June 25, 2019 / 9:11 PM / 5 months ago

Breakingviews - Pride brings out best in self-serving companies

NEW YORK (Reuters Breakingviews) - Are there any companies that aren’t proud to be allied with the lesbian, gay, bisexual and transgender communities? Judging by the rainbow designs plastered across billboards, store fronts and email signatures as cities like New York prepare for their Pride festivities, it’s tempting to believe the answer is no. It’s easy to be cynical, but short-term profit doesn’t explain the outbreak of conspicuous support sweeping corporate America. With so much still to do, such backing matters more than its motivation.

Rainbow pride flags are seen at Hard Rock cafe ahead of the 50th anniversary of the Stonewall riot, in New York, U.S., June 22, 2019. REUTERS/Jeenah Moon

High-profile LGBT leaders remain scarce at large companies – Dow chief Jim Fitterling and Apple’s Tim Cook are rare examples – but treatment of LGBT employees and customers has come a long way. More than 570 businesses earned a 100% rating in the Human Rights Campaign’s LGBT-focused Corporate Equality Index this year, more than twice the number 10 years ago. And 85% of Fortune 500 companies include gender identity – meaning a person’s sense of their gender – in their anti-discrimination policy, where five years ago only 61% did.

It’s worth remembering how different things were. In 1991, restaurant chain Cracker Barrel said it would fire employees “whose sexual preferences fail to demonstrate normal heterosexual values.” It later rebuffed a shareholder proposal to prohibit such discrimination – with the support of the U.S. securities regulator. The same year, Shell fought and lost a case against an employee who was sacked when co-workers discovered he was gay, prompting a re-evaluation of his past performance.

The idea that companies shouldn’t do such things has become mainstream. Cracker Barrel now has an LGBT staff alliance along with a comprehensive non-discrimination policy and offers the same benefits to same-sex married couples as it does those of different sexes. The $230 billion Shell is an outspoken supporter of LGBT communities. Numerous studies have shown that such a position is good for shareholders and profitability, to the point where saying so has become a truism.

Sometimes the shift happens despite shareholders, not because of them. While rainbow-plastered marketing campaigns from companies like telecom T-Mobile US or jeans maker Levi Strauss show there’s revenue to be had, the few proxy campaigns against big companies have tended to fail. Exxon Mobil investors – including BlackRock – repeatedly rejected a shareholder proposal to explicitly mention sexual orientation and gender identity in its anti-discrimination policy. The oil producer finally broadened its definitions anyway in 2015.

JOB HALF DONE

Investors aren’t well suited to fight those battles. For one, the immediate benefit is often hard to see, compared with other kinds of environmental or social measures. The LGBT community is small relative to many other underserved minorities. Moreover, measuring both problems and solutions is difficult because beneficiaries may not be visible or countable. Many companies now offer staff the opportunity to self-identify, but plenty still don’t, and employees often don’t want to participate.

Exxon’s example is encouraging, in that it shows that companies can change their views even when they don’t strictly have to. It’s not the only one that’s catching up with society more broadly. The Human Rights Campaign’s annual ranking of big U.S. companies gave oil and gas businesses a median score of 50 out of 100 this year. Not great, but better than the miserable 20 out of 100 the same companies notched up three years ago.

There’s much still to do. Half of Americans still live in states where private-sector employees can be fired for being lesbian, gay or transgender. And as New York Federal Reserve President John Williams told attendees at a New York event on Tuesday, the unemployment rate for LGBT people is nearly double the national average, according to Gallup survey data. For trans people, it’s triple. That’s a problem for government to solve – and a partisan issue. All but one of the 26 states without private-sector employment policies voted Republican in 2016.

That leaves LGBT employees, customers and their allies much to fight for. It also gives companies a clear role to play in shaping the agenda, stepping into the gaps left by politicians by promoting inclusive policies even where they don’t have to, speaking up, and making sure those trends move in a more favorable direction. If the result is more engaged workers, happier customers and a higher share price, investors will be appreciative one day, whether they’re the ones driving change or not.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below