The Value Gap: Anti-LGBTQ+ laws like ‘Don’t Say Gay’ are bad for business, says this former Wall Street banker. Here’s why.

The Value Gap is a MarketWatch interview series with business leaders, academics, policymakers and activists on reducing racial and social inequalities.

Todd Sears’ mission is to help the business world better understand the LGBTQ+ community.

As the founder and chief executive officer of Out Leadership, he works with prominent companies across the globe on equality initiatives. His organization also releases an annual survey that assesses the country’s LGBTQ+ business climate — in essence, a roadmap for those who want to learn how each state measures up in terms of important LGBTQ+ benchmarks.

For Sears, a 46-year-old North Carolina native, the mission stems from his personal experience. As a gay man who started his career in investment banking, Sears faced his share of homophobia. But he also saw how the financial community could benefit from forging a closer tie with the LGBTQ+ community. When he was at Merrill Lynch
Sears developed a successful plan to work with LGBTQ+ couples and nonprofit organizations — and brought in sizable assets as a result. “I proved that it would make business sense,” he says.

Sears says many companies now understand this business rationale, if not the broader issue of LGBTQ+ equality. He points to the fact that Out Leadership has engaged with almost 700 CEOs to date. But there’s still work to be done, he says.

Timed with this month’s Pride celebration and the release of Out Leadership’s most recent state-by-state survey, MarketWatch spoke with Sears about what he has accomplished and what lies ahead. Here are edited excerpts from the conversation:

On why he decided to start Out Leadership

About 12 years ago, Sears was out of work — he had been with another firm after Merrill — and began to think of his options.

“I found myself sitting on a sofa with my severance check and lots of martinis, and decided that I wanted to take what I did at Merrill and see if I could do it more broadly around the world and get more businesses to advocate for equality,” he says. “Because 12 years ago, you didn’t have CEOs or businesses speaking out about gay rights.”

Sears began by hosting an equality summit focused on Wall Street. That proved successful, so he continued the work in other industries and in other parts of the world. Eventually, he brought it all together under the umbrella of Out Leadership, which he runs as a B corporation — meaning a for-profit, mission-driven business.

On Out Leadership’s annual LGBTQ+ business-climate index

Sears says the first survey was released about four years ago, after marriage equality had become the law of the land. “There was a misperception that marriage equality solved all the challenges for the LGBTQ+ community, and that was patently not the case,” he says. “From employment discrimination to HIV criminalization to trans rights, there are still significant challenges at a state level.”

The index that Out Leadership created, in partnership with other organizations, looks at data points such as whether a state has employment nondiscrimination policies for LGBTQ+ people and how difficult it is to change a gender marker on a birth certificate or driver’s license. In the most recent survey, New York ranked highest of all 50 states for the second year in a row, while South Carolina ranked lowest for the third year in a row.

Sears says the rankings are intended to have an impact on how a given state is perceived — and, in particular, on its ability to draw business talent. “So that we could literally say, ‘Gosh, that anti-gay bill you passed is going to hurt your economic prospects,’” he says.

On Florida and its ‘Don’t Say Gay’ legislation

Florida ranks 31st among the states in the Out Leadership survey — in other words, not quite at the bottom. But Sears thinks the new Florida law banning classroom instruction about gender identity and sexual orientation in kindergarten through third grade, widely known by LGBTQ+ advocates as the “Don’t Say Gay” law, will hurt the state in the long run.

“We know businesses are having trouble attracting talent to Florida. Some businesses are reconsidering whether they can and should do business in Florida,” Sears says of the legislation.

At the same time, he says, Florida’s rank isn’t so low because it passed prior legislation that was supportive of the LGBTQ+ community.

On the buying power of the LGBTQ+ community

Sears points to research that says the LGBTQ+ community constitutes a $5.2 trillion global market, but says that represents only a slice of the true pie. He looks to what he calls the “ally market” — people who have LGBTQ+ relatives and friends and are thus especially supportive of the community.

In effect, he argues, an LGBTQ-friendly company will be able to tap a much broader consumer base as a result.

On the ‘global challenge’ ahead

Sears says the transgender community is facing particular discrimination in the U.S. right now. It’s about fear of the unknown, he says: “The trans community is unknown to a lot of people. A lot more people know a gay or lesbian person.”

He argues that politicians are taking advantage of that fear to push for anti-trans legislation and score points with their base in the process, and notes that there are more than 150 anti-trans bills across multiple states in spite of the fact that the trans population is relatively small.

On a larger scale, Sears notes that it’s still illegal to be gay in dozens of countries. “So the challenge we have not is not just a state-by-by state challenge or a United States challenge, but it is a global challenge,” he says.

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