A quarter century ago, a company called Cracker Barrel Old Country Stores fired more than a dozen workers for being gay. It was contrary to “traditional American values,” the company claimed, and only those with “normal heterosexual behaviors” could work at the restaurant chain.
Protests and boycotts ensued. A national backlash and a public relations nightmare dragged on. And investors — those who owned the company — got involved, because they have always understood a simple, elegant, all-American concept: inclusion and financial prosperity go hand in hand.
The New York City Employees Retirement System launched a first-of-its-kind shareowner proposal to protect LGBTQ rights in the workplace, a step never taken before. Eventually, though it took years, the board of directors adopted a non-discrimination policy on sexual orientation.
That situation — and its outcome — served as a clarion call to investors like us. New York City’s pension funds and Trillium Asset Management have dedicated the better part of the past 25 years to ensuring the companies in which we invest provide an inclusive workplace for LGBTQ employees. Our funds have pressed over 100 companies since 1992 to provide LGBT non-discrimination policies, impacting hundreds of thousands of workers. Today, the vast majority of large corporations do so, and the Cracker Barrel case decades ago was a jumping-off point.
Now, with the Trump Administration targeting LGBTQ students by rolling back their rights — and the Supreme Court’s corresponding decision Monday that sent transgender student Gavin Grimm’s case down to a lower court — local laws that foster equality and acceptance are more important than ever.
Laws that do otherwise are bad for business.
That’s something the Texas legislature must remember as it starts debate this week on Senate Bill 6, the “bathroom bill,” which pre-empts local ordinances protecting non-discrimination and forces transgender individuals to use the bathroom that aligns with the gender on their birth certificate in public schools, state universities, and government buildings.
Just last month, as investors whose funds are invested in Texas-based companies, we led a group of institutional investors representing a remarkable $11 trillion in assets under management — or 15% of all managed assets worldwide — to speak out against the bill. In a letter sent to elected officials, the group made clear the legislation will take Texas in the wrong direction.
Here’s why: a 2016 analysis by Credit Suisse found that 270 companies which provided LGBTQ-inclusive work environments outperformed global stock markets by 3% annually — for the previous six years. Inclusivity is critical to corporate success.
America’s biggest companies understand that. According to the Human Rights Campaign’s 2017 Corporate Equality Index, nearly 92% of Fortune 500 companies have non-discrimination policies protecting their employees on the basis of sexual orientation in the United States, and 82% also include gender identity in those policies.
Yet the ability of companies to attract and retain LGBTQ employees, as well as heterosexual employees with transgender children, is at risk. State legislatures — with bills like North Carolina’s HB2 and Texas’s SB6 — are making LGBTQ individuals, and those with LGBTQ family members, feel unwelcome. People are afraid in their own states.
And that’s not just wrong — it has major economic ramifications.
If SB6 passes, in the long-term, Texas-based corporations and others with operations in the state will face hurdles in hiring the best and the brightest. In the short-run, economic and reputational harm to the state could be enormous. All of it is bad for the Texas economy.
Consider this. Just last year, then-Governor Pat McCrory signed North Carolina’s bathroom bill, claiming it wouldn’t harm business. Yet an avalanche of national opposition ensued. High value sporting events abandoned the State. Corporate expansions and investments were halted. CEOs spoke out. Boycotts began. Tourism declined.
Estimates put North Carolina’s losses at over $600 million in economic opportunity due to the passage of HB2, an extraordinary economic drop in less than a year.
Texas should brace for the same outcry because it will be under national scrutiny as a result of SB6 — and if it passes, the state should expect financial consequences. Since Texas’s economy is the second-largest in the country, the fallout could be even worse than it was for North Carolina.
That’s why some of the biggest investors in the world are speaking out in this letter — for many of the firms involved, for the first time. All of us know that if this bill becomes law, talent will flee the Lone Star State.
Texas has a long and proud history of supporting business, but SB6 has the power to stain the state’s reputation and economy, all in the name of discrimination.
Today, proponents of the bill are employing the same rationale for SB6 as Cracker Barrel used to fire its workers 25 years ago. The world has progressed since. The business community has evolved with it. And the Texas legislature must know that this bill is not just backwards, it’s a massive financial mistake.
And it’s just plain wrong.
