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Research finds companies with LGBTQ+ board members outperform peers

Fortune 500 companies with LGBTQ+ board members outperform peers in both financial and non-financial metrics, from Northeastern University. The findings are published in the journal Human Resource Management.

"These companies tend to do better in sustainability performance measures, better on financial performance and long-term risk and some organizational outcomes," says 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.

"Having diverse points of view can mitigate risk and can offer new solutions, as long as they are integrated in the board."

More than 25 million individuals in the United States identify as members of the LGBTQ+ community, according to the , representing around 7.6% of the country's population.

But directors who are openly vocal about their LGBTQ+ identity hold of board seats and, in Fortune 1000 firms, out LGBTQ+ individuals of more than 7,700 available board seats at the end of 2024.

To determine the impact of LGBTQ+ board representation, Aguilera and Ryan Federo of the Universitat Autònoma de Barcelona looked at 441 American corporations and their board membership and board diversity policies in 2021 and 2022, the first years for which the data were available.

The researchers evaluated firm performance in two areas: environmental, social and governance (ESG) scores; and enterprise value.

ESG scores are accrued based on an examination of over 900 criteria ranging from green product innovation to community initiatives to management compensation.

The enterprise value is the value of a firm should it be sold on the current open market, and thus includes parameters such as a firm's debt, long-term risks and future value.

"We're looking at the performance of the firm in a holistic way," Aguilera says.

The researchers found that firms with visible LGBTQ+ board members have higher ESG performance than firms without visible LGBTQ+ directors. This ESG performance, in turn, leads to a higher enterprise value in firms.

Aguilera and Federo suggest that this positive correlation may be explained by the viewpoint diversity offered by LGBTQ+ board members.

"One of the worst things that can happen on a board is that there is group thinking," adds Aguilera. "That happens when everybody has very homogeneous views or when there is no psychological safety for different individuals to voice their opinions."

The researchers say that this study offers a new dimension to diversity studies by examining types of diversity that might not be readily identifiable—for instance, veteran status, neurodiversity or disability.

"A lot of research up to now has looked at these diversity metrics that are more obvious, like race or gender," Aguilera says. "Now we are in a new space, which is more about cognitive diversity."