Open, inclusive and diverse cities are better for business and economic growth

This article is brought to you thanks to the strategic cooperation of The European Sting with the World Economic Forum.

Author: Ruth Hickin, Partner Engagement Specialist, Global Leadership Fellow, World Economic Forum

Equal rights are not just a moral imperative. They are an economic one. Open for Business, a coalition of global companies advocating for LGBTQ rights, recently published a comprehensive report demonstrating that more inclusive cities are better for the economy. LGBTQ+ inclusion is linked to greater competitiveness and stronger financial results, showed research based on a wide range of data, including the World Economic Forum’s 2017-18 Competitiveness report. Conversely, economies are losing out by not implementing more inclusive strategies, particularly at a time when more than 80% of global GDP is created in cities. The US economy could generate an extra $9 billion annually if companies improved their ability to retain LGBTQ+ talent by implementing inclusive policies, a report by Out Now estimates. India is losing $32 billion in annual economic output due to widespread discrimination against LGBTQ+ people, the World Bank estimates. Each additional legal right for LGBTQ+ people would generate a $320 increase in per capita GDP, according to USAID. So what makes a diverse and inclusive city? And why are they so good for the economy? There are three key indicators, according to Open for Business: innovation, talent and skills, and quality of living.

The ability to nurture innovation is a key driver of competitiveness. In the Fourth Industrial Revolution, a city’s capacity to keep up with the pace of technological change governs its place in the global economy. Open for Business’s data shows a direct correlation between LGBTQ+ inclusive strategies and potential for innovation.

Cities that have transformed in recent years, such as Medellín, cite LGBTQ+ inclusion as a driving factor in making change happen. “Medellín is a city that has understood diversity”, says Luis Bernard Velez, Director of Medellín’s Office of Social Inclusion, Family and Human Rights, which worked to reduce discrimination. Or consider cities such as San Francisco, Buenos Aires and Ho Chi Minh City – set to be Asia’s fastest-growing economy in the next five years – in which LBGTQ+ inclusion is part of their make-up.

Maintaining a population of talented people and avoiding so called ‘brain drain’ attracts businesses to cities and leads to better economic performance. LGBTQ+ inclusive cities have higher concentrations of talented people. Individuals perform better and have increased levels of satisfaction. Tech giants such as PayPal and Salesforce saw this clearly when they took a stand against ‘religious freedom laws’ in the US, which were intended to prevent transgender individuals from using public bathrooms that do not match their biological gender. Salesforce is one of the largest employers in North Carolina, and removing its operations would have had a significant impact on San Francisco’s economic advantage. The World Bank reports that the highest rates of emigration of highly skilled workers are in regions often associated with a lack of LGBT+ inclusion. More than half of graduates from cities such as Accra, Kampala, Lagos or Nairobi are likely to emigrate, according to OECD data. Moscow, Istanbul and Kuala Lumpur are experiencing similar issues. The 2016 report Out in the World: Securing LGBT Rights in the Global Marketplace clearly outlines the challenge that discriminatory laws pose to businesses. While many businesses put policies in place to protect their employees, these are often in conflict with local discriminatory laws. It can put limits on the ability to maintain a mobile workforce of talented individuals if there is a risk that LGBTQ+ employees will not feel comfortable, and will not be able to thrive, in a city where they risk discrimination.

Providing a high standard for quality of life is essential for a city to attract and maintain both businesses and talent. The presence of a visible LGBTQ+ community is often used as an indicator for a high quality of life. Open for Business uses Mercer’s annual Quality of Living Index, based on data from 450 cities across the world, to show that the cities with the highest level of LGBTQ+ inclusion also have the highest quality of life. Conversely, cities with high levels of discrimination correlate directly to lower quality of life.

Across multiple indicators, there is a clear correlation between LGBTQ+ inclusivity, economic performance and quality of life. Although there is still a significant gap in research on LGBTQ+ individuals in many economies, it is clear that both individual and city potential is not being met. There are 196 countries in the world. In 72 of those, it is a criminal offence to be in a same-sex relationship. In 12, you can receive the death penalty for that offence. There are only 26 countries in which same-sex couples can legally adopt a child. Just 23 permit same-sex marriage. For the first time in a number of years, the acceptance of LGBTQ+ people is in decline, and there is an increase in open discrimination, according to GLAAD’s 2018 Accelerating Acceptance Report. Government and business both have a role to play in making our cities more diverse. They can create significant economic benefit as a result.