How Investors Can Build an LGBTQ+ Friendly Portfolio

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Making socially responsible investment decisions is important to many investors, and LGBTQ+ equality is one significant area of concern. While some companies have made great progress fostering inclusivity in things like health care coverage, hiring policies, and harassment recourse for LGBTQ+ people, there is still a long way to go. 

Research shows that implementing LGBTQ+ friendly practices in the workplace improves employee retention, strengthens customer support, and increases shareholder returns. The potential consumer power of this particular community is also becoming increasingly apparent to mainstream businesses. The LGBTQ+ population’s share of global household wealth is estimated at $23 trillion, meaning companies which isolate this community are not doing themselves any favors. 

But investing in companies that support the LGBTQ+ community means more than just building a successful portfolio. It also means supporting non-discriminatory company policies and creating more inclusive opportunities for queer-identifying individuals. 

There are many ways to get started investing while focusing on diversity through indexes like the Corporate Equality Index (CEI) and LGBTQ-specific indexes which rate companies based on their gender diversity, racial diversity, etc. Let’s explore the importance of diversity in business and how to get involved with LGBTQ+ friendly investing.  

updated pride flag
 

Why focus on LGBTQ+ diversity? 

Businesses are becoming increasingly aware of why diversity is critical for the success of any company, and it follows that there has been an increased emphasis on social responsibility in investing. It has been proven that companies who have LGBTQ+ inclusive policies in place are able to attract top talent, improving share performance. 

Gender, racial, and LGBTQ+ diversity all contribute to greater innovation and market performance. Embracing LGBTQ+ individuals and businesses is still a work in progress, but there are many companies and programs available to support LGBTQ+ entrepreneurs and investors.

While building diversity in your own team is key, you should also consider how outside contractors you work with contribute to your business diversity as well. If you hire freelancers as part of your business, keep in mind that some hiring platforms have diversity rankings or badges for LGBTQ+ owned businesses or individuals. 

The average remote freelancer makes $45 an hour in the US in industries like Digital Marketing, Graphic Design, HR, IT, and Copywriting. So if you are involved in any of these industries, or are looking to invest in them, make sure to consider the diversity of contractors and freelancers as part of a business’s diversity ranking. 

On the sales side of things, tapping diverse communities of potential clients is key to business success. When it comes to income, if the LGBTQ+ community’s spending power were quantified as its own “country,” it would be the third largest economy in the world!

 

Consider the corporate equality index

As you explore new investment opportunities, the CEI is a great tool to use when deciding to buy or sell. It provides deeper insight beyond what a company’s PR team claims about how they treat members of the LGBTQ+ community.

The CEI can help you identify companies who implement policies to meet the needs of their LGBTQ+ employees, such as explicitly protecting gender identity and sexual orientation in anti-discrimination policies and offering transgender-inclusive and domestic partner benefits.

It also identifies companies who extend these standards to their suppliers and contractors. This index is easy to use, as you can search by employer, explore best places for LGBTQ+ individuals to work, and find the answers to frequently asked questions on the topic. 

Here are some key takeaways from the 2021 Corporate Equality Index:

  • 233 Fortune 500 companies participated in the 2021 CEI
  • 149 American Law Magazine 200 companies participated in the 2021 CEI
  • The average CEI of participating Fortune 500 companies was 92%, while non-participating companies only scored 26%
  • 100% of CEI employers explicitly include sexual orientation in non-discriminatory policies
  • 99.7% of CEI employers explicitly include gender identity in non-discriminatory policies

As you can see from these statistics, companies that actively participate in the CEI standards are doing well when it comes to creating an inclusive environment for LGBTQ+ people. There are hundreds of major firms that you can consider supporting as you get a feel for your unique investment needs and your values as an investor.

 

Pay attention to LGBTQ+ inclusive companies

When preparing to invest, start by looking at the CEI for 2021 to get an idea of the lengths that companies with investing in are doing to contribute to a culture of inclusivity. In 2021, Walmart, Amazon, Apple, UnitedHealth Group, and McKesson, for example, all scored 100% on the CEI. 

There are also a variety of LGBTQ+ friendly mutual funds and ETFs including SPDR SSGA Gender Diversity Index ETF, Vanguard FTSE Social Index Fund, iShares MSCI KLD 400 Social ETF, Change Finance US Large Cap Fossil Fuel-Free ETF, and Vanguard ESG U.S. Stock ETF. 

Also consider LGBTQ+ representation in company leadership when deciding where you want to invest. For example, you have undoubtedly heard a lot about Apple, and may already own Apple products or invest in the company. But you may not have known that Apple’s CEO identifies as a gay man, and the company has made strong statements in favor of equality and same-sex marriage. Some other notable companies run by LGBTQ+ individuals include Ford, Costco, JPMorgan Chase, Microsoft Inc., and Verizon Communications Inc.

You may be able to choose stock options and investments through your employer, or if you have some experience with financial management, you might take matters into your own hands. But if you’re just starting out, you might like the convenience of an automated advisor or other financial advising service that is LGBTQ+ friendly. Options like Aspiration, Betterment, and Ellevest are all good places to get started. 

 

Some other investing tips to consider

Social responsibility is a big part of many people’s investment strategies, but you should keep in mind that what works for others may not work for you. Here are some general tips to consider when researching potential investments:

  • When you are considering investing in any company or fund, your ultimate decision should come down to a healthy blend of ethics and technical analysis. A high CEI rating won’t compensate for a bad business plan. 
  • Trading online is extremely convenient, but comes with its own set of risks which any responsible investor should be aware of. Use a reputable app, don’t give people access to your trading information, do your research in advance, and use a financial advisor whenever possible.
  • There is no one size fits all investment strategy. It’s wise to be flexible with your investment strategy and be willing to consider new opportunities according to your changing needs and resource availability. 
 

Conclusion

Supporting the LGBTQ+ community by investing in companies that participate in CEI and similar rating programs is imperative to changing the overall acceptance and implementation of LGBTQ+ friendly company policies. There are many successful companies that have a high CEI  rating to choose from that you can add to your investment portfolio. 

It’s important to do your research before you invest to ensure you are making both a socially responsible and financially strong investment. Follow these investment tips and tools to grow your portfolio and contribute to the continuing progress toward equality for the LGBTQ+ community.  


Pride flag image source: Boise Weekly