Pride and Prejudice - Executive Summary

M A R C H 3 R D 2 0 1 6 | H O N G K O N G
THE BUSINESS AND ECONOMIC CASE FOR
LGBT DIVERSITY AND INCLUSION
PRIDE AND
PREJUDICE
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E X E C U T I V E S U M M A R Y

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© The Economist Events 2016
PRIDE AND PREJUDICE 2016
Change is coming
The LGBT situation across Asia is uneven;
there are many differences from country to
country. The region may not be at the forefront
of establishing LGBT rights legislatively, but
though much is still to be done in addressing
basic issues of discrimination, there is a sense
of incipient change. Lawmakers are applying
pressure to adjust legislation in their respective
countries: Vietnam has recently passed laws
that allow same-sex marriage and gender-
reassignment surgery.
Millennials are driving change
While the older generation holds on to
traditional family values, Asia is seeing
a generational change in attitude. With
increased access to the internet and exposure
to global conversations and trends through
social media, such as Twitter, Facebook and
China’s WeChat, Asia’s youth now often
accept LGBT diversity and same-sex marriage
as social norms. This millennial generation will
be the major driver of the cultural shift on LGBT
issues, whether it be in Japan, Vietnam, the
Philippines or China.
The power of the pink dollar
In Asia, business has been silent on the
economic case for diversity and LGBT
inclusion. Yet, the LGBT market, although
often hidden, is estimated to spend $3.7
trillion globally, according to Paul Thompson,
founder of LGBT Capital. Since this market
has such tremendous potential, companies
seen to be discriminatory will find it damages
their brand, warned Amanda McCluskey,
head of sustainable investment at Stewart
Investors. Moreover, companies that
embrace LGBT diversity and inclusion tend to
perform better, which may also indicate that
those companies operate in a smarter way
in other areas.
LGBT makes cents
There is a quantifiable benefit to having an
LGBT-inclusive workplace culture. Without
the stress of having to hide their sexuality,
LGBT employees are happier, healthier,
more productive and less likely to leave a
company. For employers, lower staff turnover
results in savings on the costs of recruitment
and retention.
KEY TAKEAWAYS

3
The future is bright
Lee Badgett, professor of economics and
director of the Centre for Public Policy
and Administration at the University of
Massachusetts Amherst, said the future
for LGBT issues in Asia looked bright. Clear
social movements are building that will push
governments towards policies that support
equality, which in turn will spur dialogue in the
private sector. “It’s going to be a race to the
top,” she said.
Leading by example
The family-centred and hierarchical culture in
Asian countries makes it crucial that leaders—
be they chief executives of companies, or
heads of government—set the right tone. It
helps when a top person happens to be gay
and is prepared to be out, as it contributes
to steering the discussion and pushing LGBT
issues forward. The challenge for corporate
Asia is in getting local companies to step up
and take their necessary leadership role in
the public sphere.

How times have changed. Not so long ago, it
would have been unthinkable that the chief
executive of a major corporation might openly
declare that he was gay, as Apple’s Tim Cooke
now has. The world’s astonishing connectedness
is driving rapid change in social attitudes to
lesbian, gay, bisexual and transgender (LGBT)
people and issues. Companies in Asia, like those
elsewhere, need to embrace diversity and
inclusion to stay competitive and attract the best
talent. This was the message from the Hong Kong
segment of The Economist Events’ inaugural Pride
and Prejudice Summit, held on March 3rd 2016.
This 24-hour global event spanned three cities—
including London and New York as well as Hong
Kong—and explored the business and economic
case for LGBT inclusion.

4
THE STATE OF LGBT
RIGHTS IN ASIA
Asia is far from the forefront of championing
LGBT rights legislatively, and progress around
the region has been uneven. Though there
is still much to be done to address basic
issues of discrimination, there is a sense that
change has begun. Lawmakers in the region
are applying pressure to their governments to
make changes to discriminatory legislation.
In some countries, legislation is moving rapidly—
ahead of public opinion. For instance, in Vietnam,
the country’s new constitution of 2013 recognises
and protects human rights, including LGBT rights.
In the last two years, despite resistance from the
general populace, laws have been enacted
that allow same-sex marriage, permit gender-
reassignment surgery, and give people the right
to change their name and gender in their legal
identities, according to Thanh Tu Nguyen, acting
director-general of Vietnam’s ministry of justice.
Progress has been slow in other places. The
Philippines has recently seen Manny Pacquiao,
a world-champion boxer, local hero and
congressman, publicly denounce same-sex
marriage. Congresswoman Sol Aragones has
filed three bills relating to LGBT rights under a
wider anti-discrimination bill, but said they may
not be passed during the current sitting of the
Philippine legislature. She admitted that it had
taken nine years to pass a human-rights bill
in the Philippines, but hoped that LGBT-rights
legislation would not take so long.
Even as governments in the region may be
beginning to talk about LGBT rights, “the
silence of business is deafening,” said Daniel
Franklin, executive editor of The Economist.
Taiga Ishikawa, a member for Toshima ward
in the Tokyo Metropolitan Assembly, said he
had been lobbying Japanese companies
since 2000 to promote LGBT rights. But these
companies tend to say they can do nothing
unless there are laws in place, while the
government’s view is that it is up to the private
sector to act first.
“The silence
of business is
deafening around
the region, and
that is something
we intend to
break today.”
Daniel Franklin
Executive editor
The Economist

5
How compatible, or incompatible, are traditional
Asian values with LGBT rights? Many Asian
societies view the LGBT community as being
against nature, against traditional values such
as filial piety and, in some countries, against
their religion. There has been an inexplicable
explosion of anti-LGBT sentiment in Indonesia in
recent months, with senior government ministers,
Islamic clerics and the conservative media
calling LGBT tolerance a virus that is corrupting
Indonesia’s youth. In the Philippines many families
privately recognise that LGBT people are often
the breadwinners and primary caregivers for their
ageing parents, and that they will adopt and
raise children. But in public, LGBT people have to
toe the Catholic line that homosexuality is a sin.
Moreover, producing a son and heir is still
core to traditional family values in Asia, and
much prejudice stems from the fact that LGBT
people can’t do it. “But times have changed,
and you don’t have to have biological
children to be filial,” said Michael Tan,
chancellor of the University of the Philippines
Diliman. In China, it has become the practice
for gay men and women to marry each other
and adopt a child to produce an heir, while
their families turn a blind eye to the reality of
the situation, said Kate Zhou, a professor of
political science at the University of Hawaii.
The tension then becomes just the age-old
family tussle over who spends the Spring
Festival where.
ASIAN VALUES VERSUS
LGBT RIGHTS
“We want
more data for
policymaking for
these issues, to
show that it makes
sense to invest in it.
Countries don’t like
to be compared,
and indexes can
be a powerful force
for change.”
Nicholas Rosellini
Deputy assistant
administrator and
deputy regional director
for Asia and the Pacific
United Nations
Development
Programme

6
Traditional values are evolving, though, and
there is a sense that attitudes in the region
towards LGBT diversity and inclusion are
changing for generational reasons. “The divisions
are between the old and young generation,”
said Ted Osius, the United States ambassador
to Vietnam. The young people of Asia are no
longer wedded to the traditional values of their
elders, and are more interested in inclusion than
exclusion. As they gain exposure to the rest of
the world through social-media platforms such
as Facebook and Twitter, this trend will intensify.
Indeed, an Economist Intelligence Unit (EIU)
survey of business leaders worldwide found that
C-suite managers were less supportive of LGBT
inclusion than their younger, junior managers.
In China, a new cultural elite has emerged
and is injecting new cultural attitudes such
as tolerance into the public sphere. Anyone,
or any government, not holding these views
is seen as backward and “not cool” by the
younger generation, said Ms Zhou. She was
hopeful that the concept of tolerance would
be spread in China through social media
forums such as WeChat, and would foster a
new global identity that made LGBT people
feel more welcome.
MAKE WAY FOR
THE MILLENNIALS
“The divisions
are between the
old and young
generation.”
Ted Osius
United States
ambassador to
Vietnam

7
What is the cost of discrimination to the
broader economy? Lee Badgett, professor
of economics and director of the Centre
for Public Policy and Administration at the
University of Massachusetts Amherst, found
in her research for the World Bank that India
lost up to 1.4% of its GDP by not treating LGBT
people equally. Wages are a good measure
of productivity, and another of her studies
found that there was a 10% drop in wages and
productivity if LGBT employees were not able
to perform to their full ability.
There is a quantifiable benefit to having an LGBT-
inclusive culture in the workplace, Ms Badgett
noted. Without the stress of having to hide
their sexuality, LGBT employees are happier,
healthier, more productive and less likely to
leave a company. For employers, lower staff
turnover saves on the costs of recruitment and
retention. Social movements are building that
will push governments in Asia to pass policies
supporting equality, which in turn will, eventually,
spur change in the private sector. “It’s going to
be a race to the top,” Badgett said.
THE BUSINESS COST OF
DISCRIMINATION
“It’s going to be
a race to the top.
There are clear
social movements
building up
[pressure] on
governments to
pass policy to
support equality,
and to talk with
business and work
with businesses
to do that at the
business level.”
Lee Badgett
Professor of economics
and director of the
Centre for Public Policy
and Administration
University of
Massachusetts Amherst

8
In the end, it may be that money does the
talking. The global LGBT market, although
often hidden, is estimated to be worth $3.7
trillion. “It’s the power of the money that you
can make … that will support companies to
say, ‘we should look at that market’, as well
as doing the right thing,” said Paul Thompson,
founder of LGBT Capital. “We think there are
70–80m LGBT people in China—that’s the size of
the total population of Germany.”
Grindr, a gay dating app, is a stunning example
of the power of those numbers. Several years
ago, it was banned in China; today it is allowed
to operate, and has just recently sold a 60%
stake in its business to Chinese firm Beijing
Kunlun Tech Co. for $98.4m.
LGBT consumers say they would rather
spend their money with a company that
supports diversity than with one that does
not. Companies that are seen to have
discriminatory policies will find it hurts their
brand, warned Amanda McCluskey, head of
sustainable investment at Stewart Investors.
This should also feed into assumptions about
a company’s growth and risk potential.
Moreover, businesses that embrace LGBT
diversity and inclusion tend to perform better,
which may indicate that they operate in a
smarter way in other areas as well. “If you don’t
set the tone of openness and transparency
across everything, then you lay your company
open to risk,” she said.
By 2025, millennials will make up 75% of the
global workforce. Being proactive on LGBT
diversity and inclusion makes sense in the
competition to attract skilled people. “The
world is getting more meritocratic, and
positions of privilege are being eroded. You
need to obtain the best talent to survive and
thrive,” said Martin Cubbon, director of finance
and corporate development at Swire Pacific.
THE BUSINESS CASE
“It’s the power of
the money that
you can make …
that will support
companies to say,
‘we should look
at that market’, as
well as doing the
right thing.”
Paul Thompson
Founder
LGBT Capital

9
TAKING THE LEAD
Senior corporate leaders have to set the
agenda for their organisations, be more vocal
in the wider community, and demonstrate that
being openly LGBT is not career suicide. “The
tone from the top is critical,” said Alan Joyce,
chief executive of Qantas. “It will be more and
more important for business leaders who come
from the LGBT community, or any leaders,
whether it’s in defence, business or politics, to
be open about their sexuality and open about
why it’s an important issue.”
Joyce said having a diverse pool of employees
and senior management has helped Qantas
reverse its A$2.8 billion loss of 2013–14 and swing
its accounts back into the black. “Last year, 2015,
was our best year in our 95-year history, in terms
of performance … and I put a lot of that down to
our diversity and focus on diversity,” he said.
At the middle-management level, the
challenge for multinationals is to instil their
corporate culture in countries where respect
for diversity doesn’t necessarily exist, and to be
safe spaces where LGBT employees can be
themselves. “We try to empower local teams
to develop a more inclusive culture, and
we bring in managers from other countries
to build awareness,” said Anthony Tenicela,
global leader for workforce diversity and LGBT
markets at IBM.
Being LGBT in the blue-collar workforce often
means flying under the radar on a building
site, where the culture is male-dominated and
head office is far away. In such situations, on-
site leadership has to ensure the company’s
diversity and inclusion values are enforced.
Rod Leaver, chief executive of Lendlease,
said, “Our leadership is not just at the top,
but goes right through the company.” This
is especially important in Asia, where one
challenge is to communicate a consistent
message to construction workers who come
from a multitude of cultures and speak
different languages.
“It will be more
and more
important for
business leaders
who come
from the LGBT
community, or
any leaders,
whether it’s in
defence, business
or politics, to be
open about their
sexuality and
open about why
it’s an important
issue. The tone
from the top is
critical.”
Alan Joyce
Chief executive officer
Qantas

10
A PAUCITY OF DATA
One area hindering global progress in LGBT
diversity and inclusion is the lack of comparative
data. The LGBT community is a hidden minority;
unlike race, gender or disability, sexuality is often
invisible. “That makes it harder to understand
the real impact of diversity, especially in Asia,
where a large number of people are in the
closet,” said Simon Baptist, chief economist and
managing director for Asia at The Economist
Intelligence Unit.
While academics like Ms Badgett and firms
like LGBT Capital are crunching the numbers
in their own spheres, the United Nations
Development Programme (UNDP) is addressing
the paucity of data by launching its Global
LGBTI Inclusion Index later this year. The index
sets out to measure how well governments are
implementing LGBTI inclusion, as an adjunct to
the Sustainable Development Goals running
from 2015–2030. “We want more data for
policymaking for these issues, to show that
it makes sense to invest in it. Countries don’t
like to be compared, and indexes can be
a powerful force for change,” said Nicholas
Rosellini, deputy assistant administrator and
deputy regional director for Asia and the
Pacific at the UNDP.
Pride and Prejudice saw powerful arguments
advanced that there is a business case for
promoting diversity and acceptance of LGBT
people. It helps innovation, attracts skilled
workers and fosters a huge global market
that spends trillions of dollars. But despite this,
corporate Asia has been slow to act. It seems
that on LGBT inclusion, the region is only just at
the beginning of its race to the top.
“Our current
estimate is that
there is a $3.7
trillion global
spend in the LGBT
market.”
Paul Thompson
Founder
LGBT Capital

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