Key Takeaways

• The historical development of global LGBTQ+ rights includes key milestones like the UN charter and Yogyakarta Principles. It has taken many years for LGBTQ+ citizens to achieve their current status.
• There are many benefits of adopting DEI policies, including safer, more creative, resilient workplaces as well as improved financial performance.
• As integral LGBTQ+ champions, global companies must monitor and mitigate ESG risks throughout their supply chains. International standards and third-party supplier risk management tools enable these efforts.  

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Introduction

Companies focused on long-term supply chain sustainability are no strangers to the terms diversity, equity, and inclusion (DEI) within the context of environmental, social, and governance (ESG) risk management. These terms have added significance for the global LGBTQ+ community, which is striving to openly contribute to communities and companies and overcome discriminatory and violent treatment. It hasn’t been easy, and the effort is ongoing, but there has been a lot of progress to celebrate.

In this article, we briefly explore the benefits of:

• Understanding LGBTQ+ Rights and Regulations
• Implementing DEI Policies in Workplaces  
• Mitigating ESG Risk in Supply Chains

Understanding LGBTQ+ Rights and Standards

The “equity” in diversity, equity, and inclusion (DEI) makes it clear that to foster equality in society, we must acknowledge that not everyone currently has a seat at the table or even a way to get there. Despite the value we place on the ideal of equality, there are certain inequities that make the ideal unrealistic – inequities that the LGBTQ+ community has felt keenly.

A series of events have driven the development of global LGBTQ+ rights and regulations.  

• The United Nations charter in 1945 declares universal human rights are to be enjoyed by all.¹  
• In 2000, Article 21 of the European Union Charter of Fundamental Rights codifies the right to non-discrimination, including protection against discrimination based on sexual orientation.²
• Toonen v. Australia, a 1994 court case heard before the UN Human Rights Committee, ruled that discrimination based on sexual orientation was recognized as a violation of international human rights.³  
• The Yogyakarta Principles, published by a committee of human rights experts in 2006, specified inclusion for all people regardless of “sexual orientation” and “gender identity.”⁴  

In 2017, the UN issued the United Nations Standards of Conduct for Business Tackling Discrimination Against LGBTI People. This document outlines five standards to help the business community adopt LGBTQ+ non-discrimination policies and honor LGBTQ+ rights and regulations.⁵ Organizations can use the UN LGBTIQ+ Standards Gap Analysis Tool to assess their standing.⁶

Implementing DEI Policies in Workplaces

The benefits of fostering diversity, equity, and inclusion (DEI) policies at work are measurable, as are the costs of refusing to do so. According to the World Economic Forum, the estimated cost of LGBTQ+ discrimination is $100 billion every year.⁷ On the flip side, LGBTQ+ friendly companies have annually outperformed MSCI Inc.’s ACWI global equity index by 378 points since 2010, according to Credit Suisse’s market analysis of 350 of these companies.⁸

Beyond the financial sense of doing so, embedding DEI policies into work culture has a positive net effect on the mental wellbeing of current and future employees, a growing number of whom identify with the LGBTQ+ community. A 2021 survey showed 20.8% of the zoomers (members of Generation Z) identifying as LGBTQ+.⁹

Diverse and inclusive workplaces are inherently more innovative and resilient. They can harness the full potential of unique perspectives, experiences, and equal opportunity by eliminating fear of discrimination.¹⁰ Consciously monitoring DEI policies is essential for building and stimulating robust communities in an increasingly interconnected global landscape. Multinational business will continue to play a central and crucial role in advancing LGBTQ+ equality and holding steady ground amidst dynamic political climates.¹¹

Mitigating ESG Risk in Supply Chains

It is important to keep in mind not only how you work, but who you work with. In a business context, rules surrounding DEI fall under the larger umbrella of environmental, social, and governance (ESG) risk management. More financial and legal institutions are paying attention to these metrics than ever before despite some outspoken anti-ESG sentiment.¹²  

Some experts state that ESG and sustainability are interchangeable terms. Others make clear the subtle distinctions between them.¹³ Either way, investors and citizens alike are demanding businesses focus on these measures. As Larry Fink, the cofounder of Blackrock, has famously stated, “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”¹⁴ ESG social performance indicators must officially be on every business’ “bread and butter” list.  

Without universal regulations in place, it isn’t always obvious how to address ESG risk in supply chains, but here are some places to direct your efforts.

1. Assess your current policies and find any gaps where you can expand ESG definitions and efforts. Consider hiring practices, pay equity, career advancement opportunities, employee safety, human rights, and community engagement. What do your customers and partners expect? What is your larger societal impact? Why are you taking these measures? What are your reasons for doing so?  

2. Extend your ESG risk management policies to the suppliers in your supply chain network. Policies should explicitly include sexual orientation and gender identity. How well do your suppliers leverage diverse teams, partners, or networks and serve diverse communities? How skillfully do they navigate LGBTQ+ criminalization?
   
   Compare suppliers’ ESG social performance indicators against your policies and against international standards, such as:
   
   • The Human Rights Campaign Foundation’s Corporate Equality Index Resource Guide.¹⁵
   • The UN’s sustainable development goals (SDG). Goal 10 calls for “reducing inequalities in income as well as those based on sex, age, disability, race, class, ethnicity, religion and opportunity – both within and among countries.”¹⁶  

3. Embed and automate ESG risk management and scoring into business and reporting processes. You can enlist the help of third-party risk management software to vet all the suppliers in your network and identify suppliers or contractors with LGBTQ+ friendly policies and ESG scoring metrics.

To learn more about complying with evolving human rights and sustainability regulations and find software tools to help your DEI and ESG risk management efforts, please visit https://www.avetta.com/clients/solutions/sustainability-esg-dei/esg-sustainability-regulations.

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References

¹ “United Nations Charter,” signed June 26, 1945.

² “EU Charter of Fundamental Rights Article 21,” European Union Agency for Fundamental Rights.

³ “The Changing Landscape of Global LGBTQ+ Rights,” Paul J Angelo and Dominic Bocci, Council on Foreign Relations, January 29, 2021.

⁴ “The Yogyakarta Principles,” 2006.

⁵ “Partnership for Global LGBTI Equality (PGLE),” World Economic Forum Centre for the New Economy and Society, accessed on June 2, 2024. 

⁶ “UN LGBTIQ+ Standard Gap Analysis Tool, United Nations Global Compact, United Nations Human Rights Office of the High Commissioner.

⁷ Supra note 5.

⁸ “Companies that support LGBTQ-inclusive policies outperform: Credit Suisse,” Investment News, December 1, 2024.

⁹ “LGBT identification in the U.S. 2012-2023, by generation,” Statista Research Department, Apr 17, 2024.

¹⁰ “Out to Succeed 2.0,” Out Leadership, October 31, 2023.

¹¹ “Why Companies Must Recommit to the Fight for LGBTQ+ Rights,” Sylvia Ann Hewlett and Todd Sears, Harvard Business Review, May 07, 2024.

¹² “Why Business Leaders Must Resist the Anti-ESG Movement,” Andrew Winston, Harvard Business Review, April 05, 2023.

¹³ “Why Business Leaders Must Resist the Anti-ESG Movement,” Andrew Winston, Harvard Business Review, April 05, 2023.

¹⁴ “BlackRock’s Message: Contribute to Society, or Risk Losing Our Support,” Andrew Ross Sorkin, Harvard Business Review, January 15, 2018.

¹⁵ “Corporate Equality Index Resource Guide,” Human Rights Campaign Foundation.

¹⁶ “United Nations Sustainable Development Goals: 10 Reduced Inequalities,” Department of Economic and Social Affairs.

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