Should LGBT+ engagement be incorporated into broader DEI?

Firms are starting to acknowledge a wide range of diverse characteristics

“Invisible diversity characteristics” such as sexual orientation can be a challenge to engage companies on, but small signs of progress are appearing, ESG Clarity research has found.

Last year, ESG Clarity took the top 10 asset management groups that appeared in the Responsible Ratings Index at the time, and looked at each group’s annual review, active ownership report or sustainability report – wherever they note progress on ESG topics – to search for mention of engagement on LGBT+ issues specifically.

Those groups were Fidelity International, Nordea Asset Management, Pictet Asset Management, Jupiter Asset Management, Royal London Asset Management, Evenlode Investment Management, Robeco, Brown Advisory, Schroders Asset Management and Rathbone Unit Trust Management.

At the time, none of the 10 groups noted how they intended to approach this in their engagement strategy.

This year however, one group, Schroders, has updated its engagement blueprint to acknowledge specific diversity characteristics, which includes sex and sexual orientation, in its engagement with companies.

“We ask that the workforce of a company broadly represents the communities that the company operates in and the customers that it serves, and that the company creates an inclusive culture, which increases employee engagement and productivity,” Katie Frame, active ownership manager at Schroders told ESG Clarity.

“Our engagement seeks to ensure companies create an inclusive culture regardless of an employee’s personal characteristics, including their sexual orientation; this is through the belief that having an inclusive culture is what allows us to realise the benefits of diverse teams.”

Frame said one way the firm has been encouraging progress through its engagement activities is by asking companies to disclose the results of specific questions around feelings of inclusivity from employee engagement surveys, although it is unclear whether these refer to specific diversity characteristics.

Last year, Amy Wilson, UK engagement lead at Federated Hermes’ stewardship services provider EOS, which does engage on LGBT+ issues specifically, said it was a bit disappointing more groups were not mentioning the topic in their literature because many topics “suffer from being a strand within a bigger topic and so don’t always get the airtime publicly”.

However, Schroders, which says it “encourage[s] companies to consider diversity broadly,” may benefit from a holistic approach.

“Companies would hugely benefit from a good understanding of social intersectionality and from practices that look beyond single demographic characteristics,” remarked Sasha Graham, partner at Equality Group.

“However, due to challenges around data collection, lack of understanding of invisible diversity characteristics and people’s prejudice, the main focus is still on gender.”

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Natasha Turner

Natasha was global editor at ESG Clarity, part of Mark Allen Financial, and a financial journalist for seven years. She has been shortlisted for Story of the Year and Investment Journalist of the Year...