By Carly Greenberg
From the Winter 2013 Edition of Values

The U.S. Senate made history in November by passing (64-32) the Employee Non-Discrimination Act (ENDA) for the first time since the bill made its congressional debut in 1994. Although prospects in the House are uncertain, if it passes ENDA would add “sexual orientation” and “gender identity and expression” as protected classes to the country’s nondiscrimination law. In conjunction with the Supreme Court’s ruling in June on United States v. Windsor—which declared the federal government could not discriminate against married same-sex couples “for the purpose of determining federal benefits and protections”1—this legislation makes 2013 a watershed year for lesbian, gay, bisexual, and transgender (LGBT) rights.

Need a further sign of changing times? Exxon Mobil, a company that has been the focus of copious media attention for its failure to provide inclusive policies and benefits for LGBT employees, began offering health-care benefits to legally married same-sex couples in October.

Despite this great progress, there is still a ways to go. Until workplace protections for LGBT individuals become national law, investors and other concerned stakeholders will continue to be drivers of change in the corporate sphere. Walden believes that strong equal employment opportunity (EEO) records that encompass the inclusion of sexual orientation and gender identity in publicly accessible corporate EEO and non-discrimination policies may enhance long-term shareholder value. Companies lacking these policies may face higher turnover; lower morale and productivity; negative publicity; and costly risks associated with discrimination, harassment, and litigation. Furthermore, companies that do have these policies are better positioned to attract and recruit employees from a broader talent pool.

Companies that lack inclusive policies find themselves increasingly in the minority. According to the Human Rights Campaign Foundation’s Corporate Equality Index, 90 percent of the Fortune 500 have EEO policies that include sexual orientation, 57 percent include gender identity, and 60 percent provide domestic partner benefits. Likewise, 95 percent of the companies in a typical Walden client core equity portfolio currently include sexual orientation and 61 percent include gender identity in their non-discrimination policies.

This year, Walden engagement has focused on encouraging the adoption of inclusive policies among smaller companies and promoting better transparency and consistency among companies that had stopped disclosing these policies externally. In recent months, Advance Auto PartsDonaldsonLiquidity Services, and St. Jude’s Medical increased the transparency and consistency of their employment policies. Riverbed Technologies expanded its non-discrimination policy and increased transparency.