Lawmakers have introduced around 530 bills targeting LGBTQ people during the 2026 legislative session. Those policies can affect a state’s business climate, even if they never take effect, according to Todd Sears, CEO and founder of Out Leadership, a business advocacy group.Out Leadership publishes an annual State LGBTQ+ Business Climate Index exploring how each state’s treatment of the LGBTQ+ community can affect its business climate. To discuss, Sears recently joined “Marketplace Morning Report” host Kimberly Adams. The following is an edited transcript of their conversation.Kimberly Adams: What really determines where a state ranks in your list?Todd Sears: How either affirming or negative the governor is, state legislators — we actually added the attorneys general this year — but also, do state residents have the opportunity to have access to healthcare, specifically trans healthcare, trans medical benefits? Can they change their driver's license to match their gender identity? Can trans youth participate in sports?So, if you have an employee, for example, that has a trans or nonbinary child, in 29 states, they're losing access to both healthcare and the ability to participate in sports in their schools.Adams: What about some of the states that moved down in the ranking from a business perspective? What's at stake for those states?Sears: Well, let's just talk about talent, for example. If you think about replacing an employee, what does that actually cost? If you think about tourism, we've seen a decline in tourism across the United States in the last 24 months, and specifically in anti-LGBTQ states.It all comes down to risk and risk calculus, and states are now having to navigate laws for their employees and the families of their employees that they never had before. And if you look at the broader spectrum of so many of these laws, when they do actually go before the federal judges, they have been struck down, they have been given injunctions, but the fact that they have been introduced creates a culture in these states that's unwelcoming — not just to LGBTQ people, but the next generation. Over 25% of Gen Z Americans identify as LGBTQ+, and they're paying attention.Adams: There are now state and federal policies in place that can really penalize companies for diversity, equity, and inclusion policies that could be more inclusive to LGBTQ+ folks. How are you talking to companies about navigating this space?Sears: When it comes down to the legalities, diversity and inclusion is actually not illegal, and the smart companies actually do understand that. Now, language and making sure that everything is inclusive as possible is incredibly important, and so messaging has been one of the major things the companies have had to navigate. But I always remind them that they didn't enter this conversation 20 years ago because they were just nice people; they entered this conversation because they knew that inclusion drove business results, and that's why they've done this for so long. So the smart companies out there are continuing to navigate and invest in inclusive environments because they know that it delivers business opportunity and talent.