The male-female binary serves as a common point of reference for conversations on gender identity, gender expression, and sexual orientation. The premise that biological sex and gender are binary and wholly aligned with each other means that people situated elsewhere along the gender spectrum—particularly those who are non-binary or non-conforming—are often overlooked.
In the context of social investing, this oversight means that the investment strategies that seek to solve gendered problems, promote gender equality or examine the gender dynamics of investee projects and enterprises often limit their work to the advancement of women and girls. Given the differences in policies and benefits required by members of the lesbian, gay, bisexual, transsexual, questioning and other (LGBTQ+) community relative to their cisgender, heterosexual female counterparts, this means that the social investment universe fails to cater to key needs of the queer community. Remedying this situation calls for a more intersectional approach to social investment.
This post proposes queer lens social investing as a more inclusive investment strategy and a necessary complement to the gender lens increasingly being adopted by investors. It defines the queer lens, and presents its investment thesis, application, pre-requisites and outlook. Given that queer investment strategy extends efforts to address disparities in opportunities and attainment faced by women and girls to also support the LGBTQ+ community, this post also examines how gender lens investment practices can be adapted to meet the requirements for queer lens investing.
Queer lens social investment focuses on advancing the rights and interests of persons across the full spectrum of gender identities, gender expressions, and sexual orientations. The Criterion Institute provides nuanced explanations of these categories and discusses how the targeted deployment of finance to investees who are committed to the advancement of the LGBTQ+ community can contribute to the achievement of socially desirable outcomes – particularly those aiming to improve financial inclusion, employment, and access to products and services.
This approach, as well as the Institute’s advice that queer lens investors pay as much attention to investee impact within companies as they do to investees’ impact on the wider society, bears strong resemblance to the solution-promotion-awareness criteria employed by gender lens investors.
The queer lens adopted by LGBT Capital points to several other business segments where impact investors may have a role to play, including in compiling consumer data & research, providing wealth management and business advisory services, and programming support for diversity and inclusion in favour of the LGBTQ+ community.
The queer lens may focus entirely on LGBTQ+ advancement or be one of several lenses in a holistic approach. In both cases, the Total Portfolio Activation approach by Croatan Institute and others recommends that investors adopt a ten-step process in deploying funds. This involves taking stock of issues to be addressed, evaluating impact profiles, identifying an aspirational set of impact opportunities, performing gap and capacity analyses, allocating assets, and monitoring and assessing performance.
The social investment opportunities available varies according to the degree of protection provided to LGBTQ+ rights in any given context. If rights are upheld, investment opportunities may support improved access to capital, workplace equity, or targeted products and services. In other contexts where rights are not upheld or do not exist, investors would focus primarily on preserving the safety and dignity of the LGBTQ+ community.
Once investment selection is complete, social investors actively engage with investees to drive change in favour of the investees’ LGBTQ+ stakeholders. This includes the formation of coalitions that together pursue more inclusive and LGBTQ+ friendly policies and practices. Finally, social investors also have a role to play in policy advocacy. Together, these four areas of investment activity are identified in the Total Portfolio Activation approach as crucial to meaningfully incorporating a queer lens while investing for impact.
Queer lens investing calls for disaggregated data and tailored metrics on investees which are difficult for investors to obtain or verify. Dreilinden details the extensive due diligence required in integrating the queer lens in relation to workplace equity, access to capital, gender diversity and leadership, representation among investors and supply chains, and product and service offerings; and LGBT Capital offers companies an LGBT accreditation based on a rating and screening framework that evaluates their diversity and inclusion credentials to better inform investor and customer decision making.
Elsewhere, a keener assessment of risks is also necessary: Criterion Institute, for instance, identifies a series of political, market, operational, regulatory, and reputational risks specific to the LGBTQ+ experience, many traceable to everyday structural barriers faced by the community. Queer lens investment is therefore more prevalent in contexts where the outlook for LGBTQ+ rights is positive and where legal and regulatory groundwork is already in place for the recognition of these rights.
The effort to build a case in favour of queer lens investing arises not only from a social justice point of view but also from the economic losses that flow from an inequal society. While these losses have not been quantified in countries where discrimination is most severe, some estimates exist. Dreilinden estimates economic losses from LGBTQ+ discrimination in Kenya at a minimum of USD 1.8 million annually.
Incorporating the queer lens in building a social investment portfolio broadens the pool of potential investees and provides investors the opportunity to invest in ventures that are frequently overlooked and underserved by traditional finance. As gender norms and dynamics slowly undergo change, first-movers into the queer lens investing space stand to benefit from early access to viable ventures in a new market segment, giving them significant competitive advantage.
For the investees, diversity and inclusion result in more innovative thinking and improved performance. This assertion has been proven by examining stock market outperformance by companies contributing to social equality as well as by focusing on the impact of LGBTQ+ diversity on corporate performance. International Advisor also notes that companies within the scope of the queer lens benefit from better prospects in relation to recruitment, retention and productivity of talent.
LGBT Consumer Data & Research estimates the purchasing power of the queer community, or ‘LGBT GDP’, at USD 3.6 trillion per annum globally; for Asia in 2018, the nominal LGBT GDP was estimated at USD 1.3 trillion, and in Singapore at USD 17 billion. It is worth noting that there is, in addition, a larger pool of LGBTQ+ allies with considerable purchasing power and motivation to support inclusive businesses. As queer lens investment proliferates and investees in the space demonstrate impact, improved purchasing power and financial inclusion within the community as well as active support from allies will increase the market size, enhance quality of life of beneficiaries, and benefit the economy in general.
To unlock the socio-economic benefits of queer lens investing, there must be, at the very least, legal recognition of the LGBTQ+ community and the rights of its members, protection from violence based on gender identity, gender expression or sexual orientation, and social acceptance of queerness. In addition, the presence of openly-queer role models, a visible gainfully employed queer workforce and funding sources are key to the emergence of queer-led and queer-focused enterprises. Dreilinden provides a particularly detailed account of these and other enabling factors for queer-led enterprises and queer lens investments.
Unlike the gender lens, which is being increasingly adopted by social investors, the queer lens remains an underutilised investment strategy and is likely to remain so in years to come. This is in line with the global outlook for LGBT social inclusion in the decade leading to 2030. However, in the wake of the present global health crisis precipitated by COVID-19—a pandemic which puts LGBTQ+ groups among those at the greatest risk—it is increasingly pertinent that social investors do not lose sight of the queer lens.
This article is part of SIG’s series on gender lens investing.