Credit Suisse has released a report that explores the benefits of LGBT diversity in relation to corporate performance.
This is not the first time that the financial services corporation has explored the tangible benefits of diversity. In 2014 it published a report on the Women in Senior Management and the effects on business. It decided to apply the same analytical framework to LGBT diversity.
In 2013 it also launched its own LGBT Equality Index for investors, tracking the stock market performance of LGBT-friendly companies – as defined by those that scored 80 or more on the HRC Corporate Equality Index.
For the purposes of its report, it looked at 270 companies that it regards as LGBT-friendly in terms of policies and customer relations. It says the companies ‘have either openly LGBT leaders and senior management,’ or have ranked high in Stonewalls Top 100 Employers (UK) or DiversityInc’s Top 10 Companies for LGBT Employees (US), ‘or whose employees are openly members of local LGBT business networks.’
Key findings, released Friday, included:
- The companies examined outperformed MSCI ACWI [a Morgan Stanley operated market capitalization weighted index] by 3.0% per annum over the past six years.
- ROEs (Return of Equity) and Cash flow returns (CFROI) are 10-21% higher than those of companies in the MSCI ACWI whilst economic profit generation is double.
- The results echoed those on gender diversity, which found that corporations with at least one female board member performed better than boards with no women.
It concludes, ‘the growing wealth of research – including our own research on gender and sexual diversity – points to diversity being a positive contribution to corporate performance.’
It says that companies that embrace LGBT employees, ‘are likely to benefit from lower staff turnover rates and better retention, both of which directly reduce operating costs.’
LGBT employees, according to University of Warwick economists, are also more productive if they feel able to be out at work.
Corporates need to do more to promote an open and inclusive culture
The difference in performance was more marked in those significant that have openly LGBT senior leaders, compared to those companies that merely have LGBT-friendly policies.
Despite finding an obvious business benefit to diversity, the author’s noted that 41% of workers and 72% of senior LGBT executives report not coming out at work. Tim Cook is the only openly gay CEO of a Fortune 500 company, and only 21 states in the US. Many corporates need to do more to promote an open and inclusive culture.
‘Having the policies is not enough,’ said Stefano Natella, Credit Suisse’s global head of research, who co-wrote the report, to CNBC. ‘You have to want the culture.’
Bob Witeck is the founder of Witeck Communications, which has gathered data on the size of the LGBT consumer market – and whose research is quoted in the report. He told Gay Star Business: ‘The Credit Suisse findings are a timely marker about LGBT contributions to corporate performance.
‘I’m impressed because they mirror the findings last year by Denver Investments and its respected Workplace Equality Index that tracked the successful performance, over years, by company and by sector. The Index data also strongly suggest a correlation between LGBT inclusive companies and their performance over time.
‘It is hard to attest to a direct or causal effect, but the secondary evidence here is compelling.’