Firms with LGBTQ+ board members outperform peers, study finds

What you probably already know: Many big companies are distancing themselves from their commitments to diversity, equity, and inclusion hiring practices following the Trump administration’s lead on what the president has referred to as “illegal and radical” DEI initiatives. Studies suggest that LGBTQ+ discrimination greatly impacts employees’ choice of workplace, mental health, productivity, and sense of safety, and leads to higher turnover among members of the LGBTQ+ community. Now, new research suggests that having LGBTQ+ board members is a smart business decision.

Why? The study published in the journal Human Resource Management examined data on board members and board diversity policies in 2021 and 2022 across 441 Fortune 500 companies. Researchers then measured each corporation’s performance using two metrics: environmental, social, and governance (ESG) scores, and the firm’s market value. The former assigns scores based on over 900 criteria, such as fair labor practices, waste management and pollution mitigation efforts, and business ethics. The researchers found that companies with visible LGBTQ+ directors had higher ESG scores than firms that didn’t and that their ESG performance was associated with a higher enterprise value. In other words, companies with LGBTQ+ board members outperformed their peers financially and socially.

What it means: Gallup’s latest poll data shows that 9.3% of adults in the U.S. identified as members of the LGBTQ+ community in 2024, up by more than a percentage point compared to 2023 and nearly double the 2020 figure. Gen Zers represent the largest share of out individuals, followed by millennials and Gen Xers. Still, the LGBTQ+ community is underrepresented in corporate board seats. Experts theorize this is due to a general lack of attention, as well as minority groups being less likely to be nominated or elected to top executive positions. Another sobering possible factor has to do with the impact of the AIDs epidemic on the LGBTQ+ community, which disproportionately impacted gay men who would now be of prime age to be serving as corporate board members.

What happens next: While many firms have fallen in line with the White House’s anti-DEI efforts, others are flouting federal rhetoric and doubling down on their commitments. While more than 31% of Fortune 500 companies and over half of Nasdaq-listed firms have LGBTQ+ inclusive policies, few board seats are actually occupied by members of the LGBTQ+ community. The Association of LGBTQ+ Corporate Directors’ Board Monitor Report showed just 1.3% of board seats were occupied by openly LGBTQ+ people at Nasdaq-listed companies in 2024, and less than 1% of Fortune 500 seats were held by LGBTQ+ individuals. This trend in underrepresentation could shift as more millennials and Gen Zers assume top leadership positions. Out Leadership data shows the number of FTSE 350-listed firms that have incorporated LGBTQ+ inclusive board policies more than doubled within a year, growing from 29 in 2023 to 49 in 2024. “Having diverse points of view can mitigate risk and can offer new solutions, as long as they are integrated in the board,” said Ruth Aguilera, the Darla and Frederick Brodsky Trustee professor in global business and distinguished professor of international business and strategy at Northeastern University's D'Amore-McKim School of Business.