HONG KONG -- Aside from the moral implications of discrimination against the LGBT community, stigmatization and exclusion of minority groups can translate into huge economic losses, research shows.
"Billions of dollars are lost simply because of treating LGBT [people] unfairly," said Lee Badgett, professor of economics at the University of Massachusetts Amherst, at The Economist Events' Pride and Prejudice 2016 conference which took place in Hong Kong, London and New York on March 3. Badgett was referring to a study she carried out for the World Bank and the Nordic Trust Fund that was published in October 2014. For example, she found that India had seen 1.7% of its gross domestic output vanish due to LGBT discrimination in the workplace.
Such losses mainly came from lower productivity as a result of labor supply constraints induced by prejudice against the employment of LGBT people, reduced returns from inefficient human capital investment in this group, and lost output from exclusion-linked health problems.
"We see LGBT people having a hard time not getting the jobs they are qualified for, or being undercompensated," said Badgett, adding that impeding people from fulfilling their abilities would cause productivity to drop by 10%, using wages as a proxy measure.
In another piece of research, she found that the advancement of LGBT rights, whether through implementing non-discrimination laws, from recognition by their family, or the decriminalization of homosexuality, was associated with 3% higher gross domestic product per capita.
Although Badgett acknowledges that more affluent countries tend to be more ready to liberalize individuals' rights, she believes that LGBT people in developing Asian countries would have delivered more to the economy if they had been given more opportunities. "Those two things go hand-in-hand. Economic growth helps LGBT people, and LGBT people's rights helps economic growth," said Badgett.
From the perspective of business enterprises, Badgett said that creating an inclusive environment for the LGBT community would enable significant cost savings in terms of lower labor turnover, recruitment and retention of staff. "When you have an environment that encourages LGBT people to be more open, you're going to have people who are probably healthier, much more committed to their jobs and less likely to leave," she said.
The corporate world has also woken up to the benefits of having a more tolerant and diverse culture. "A room of homogenous people doesn't give you creativity, innovation, and talent," said Laura Atherley, Nomura's global head of senior relationship management, at the Pride and Prejudice conference.
Atherley noted that the mix of potential employees signing up for Nomura has drastically changed after the bank's sponsorship of the Tokyo Rainbow Pride LGBT parade last year. "Our branding completely changed. Nomura is no longer seen as a traditional firm."
The Japanese securities firm, which inherited its pro-LGBT culture when it acquired the bankrupt Lehman Brothers in 2008, said they now use "cultural conduct" as a yardstick for yearly remuneration evaluations, while also giving middle management regular training in cultural diversity.
Goldman Sachs, ranked the top employer for LGBT inclusion in 2015 by Community Business, a Hong Kong-based nonprofit organization, is also actively bolstering what it calls "a compelling business case." Last year the bank mobilized 1,600 employees to support its Pink Friday event, where people wore pink T-shirts stating their personal connection with the LGBT community on the back.
"A lot of things we do at Goldman is trying to make the invisible visible," said Ronald Lee, Goldman's head of private wealth management and co-chair of diversity for Asia Pacific. "People perform better when they can be themselves," he added.
Outside of the financial services sector, tech juggernaut Google has pushed forward the provision of health care for same-sex partners of its staff in 11 out of the 13 Asia-Pacific markets in which it operates, while consultancy McKinsey helps its LGBT employees relocate globally to ensure they are working in a conducive and accepting environment.
Setting an example
Alan Joyce, chief executive officer at Australia's Qantas Airways since 2008, is one of the few openly-gay executives who hail from Ireland, a predominantly Catholic country.
"The tone from the top is critical," said Joyce, adding that it is essential for LGBT business leaders and politicians to be open about their sexual orientation. "There should be more people like Apple's [CEO] Tim Cook and Paul Zahra, former CEO of Australia's [department store] David Jones."
But it is not just the big guys. Investors and smaller businesses are increasingly eyeing the LGBT community as a potential market.
"For us, it's trying to get investment insight," said Amanda McCluskey, head of sustainable investment at Stewart Investors, an Edinburgh-based fund manager that targets emerging markets.
Responsible investors, McCluskey said, do not just look at the back section of annual reports for financial performance. "They look at a company's approach to LGBT, which I think is a proxy for broader human capital management," she said.
Other rising LGBT businesses include Los-Angeles based Grindr, a social networking site targeting gay and bisexual men. It claims to have more than 2 million daily users across 196 countries.
"We were doing this basically because no one was doing it," said Grindr's founder and CEO Joel Simkhei of his business. "It's an example that the LGBT [community] are trailblazers and found innovative solutions to solve problems that the general population wasn't thinking about."
However, Grindr is yet to develop a big presence in Asia, compared to its fast-growing businesses in emerging markets like Brazil and Mexico. Just over a year ago, Grindr was banned in China. Although the ban has now been lifted, Simkhei said that delay had already hurt growth in the region.
But, while homosexuality remains a taboo subject in the world's second largest economy, in January, Beijing Kunlun Tech Company, a Chinese gaming company controlled by billionaire Zhou Yahui, bought a majority stake in Grindr for $93 million.
A different challenge facing Grindr is that few users in this region are willing to pay for a subscription service. "Many firms in this space are still struggling to monetize," Simkhei said.
Others are more optimistic. Paul Thompson, founder of LGBT Capital, an asset manager that specializes in offering financial services to the group, said China is a "fascinating market" with an LGBT population of some 70 to 80 million.
"That's the size of the total population of Germany. It's not a small market," said Thompson. He said one reason to be hopeful about China's LGBT market is that it does not face the same religious issues as in other countries, adding that "gradual liberalization" would take place.
The global LGBT community is estimated to spend $3.7 trillion annually, according to LGBT Capital, while the LGBT population is about 450 million globally.
Nonetheless, the LGBT market is often a hidden one, making it sometimes difficult for businesses to cater to it. But with such market potential, companies that are seen to be discriminatory would only be hurting their own brands. "Companies need to walk and walk, not just talk and talk. A good business should be aware of its customers," Thompson said.
One example he cited is that it is often one thing for banks to announce LGBT-friendly policies, but quite another picture when LGBT couples walk into a local branch to open a joint bank account.
Lifenet Insurance is one of the few Japanese financial institutions trying to bridge the gaps that remain. The Internet-based insurer began to expand its service to same-sex partners in November.
However, catering for the group -- which accounts for less than 1% of Lifenet's customer base -- presents certain challenges under an inflexible legal regime and the company can find itself with its hands tied in many situations.
Under current laws in Japan, where same-sex marriage is not legal, a person cannot collect their partner's death certificate unless they are legally married. Without it, the company is unable to process insurance claims.
Daisuke Iwase, Lifenet's president and chief operating officer, however, remains determined. These are challenges "worth taking on," he said.
The LGBT market is in its early stages in Japan, with mainstream society still largely reflecting rigid and traditional values, but Iwase is not pessimistic. "We think changes can be led by smaller companies like us," he said.