement Advancement Project. The map highlights the advocacy group's findings.
Like many in the investment space pushing firms to create cultures that mirror society more accurately, Cornerstone argues that more inclusive policies towards LGBT employees lead to improved brand reputation, reduced turnover, and more productivity and innovation. It is why many companies now advocate publically for policies that support LGBTQI rights, the firm said.
“We see countless opportunities for investors to become actively engaged and to use their investment capital as a strong and important force for change," Cornerstone head of impact strategy and the study’s lead author Katherine Pease, said. But there is "much to be done to ensure true inclusion across the full spectrum of the LGBTQI community.”
With no national body in the US mandating companies to disclose LGBT policies, and discrimination pervasive enough to mean that many LGBT employees are reluctant to self-identify at work, rooting out bias and discrimination is a tough task. The data coming from companies that self-report is also inconsistent at best.
However, the LGBT community’s largest advocacy group has helped. The Washington, DC-based Human Rights Campaign has been gathering data from US corporations and law firms on gender diversity since 2002. While “enormously helpful,” Cornerstone said the group still doesn’t ask companies to report the number of LGBT people in leadership roles or in the workforce overall. Also, any company aware it is going to turn in a bad report can simply choose not to respond.
“Until these data collection challenges are overcome, there will be limited opportunities for tracking LGBTQI diversity numbers”, the report said, and therefore limited opportunities for improving the data by which corporations can be judged.
Telegraphing what more the industry can do, the report called on investors to support more research, including quantitative data on LGBT equity and how that relates to gender in the workplace. It also urged them to work with advisors, managers, and the companies they invest in to see where LGBT equity policies can be improved in the workplace and in public advocacy.
Those wanting to see more inclusion should be asking fund managers and companies how diverse the staff are. Do they have worker-friendly whistleblower policies? Is there training to prevent discrimination and harassment based on gender, sexual orientation, and gender identity? The report also advised due diligence on how firms have responded to any policy issues on gender/LGBT rights relevant to their own business.
In allocating assets, Cornerstone advises its own investors to look at how sexual orientation and gender identity issues are incorporated into a firm's investment selection. To look for a non-discrimination policy, at wage equity, and whether there is training on sexual harassment. “Also, how is this information used to screen companies in or out of the portfolio?”
The firm concluded that there is a “deep and compelling rationale” for investors to engage in LGBTQI equity, especially through gender lens investing. (One definition of the term says it is a "viewfinder that reveals opportunities for the world of investing.") This new optic has become a useful tool in the impact-investing armory as more investors want to align investments with their values. Primarily seen as a vehicle for investors to support women, through women-owned businesses, more women represented on boards, and better pay and representation for women across the workforce, Cornerstone also sees gender lens investing as an already visible path to improving LGBT diversity.