Companies that support LGBTQ-inclusive policies outperform: Credit Suisse

Shares in companies supporting diversity including gender identity and sexual orientation have historically performed better than the broader market, according to Credit Suisse Group AG analysts.

Credit Suisse’s market-cap weighted basket of about 350 LGBTQ-inclusive companies, which includes firms such as Apple Inc., Tesla Inc. and JPMorgan Chase & Co., has outperformed MSCI Inc.’s flagship ACWI global equity index excluding those 350 constituents by 378 basis points a year since 2010, analysts including Eugene Klerk wrote in a report.

These companies more easily attract and retain talent, with 72% of LGBTQ allies saying they’re more likely to accept a job where the employer supports LGBTQ equality, Credit Suisse said. Revenue growth and cash flow returns at the companies in the broker’s LGBT-350 basket also tended to be stronger than at the remaining firms in the MSCI ACWI Index, according to the analysts.

[More: Nasdaq plans to require more diversity on listed company boards]

“The need for companies to take a pro-active LGBT+ approach is obvious in our view,” the analysts wrote. “With LGBT+ consumers making up between 5%-10% of the population we estimate that consumer spending by LGBT+ could represent as much as $5.6 trillion.”

Credit Suisse said it selected basket members based on either the presence of openly LGBTQ managers in senior positions or recognition as a top LGBTQ-inclusive employer in surveys such as the Human Rights Campaign’s Corporate Equality Index.

[More: Consider the role we can play in creating the radical change needed to improve diversity, inclusion and belonging]

Almost 90% of companies in the LGBT-350 are based in North America, with financials and information technology among the top sectors represented. Another index tracking inclusivity, the U.S.-focused LGBTQ100 ESG Index, has also outperformed this year, with an 18% gain compared with 12% for the benchmark S&P 500 Index.

Even so, Credit Suisse said its analysis doesn’t aim to prove that a company’s focus on LGBTQ equality is the reason for potential outperformance, but merely highlights that these two factors coexist for the average stock in the LGBT-350.