LGBTI+ Rights and Corruption: What’s the Connection?

03.27.2019 | James Reston

This blog originally appeared on CC Trends

 

Global business leaders can reduce corruption and boost productivity by upholding LGBTI+ rights.

Even with rapid progress on LGBTI+ rights in the last decade, 69 countries still criminalize same-sex relations and 155 lack anti-discrimination protections. At the same time, 91% of Fortune 500 companies have prohibited discrimination on the basis of sexual orientation – in their operations globally.

In societies without legal protections, LGBTI+ employees are under constant threat of violence, extortion by corrupt officials, and decreasing productivity due to exclusionary workplace environments. According to the United Nations, the global economy faces at least $120 billion in losses per year because of rampant discrimination against LGBTI+ people.

Personal cases of extortion are commonplace. For example, before 2003, same-sex relations in the small country of Armenia were criminalized under the country’s “Article 116,” a Soviet-era law that carried a penalty of 3 to 5 years in prison. In 1999, 20-year old Hovik Minasian was the last to be sentenced under Article 116 to a shorter term of 3 months because of the $1000 bribe the corrupt judge in Minasian’s case extracted from him.

Across the border from Armenia, a 2017 anti-gay purge in Azerbaijan threatened LGBTI+ business leaders. One Azeri man who was held and tortured by police told Human Rights Watch, “From my phone, [the police] reached some of my partners and some very respected wealthy gay persons, and they began to blackmail them [on the premise that] they had an affair with me.”

Employee engagement can suffer up to 30% when workers are forced to stay in the closet, according to a report by the Human Rights Campaign. In major economies, the dollar cost can be staggering. In 2016, the World Bank estimated that India was losing $32 billion in economic output because of its “Section 377” ban on same-sex relations and pervasive discrimination against LGBTI+ people. Burdened by these conditions, governments and businesses around the world face heavy yearly losses due to exclusionary economic environments.

These costs have incentivized multinational companies, including Apple, Microsoft, Accenture, and IKEA, to attack the problem with advocacy. In 2013, Apple CEO Tim Cook declared to the United Nations “now is the time to write these basic principles of human dignity into the book of law.” Microsoft, which recently expanded operations in India to include over 6,000 employees, took a hard stance on Section 377, which was struck down in 2009, re-instituted in 2013, and struck down again in 2018. However, advocacy must be combined with capacity-building programs for companies, governments, and LGBTI+ employees in order to be successful.

Government agencies, such as USAID and the Swedish International Development Agency, began to take the lead in 2012 with the “LGBTI+ Global Development Partnership,” which provided more than $2.7 million in grants to 58 civil society organizations by the end of the program in 2018. The Partnership also established LGBTI+ Chambers of Commerce in five countries and trained over 2,100 LGBTI+ entrepreneurs, a hopeful first step for economic health.

Some Western countries have gone even further, establishing preconditions for economic agreements with countries that lack protections for LGBTI+ people. In 2015, the Ukrainian parliament approved a law prohibiting workplace discrimination against LGBTI+ individuals, a step required for visa-free travel to the European Union for Ukrainians. These changes hint at a developing international standard, but the effectiveness of diplomatic pressure is limited.

The Ukrainian government’s 2020 National Action Plan for Human Rights did not include vital anti-discrimination legislation in housing, goods, and services. Foreign investment has slowed in the country. According to Tymur Levchuk, an activist with Fulcrum, which publishes a Ukraine-wide LGBTI+ business inclusivity index, “liberal, open-minded business people who were optimistic after Euromaidan [in 2014] are leaving Ukraine.”

Stalled opportunities, like the inertia in Ukraine, can be jump-started through increased coordination between governments, businesses, and entrepreneurs. The World Economic Forum at Davos held its first seminar on “Bridging the Diversity Divide” in 2016, with 10 major global corporations as sponsors, including Mastercard and McKinsey & Company. Now, these key multinational actors face the dual challenge of globalizing the conversation to include more partners and addressing the economic weight of exclusion on a local level.

One of the most important factors in many governments and local business leaders’ calculus is attracting foreign investment, providing economic leverage for key actors. After the Ugandan parliament passed its notorious “kill the gays” law in 2014, Richard Branson, the CEO of the Virgin Group, announced the group’s 400 companies would no longer do business in the country as the risk of arrest and persecution faced by LGBTI+ employees had grown too high. Homophobic attacks in Uganda increased tenfold in the wake of the law, while foreign investment inflows decreased from $1 billion to less than $600 million between 2014 and 2015.

Reduction of extortion risks and economic losses through the inclusion of LGBTI+ people are businesses’ chance to effectively match moral commitments with financial interests by engaging more stakeholders, which is CIPE’s specialty. To take an example from CIPE’s work in women’s economic empowerment, the Bangladeshi Women’s Chamber of Commerce, supported by CIPE, successfully pushed the country’s central bank to institute a minimum 3% disbursement level for women entrepreneurs. By 2014, more than 65% of Bangladeshi banks had dedicated resources for women borrowers and distributed $93 million to almost 10,000 women.

Pushing for inclusive policies is not only about preserving employees and entrepreneurs’ human rights – it also makes sense for profit margins. Self-driven inclusivity gives companies in countries that lack legal anti-discrimination protections a distinct competitive edge. Companies that take real action on LGBTI+ rights are more likely to attract and retain top talent and tap into the $3.7 trillion in global LGBTI+ buying power. Implementation of an international standard for LGBTI+ rights is a win-win scenario for citizens, governments, businesses, and global markets.

 

James Reston is a Washington, DC-based researcher, whose work focuses on human rights, corruption, internet freedom, and security.