Responding to an investment initiative asking adoption of the Equality Principles on Sexual Orientation, Johnson & Johnson has agreed to prevent discrimination against lesbians and gay men for all of its 80,000 employees.

The Equality Principles were developed by the Wall Street Project (WSP) in May 1995, part of the Community Lesbian and Gay Rights Institute (CLGRI) in New York City.

The Principles set forth standards in the areas of:

• sexual orientation policy
• HIV and AIDS policy
• employee groups
• diversity training
• spousal benefits
• advertising
• consumers & suppliers
• compliance.

After nine months of getting the endorsement of investors, elected officials and community activists, WSP joined with the Franklin Research & Development Corporation to approach J&J with a shareholder resolution asking adoption of the principles.

At first J&J asked the SEC to dismiss the resolution. After reflection the company saw that embracing the Principles would strengthen the diverse nature of its markets and workforce - and its marketing of a home HIV test.

Reports on J&J's track record on sexual orientation are mixed. The Company is headquartered in the State of New Jersey, which prohibits employment discrimination on the basis of sexual orientation. Yet only its Raritan facilities have prohibited employment discrimination on the basis of sexual orientation. Meetings with employees in Edison, NJ, and officials of CLGRI had revealed deep-seated fears of coming out in the company-dominated community or at the workplace.

Yet J&J has a strong record on social responsibility. Rating America's Corporate Conscience (Addison-Wesley Publishing Company, Inc, 1986) summarizes its responsiveness in product safety, international responsibility, community revitalization, minority economic development, affirmative action, charitable giving, employee health, and employee benefits.

The problem is real; between 16% and 44% of gay men & lesbians in 20 cities have experienced some form of workplace harassment or discrimination related to their sexual orientation according to a National Gay & Lesbian Task Force study.

On December 6, 1995, the Hawaiian Commission on Sexual Orientation and the Law identified more than 450 rights and benefits denied gay people when it recommended that the State legislature grant full marriage rights.

Activists are finding that it is often easier to obtain these rights and benefits first at the workplace. Moreover, these rights and benefits often produce greater payoffs at the workplace.

The thrust of the Equality Principles is that employment discrimination and unequal benefits are simply bad business.

In the lean 90s, faced with rapidly changing markets, business appears to be embracing a workforce model based on diversity - in contrast to old personnel philosophies of a corporate family. A business based on a diverse workforce wants to encourage employee differences to not turn off increasingly diverse customers and to respond to different market opportunities.

The costs of discrimination are high in a corporate environment that demands diversity to be competitive: turnover, turnoff, absenteeism, apathy, and unrest. Discrimination keeps the corporate focus inward when today's world demands that a company have its house in order to carefully monitor and serve its marketplace.

New advances in computers enable today's corporations to make diversity practical. Companies increasingly embrace "cafeteria style" benefit programs which can literally tailor benefit choices to individual preferences. Companies no longer have to force individuals into benefits molded around obsolete, singular models of a family unit with a legally married spouse and 2.5 children. This means employees can be better motivated through benefits and personnel policies tailored to them as real people.

E-mail and internet communications have fostered the growth of gay employee groups. There are now resources available to corporations considering gay-friendly policies and benefits - and to encourage gay groups to progressively come out at the workplace.

With the Equality Principles gays as investors can ask corporations to adopt new policies and benefits - or explain why it doesn't. As the J&J example shows, often the most effective approach is to muster grass roots endorsements, research how such changes can be seen as advantageous in a specific company environment and markets, and engage an investor dialogue. It's often possible, and best, to avoid full-scale, costly investor initiatives; yet they, and the Equality Principles, can be powerful motivators for creating gay-friendly workplaces.

The Equality Principles on Sexual Orientation

1. Explicit prohibitions against discrimination based on sexual orientation will be included in the company's written employment policy statement.
   
2. Discrimination against HIV positive employees or those with AIDS will be strictly prohibited.
   
3. Employee groups regardless of sexual orientation will be given equal standing with other employee associations.
   
4. Diversity training will include sexual orientation issues.
   
5. Spousal benefits will be offered to domestic partners of employees regardless of sexual orientation on an equal basis with those granted to married employees.
   
6. Company advertising policy will bar negative sexual orientation stereotypes and will not discriminate in media advertising on the basis of sexual orientation.
   
7. Companies will not discriminate in the sale and purchase of goods and services on the basis of sexual orientation.
   
8. Written non-discrimination policies on sexual orientation must be disseminated throughout the company. A senior company official will monitor compliance corporate-wide.