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'They are demanding change': Investors push companies beyond 'rainbow washing'

·Anchor, Editor-at-Large
·3-min read

Rainbow washing by corporations during June's Pride Month celebrations continues to be a problem that needs to be addressed, says one of Peloton's top instructors.

"We have this conversation all the time about 'rainbow washing'... some corporations continue to do this. Others truly put their money where their mouth is," said Peloton (PTON) instructor Matty Maggiacomo on Yahoo's "Let's Glow" series.

The rainbows on corporate websites, TV commercials, social media and in other marketing venues begins to appear at the start of June as 'Pride' months kicks off.

Fresh data hints at why companies continue to promote the use of the rainbow logo come June.

About 91% of consumers in a new Bazaarvoice survey indicated they are more likely to choose a brand or try a new brand that supports the LGBTQ+ community than a brand that does not. The survey also shows that 88% of consumers believe brands should support the LGBTQ+ community by supporting LGBTQ+ employees.

But critics of corporations using rainbow logos in their Pride promotions are numerous.

They say companies are simply trying to sell merchandise by looking to connect emotionally with consumers on an important topic. At the same time, these companies may be doing little to support LGBTQ equality inside of their own companies and local communities.

NEW YORK, NEW YORK - JUNE 26: Revelers are seen on the Target float during the 2022 New York City Pride march on June 26, 2022 in New York City. (Photo by Astrida Valigorsky/Getty Images)
Revelers are seen on the Target float during the 2022 New York City Pride march on June 26, 2022 in New York City. (Photo by Astrida Valigorsky/Getty Images)

"I think the concern from rainbow washing is that you have all of these firms who have simply plastered the rainbow on their logo or even sometimes on their actual packaging. And you walk into a big box store this week and there are rainbows abound in some of the oddest of places, quite frankly," Dr. Aronte Bennett, associate chair of marketing and business law and associate dean of diversity, equity, and inclusion at the Villanova School of Business told Yahoo Finance.

Bennett says the use of the rainbow logo should also include clear-cut efforts by companies to address LGBTQ inequality and be authentic in their application. Retailer Target's (TGT) Pride month transgender apparel collaboration with TomboyX is a decent example of a company being authentic in their rainbow usage, Bennett explained.

"I think Target having a collaboration that is more than just walking in the door seeing a rainbow it says not only do we recognize you, we want to ensure that we can serve you and that you are a valuable part of our customer population," added Bennett.

Other companies also appear to be getting the memo that this 'rainbow washing' across the calendar — not just in June — must end, too.

Based on new data from Datamaran, mentions of LGBTQ+ in public companies’ financial reports increased to 432 from 336 from 2020 to 2021; in 2013, just 20 such references were made in corporate filings.

Still, with thousands of public companies in existence, there remains room for these numbers to materially increase.

The number of public companies discussing LGBTQ issues is on the rise.
The number of public companies discussing LGBTQ issues is on the rise.

"Companies need to look beyond the marketing aspect of changing a logo to incorporate a rainbow and ensure values are aligned with the LGBTQ+ community," co-founder and CEO of Datamaran Marjella Lecourt-Alma told Yahoo Finance..

"This means companies can’t live in the grey area where they celebrate pride with grand gestures while financially backing those who do not stand for equality. Stakeholders no longer want claims to go unchallenged and unquestioned — they are demanding change."

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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