Image copyright Getty Images Image caption The issue of gay rights is increasingly fraught in Singapore, which aspires to be an open business hub

In May, a dozen university students showed up for dinner at Goldman Sachs' office in Singapore's business district.

But it was no run-of-the-mill event. Hosted by the company's Lesbian, Gay, Bisexual and Transgender (LGBT) employee network, and billed as a "LGBT recruiting and networking dinner", it triggered controversy in this largely conservative nation-state.

Local newspaper MyPaper ran a piece ahead of the dinner entitled: "Wanted by Goldman Sachs: LGBT employees". News of the event caused enough handwringing that Minister for Social and Family Development Chan Chun Sing publicly expressed concern.

While discrimination had "no place in our society", foreign companies should "respect local culture and context" and "not venture into public advocacy for causes that sow discord among Singaporeans", he said.

The incident, however, raised questions over how far companies should pursue their diversity policies in countries which may not agree with them.

The minister's statement comes as more multinational companies are stepping up to publicly support Singapore's annual gay rights event, Pink Dot, happening on 28 June.

Gay sex is banned in Singapore, but companies including Google, Barclays, J P Morgan, Goldman Sachs and BP are on board as corporate supporters for what has become the city-state's biggest annual gathering organised by civil society.

Image copyright Pink Dot SG Image caption The eponymous dot at the inaugural Pink Dot in 2009...

Image copyright Pink Dot SG Image caption ...and what organisers call "the pink whale", formed at 2013's event

None of the companies have indicated they will pull out, despite Mr Chan's warning.

Asked why it went ahead with its dinner, a Goldman Sachs spokesman told the BBC it regularly holds recruitment events and "our goal is to hire the best people we can find and to build diverse teams".

Asked about their stance, JP Morgan said it "believes in the importance of diversity in the workplace", while Barclays said that it is committed to "a culture of meritocracy, where people are judged on professional performance rather than their personal lives".

Google, meanwhile, said "a diversity of perspectives, experiences and cultures" among its workers would lead to "the type of products and innovation that everyone can benefit from".

'Good sense'

The issue of gay rights has become increasingly fraught in Singapore. The authorities have pledged not to actively enforce the law that bans gay sex, but public promotion of homosexuality in the media is frowned upon.

From Pink Dot to "pink whale"

Last year's Pink Dot drew 21,000 attendees, and organisers expect even more this year.

The first Pink Dot in 2009 saw 2,500 pink-clad supporters forming the eponymous dot at Hong Lim Park. Over the years, that dot has expanded to cover the entire park, which takes up nearly a hectare in Singapore's city centre. Organisers now jokingly call it a "pink whale".

Pink Dot has moved carefully, eschewing traditional protest activism for a soft-pedal approach. It touts a fuzzy slogan "Supporting the freedom to love" and its main event is a family picnic.

This may have made it easier for the authorities to let Pink Dot carry on, although they have set limits on how far it can grow.

For the second time in a row, the authorities have turned down their application to shift the event to a larger space at Marina Bay, calling the proposed venue not "suitable".

Organisers were "disappointed", but understood that officials had "a duty to balance and manage the sensitivities of different segments of society", Pink Dot spokesman Paerin Choa said.

The government has been trying to walk a tightrope on the issue of gay rights in recent years, as signs of a conservative pushback have emerged from religious groups.

In May, a group affiliated to a megachurch applied to hold an event at the historic Padang site. The event was touted as "defending the family" against several things including "media that promotes sexual immorality including the homosexual agenda". The government turned them down.

Yet Singapore aspires to be an open and global hub for business, amid strong regional competition, meaning it needs strong ties with big multinationals.

These multinationals, human resource experts say, are increasingly implementing and advertising diversity policies aimed at supporting the disabled, LGBT individuals, working mothers and older workers, for example.

Such practices are especially gaining traction in industries that face fierce competition for global talent, such as the banking and finance, consulting, technology and energy sectors.

Robert Wilkes, managing director of the Singapore office of professional services company Towers Watson, says diversity policies make good business sense. "If you hire only people who think the same, you'll only get the same ideas," he says.

It's important to be respectful of a country's customs and norms, but [companies] do need to play a role in educating on the direction the rest of the world is moving Matthew Chapman, , The Chapman Consulting Group

More companies are recognising that inclusion - regardless of race, gender, sexual orientation - is "the right thing to do, morally-speaking," he adds.

It also makes sense given that many countries have tighter labour markets with ageing populations, including in Asia, says Adecco Asia's head of marketing and communications Ian Grundy.

"We don't have enough people in the workforce. The smart companies are the ones that are not going to practise any discrimination in the people they choose," he said.

'No backpedalling'

But it can backfire on a company. Matthew Chapman, chief executive of The Chapman Consulting Group, notes that if handled poorly, employees could believe certain people get hired because of their minority status, rather than on merit.

"There might be the sense of, 'if you weren't gay, you wouldn't be here'. So companies should focus on the fact that hiring still ultimately depends on one's skills and capabilities, and the idea is that these groups are included in the candidate pool," he says.

In 2012, a money management firm broke ties with Goldman Sachs because of the company's support of gay marriage in the United States.

The backlash can also come from the society or government of the country in which the company has a presence, as seen in the Singapore case.

But what can companies do if their core values are at odds with that of the countries they are in?

Some advocate for the easy-does-it approach. Mr Wilkes says while companies should continue their policies, they need not "shout it from the rooftops".

Others, however, point out that companies with such progressive policies have a duty to educate. "It's important to be respectful of a country's customs and norms, but they do need to play a role in educating on the direction the rest of the world is moving on these issues," says Mr Chapman.

One thing that experts all agree on is that a company should not backpedal.

If supporting an issue like gay rights is "core to your values and business, then you have to hold that above all else", says Mr Wilkes.

If a company decided to drop that position for the sake of a client or the environment it operates in, "it would raise serious questions" about the company's integrity.