Advancing economic inclusion of the LGBTIQ+ community

There is an untapped banking market for LGBTIQ+ people – and it’s not actually a new market but one which has been recognised for decades, right back to the 80s and 90s when it was known as the ‘pink dollar’.

“There is now a considerable body of research which supports the economic opportunity from engaging the LGBTIQ+ community”

Yet that market remains under-served.

At ANZ we recognise there is an ever-increasing expectation from all stakeholders that companies will take a stand on social issues and demonstrate commitment to diversity, equity and inclusion. That too is not only the right thing to do but also has an economic dimension in terms of a social licence to operate and being an attractive employer to the highest quality candidates.

This is especially true given the war for talent and the importance Millennial and Gen Z professionals (not just those who identify as LGBTIQ+ but also their allies) place on diversity, equity and inclusion.

Trillions of dollars

There is now a considerable body of research which supports the economic opportunity from engaging the LGBTIQ+ community, including a recent report from World Bank-affiliated International Finance Corporation (IFC) titled, “Inclusive Banking: Emerging Practices to Advance the Economic Inclusion of LGBTI People” to which ANZ was pleased to contribute.

“The size and potential of the untapped banking market for LGBTIQ+ people is significant and growing in importance,” the report found.

“Estimates suggest that LGBTIQ+ people have a collective annual spending power of $US3.9 trillion and that they could represent up to 10 per cent of the global population. LGBTIQ+ people, however, are often subject to social stigma, exclusion, and discrimination that harms individuals, businesses, economies, and societies.”

As the report says, the banking industry is well-positioned to lead the way on increasing LGBTIQ+ access to employment opportunities, as well as financial services and products.

That is something we fully endorse at ANZ and we have LGBTIQ+ inclusion programs targeted towards employees, customers and the broader communities in which we operate.

Of course this is not a simple challenge. To quote the IFC report: “It is difficult to pinpoint the exact size of the LGBTIQ+ population, as many individuals choose not to express their sexual orientation and gender identity for fear of stigma, marginalisation, discrimination or—in some contexts—criminalisation.”

The report continues, “However, estimates suggest that LGBTIQ+ people could represent up to 10 percent of the global population, or up to 770 million people. On this basis, according to global investment bank Credit Suisse.”

Moreover: “if the LGBTIQ+ community were an economy, it would be the third largest in the world.”

The IFC report is equally as compelling on the customer front.

“A proactive approach to LGBTIQ+ inclusion can also shape customer preferences. There is an increasing expectation among many LGBTIQ+ and non-LGBTIQ+ consumers — particularly younger generations — that businesses will advocate for the rights of marginalised groups including LGBTIQ+ people,” it found.

“A US survey found 51 per cent of millennials were more likely to choose one brand over another if it demonstrated awareness of diversity and inclusion. In many countries, there is a shift towards socially responsible consumption, where consumers reward companies committed to meeting environmental, labour, social, and human rights standards.”

Stick to your knitting?

Moreover, it was only a year or so ago when business in Australia was told to “stick to their knitting” and not get involved in social issues. “Knitting” in this case was not defined but appeared to refer to a very short-term concept of returns to shareholders.

Not only is the argument economically flawed – long term shareholder returns depend on all the factors covered by the IFC as well as though increasingly, if imperfectly, by Environmental, Social and Governance (ESG) principles – it does not reflect investor view.

In Australia, corporate involvement in the marriage equality debate was a watershed moment.

These days there’s a clear expectation for business and CEOs to take a stand on social issues like climate change and inequality. The 2022 Edelman Trust Barometer report found societal leadership has become an operational imperative in business.

All stakeholders now hold business accountable for taking a stand on issues that align with their values and beliefs. Nearly two thirds of Australian consumers will buy or advocate for brands based on their belief and values; 57 per cent of Australian employees will choose a place to work based on their beliefs and values; and 64 per cent of investors make financial decisions based on their beliefs and values, according to Edelman.

The expectation for business to take a stand on social issues is putting greater pressure on CEOs to personally lead on change - and be visible. Eight in 10 people believe CEOs should be visible discussing policy with external stakeholders or work their company has done to benefit society. Australians also expect CEOs to inform and shape conversations around subjects specifically related to jobs and the economy (72 per cent), wage inequality (72 per cent), technology and automation (68 per cent), prejudice and discrimination (64 per cent) and climate change (61 per cent).

War for talent

There are numerous studies and articles, including a widely quoted one from Glassdoor, about the importance Millennial and Gen Z professionals, particularly women, place on diversity and inclusion when considering prospective employers. Today's workforce demand action and impact. Organisations that talk the talk but don’t walk the walk will lose the war for talent.

Being visible is crucial. ANZ is a signatory to the UN Standards of Conduct for Business Tackling Discrimination against Lesbian, Gay, Bi, Trans, & Intersex People (UN Standards of Conduct). As a signatory to the UN Standards of Conduct, ANZ takes seriously its commitment to use its influence to champion human rights through words and deeds and stand up for the human rights of LGBTIQ+ people in the communities where we do business.

It’s business

The economic imperative is well documented. The 2017 Deloitte/Australian Human Rights Commission report “Missing out: The business case for customer diversity” found surveyed customers who identified as lesbian, gay or bisexual were three times as likely to avoid an organisation and twice as likely to dissuade others because of an organisation’s negative diversity reputation.

Surveyed customers who identify as lesbian, gay or bisexual were also about twice as likely as comparator groups to recommend an organisation to another person based on its reputation as supportive of gender equality, marriage equality, people with a disability, older people or cultural diversity.

Diversity Council Australia research found employees concealing themselves at work compromise their wellbeing. LGBTIQ+ employees who are not out to everyone at work are twice as likely to feel down as employees who are out to everyone at work and are 45 per cent less likely to be satisfied with their job.

Meanwhile, being out at work drives higher performance. LGBTIQ+ employees who are out to everyone at work are 50 per cent more likely to innovate than workers who are not out to everyone; 35 per cent more likely to work highly effectively in their team; and 28 per cent more likely to provide excellent customer/client service, according to DCA.

And this positive impact extends well beyond those directly involved. According to a Boston Consulting Group report it is not just LGBTIQ+ employees who are attuned to an organisation’s culture.

“[Heterosexual and cisgender] Gen-Z and Millennial employees — who will soon make up the majority of the workforce — also care deeply about inclusion and are more likely to advocate for it than previous generations,” the report found. “In that light, there are clear benefits for companies that get it right: improved financial performance, stronger innovation, less attrition and a more engaged workforce.

Companies focused on the best returns for shareholders must be also focused on attracting and retaining the best employees, attracting the deepest customer base and satisfying their social licence to operate. Advancing the economic participation and inclusion of LGBTIQ+ people makes sense by any measure.

Fiona MacDonald (she/her) is Diversity & Inclusion Lead at ANZ

Fiona will be discussing the IFC report as part of a panel for the 2022 Business Fights Poverty Global Summit on Tuesday 14 June. You can register to watch the panel session here.