By eToro

Companies stand up to LGBT discrimination: but will their investors back down?

Recent weeks have seen growing outrage in the tech and business community against anti-gay discrimination, culminating with Apple’s openly gay CEO Tim Cook speaking out against the passing of a pro-discrimination law in the state of Indiana in an op-ed in the The Washington Post.

Tim cook camera flashes
Photo: 9to5 Mac

Cook not only criticized the legal action in Indiana, but also implied a possible boycott against other states considering such legislation, in particular Texas, North Carolina and Nevada where Apple was planning on opening new facilities. “Apple is open. Open to everyone, regardless of where they come from, what they look like, how they worship or who they love. Regardless of what the law might allow in Indiana or Arkansas, we will never tolerate discrimination,” said Cook, implying possible scrapping of the aforementioned plans.

And he is not alone. The higher-ups at Yelp, Salesforce and hundreds of other companies, mainly from the tech industry, have explicitly announced cancellation of expansion plans in Indiana in defense of LGBT rights.

Business with social conscience

In the past, we’ve come to consider business as politically and socially neutral. As long as a company provided quality service or product and managed its growth wisely, customers and investors were happy.

However, in recent years, and largely thanks to the expansion of social media, it has become increasingly common for companies to take stances on political and social issues. On the one hand, such stances help define the company brand and attract consumers who share the same values. The other side of this coin of course is the risk of alienating customers who disagree with the company’s declared views.

And yet, it seems like in today’s business climate, staying on the fence is not an option. There is increased pressure from consumers, investors and business partners alike to pick sides on controversial social issues, a sign probably of the growing political divide in the United States in particular.

The Starbucks Backlash

While the Silicon Valley crowd might so far enjoy the backing of left wing elites in this particular debate, other companies have not been so lucky.

Starbucks for example found itself in hot water with Christian groups after it came out in support of legalizing gay marriage last year which resulted in investors backing out, and nationwide boycotts of the company’s product.

Starbucks logo

A recent shareholders’ meeting revealed that following the boycott the company’s earnings were disappointing, to which CEO Howard Schultz replied: “Not every decision is an economic decision”. Schultz went on to say that if you’re not satisfied with the company’s returns “you can sell your shares in Starbucks and buy shares in another company. Thank you very much.”

This answer garnered Schultz applause at the meeting, however investors might not appreciate Schultz’s “social issues first” approach to the company’s management in light of growing protest from the Christian right.

Will investors turn sour on Apple?

It remains to be seen. Unlike Starbucks, Apple has branded itself as an elite product that is not likely to be boycotted by religious groups. At the same time, investors may be fearful of repercussions from the Christian right and pull out anyway in order to protect their capital in case of a possible backlash.

On the other hand, Apple may have just given its brand the boost of social consciousness it needed after the expose of disastrous working conditions at the Foxconn plant where many of Apple’s products are assembled tarnished its reputation a few years ago.

Is this the right time to invest in Apple? You decide!