Asset managers not engaging companies on LGBT+ issues

None of 10 top firms in the RRI publishes a strategy


Christine Dawson

Active ownership rests on investment groups engaging companies where they want to see improvements, but it is not always made clear to outsiders what these areas of engagement are and what sort of progress is being made.

This is certainly true for the area of LGBT+, where there is very little information available on how fund groups are approaching the topic with issuers.

Taking the 10 asset managers that appear at the top of the Responsibility Ratings Index for May, ESG Clarity looked at each group’s annual review, active ownership report or sustainability report – wherever they note progress on ESG topics – and searched for mention of engagement on LGBT+ issues specifically.

10 fund groups in the top RRI funds – May 2022

Fidelity International
Nordea Asset Management
Pictet Asset Management
Jupiter Asset Management
Royal London Asset Management
Evenlode Investment Management
Brown Advisory
Schroders Asset Management
Rathbone Unit Trust Management

None of the 10 groups noted how they intended to approach this in their engagement strategy. However, Federated Hermes, which does not appear on the list, does mention it explicitly.

Amy Wilson, UK engagement lead at Federated Hermes’ stewardship services provider EOS, said it was a bit disappointing more groups were not mentioning the topic in their literature but understood why it might be the case.

“There are many topics that suffer from being a strand within a bigger topic and so don’t always get the airtime publicly.

“The impressions I get from industry-level conversations is it could be the case [the engagement] is happening, but it’s being lost underneath the detail of other things within this topic area.

“[However] it could be that it isn’t being on engaged enough… it’s taken a while for even gender, which is a pretty well established part of the diversity, equity and inclusion (DEI) landscape, to become a high enough profile engagement issue.”

Key theme

Lindsey Stewart, Morningstar director of investment stewardship research, said despite it being hard to find examples of UK funds engaging with companies on LGBT+ inclusion as a specific topic, “it’s clear inclusion and diversity have become a key theme for those focused on responsible investing.”

Stewart said DEI is up there with climate as one of fund groups’ main engagement priorities.

Despite the dearth of data on LGBT+ engagement, there are other indicators that could back up the argument LGBT+ inclusion is being taken increasingly seriously at the company level.

For example, according to All Street SEVVA’s ESG ratings platform, LGBT+ corporate support programmes nearly doubled between 2017 and 2021, going from 727 companies globally to 1,365, respectively. found large-cap companies are the most active, with 466 out of 2,317, or 20% reporting a programme last year.

However, there are also figures that clearly show we are a long way from acceptable levels of inclusion for LGBT+ people. According to the Equality Group Bias Report from 2019, 35% of LGBT+ employees have hidden their sexual identity at work for fear of discrimination.

Getting the picture

Hephzi Pemberton, chief executive officer at Equality Group, noted there is additional value to getting data on LGBT+ inclusion because it is a good marker of broader DEI in a company.

“It’s a huge indicator for inclusion overall, in terms of if you do have a representative portion of your team that is comfortable being out at work, it’s [a marker] of how safe the environment is generally for anybody at work,” she said.   

Pemberton acknowledged it is not an easy process for employers to be gathering LGBT+ data from staff as it requires respondents to feel plenty of trust in the company.

But she pointed out the fact a company is even trying to ask the questions could indicate to investors that it is further along with DEI than a company which is not making any attempt at gathering LGBT+ data at all.

Industry trade bodies the CFA and the CII recently told ESG Clarity sister publication International Adviser they did not have robust data on LGBT+ diversity within the industry itself.

Points of engagement

Both Pemberton and Wilson said there is no need for companies to wait to get perfect data before working on a more inclusive culture, and having visible, effective allies in senior leadership is a central part of that.

Wilson said aside from encouraging actions that would foster an inclusive workplace, she has used her role to challenge companies with an inconsistent approach to LGBT+ support across their global operations.

“[They may be] very active and vocal in support LGBT+ rights in particular geographies, where it’s fine to be so or even commercially advantageous to be so, and then they’re totally silent on these issues in other parts of the world.

“I would have that conversation with the company in the context of their commitment to human rights and challenge the consistency on signing up to these positions,” she said.


On the other hand, Wilson said for active owners engaging companies solely based in countries where LGBT+ as a topic is culturally sensitive, she can understand it would be hard to make progress.

“It would be wrong to suggest that it’s a topic that’s completely freely on the table all over the world. I don’t think it is,” Wilson commented.

As asset managers work with limited time and resources, Wilson said they all have to prioritise areas of engagement.

She suggested another reason more groups are not engaging on LGBT+ issues, or at least are not vocal about it, is because they have deemed it as lower impact.

Within DEI, they may be looking for the most material and highest impact areas and see gender and ethnicity as higher priority as they effect a higher proportion of the population than LGBT+.

Wilson said she would not claim EOS does engagement perfectly, but its clients want to see a holistic approach and for her team that means seeing how a company’s DEI strategy takes account of intersectionality, including LGBT+.

Latest Stories