Morningstar has introduced a Developed Markets LGBTQ+ Leaders index, providing exposure to companies with well-constructed policies and practices for LGBTQ+ inclusivity.
The index awards companies a score from zero to seven, ranging from no effort at all seen on the company’s website or reports to recognise diversity and inclusion, to an active communication of support to LGBTQ+ staff, as well as an LGTBQ+ person or ally as part of the executive team.
Companies must hit a score of at least three, which is identified as a ‘clear diversity and inclusion approach, with a special mention for LGTBQ+ matters’ to be considered for the index.
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Rob Edwards, global director of ESG product Management, Morningstar Indexes, said: “The index industry has made great strides in recent years to develop products that fall under the ‘S’ in ESG. Yet, while there are a number of broad socially focused indexes available in the market today, few options focus on sexual orientation or gender identity.
“In developing the Morningstar Developed Markets LGBTQ+ Leaders Index, our objective was to bring greater transparency to LGBTQ+ practices and policies in the workplace and how companies are incorporating these approaches into their strategy. We opted to do this in a way that stresses an objective, data-based approach.”
The index holds 100 companies that Morningstar identifies as leaders in the industry. Currently, the index holds 41 companies which are categorised as tier seven, excluding just three companies from all of those assessed which reached tier seven. There are 28 companies in tier six, eight in tier five, and 23 in tier four.
Ron Bundy, president of Morningstar Indexes & Morningstar Sustainalytics, said: “We are thrilled to add this new capability to our growing suite of indexes to empower investors while expanding our global sustainability index offering.
“Our new index fulfills a market need by enabling investors to tap into global companies with leading LGBTQ+ policies to pursue their investment objectives, whether for values alignment, or to pursue investment opportunity, or a combination.”
The financial services sector sits at an average tier of 3.65, with 17% of companies in the top two tiers, and 13% of companies in the bottom two tiers.
Financial services companies JPMorgan and HSBC were both placed in the highest tier of engagement. Morningstar’s report pointed to JPMorgan’s Pride Business Resource Group, which was started in 1996, and its involvement in the UN’s LGBTI Standards of Conduct for Business.
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“JPMorgan Chase CEO James Dimon has shown consistent support for the LGBTQ+ community, and Stacey Friedman is the only openly gay general counsel in a major financial institution,” the Morningstar report said.
UK-based HSBC also earned a score of seven for its worldwise employee research groups and representation on the company website of DEI leaders.
This article first appeared on PA Future’s sister site Portfolio Adviser
