NYC, California Leaders Call for Pensions to Back LGBT Diversity

Comptrollers asked public fund fiduciaries to embrace a definition of board diversity that includes lesbian, gay, bisexual, and transgender communities.

The comptrollers of New York City and California have urged pension funds across the country to push for LGBT (lesbian, gay, bisexual, and transgender) inclusion at the companies they invest in.

In a letter to 19 fiduciaries of public pension funds, NYC Comptroller Scott Stringer and California Comptroller Betty Yee asked pensions to use their influence to promote boards composed of people of diverse gender, race, and sexual orientation.

“As long-term and diversified investors, we know that our economy works best—and our investment returns excel—when we harness the energy and talent of diverse communities,” Stringer and Yee wrote. “We welcome you to join us in this effort.”

Stringer oversees the $162.9 billion New York City pension funds, while Yee serves on the boards of the California State Teachers’ Retirement System and California Public Employees’ Retirement System. All have adopted corporate governance policies and proxy voting guidelines that encourage companies to recruit diverse boards, while explicitly including the LGBT community in their definition of diversity.

“Diversity is not just a social value, it is a bottom-line consideration that affects our entire investment portfolio,” Stringer said in a statement. “If we want to drive long-term shareowner value, we need to ensure that the directors of the 10,000 publicly-held companies owned by the city’s pension funds reflect the society in which we live and that includes the LGBT community.”

In the letter, released publicly this week, Stringer and Yee asked companies and investors to assess their policies and practices to ensure that efforts to promote diversity are inclusive of the LGBT community. The pair also encouraged letter recipients to explore such resources as Out Leadership’s Quorum Initiative, which has “developed a comprehensive database of prospective LGBT directors, as well as board training and candidate networking events.”

“In our modern global economy, diverse board members bring a broad array of experience and skills in overseeing company strategy, risk mitigation, and management effectiveness,” said Yee. “Board diversity is critical to decision-making and long-term value creation.”

Related: Diversity—Let’s Get Real