1) Only in the West does anyone really care, and even then it's a very small, but often vocal minority that frankly I can't stand anymore, as they make a mockery of "liberalism," having neither the balls to look themselves in the mirror for their hypocrisy, nor any shred of integrity of their beliefs...thus they constantly devolve into ever smaller and smaller groups looking for more and more problems to solve or conspiracies in the walls out to get them...OMG...THE PAINT IS WHITE...IT'S WHITE PRIVILEGE...OH GOD HELP US...WAIT WE DON'T BELIEVE IN GOD...OH SCIENCE DAMN YOU WH...OH WE DON'T BELIEVE IN SCIENCE ANYMORE...OH SOCIAL JUSTICE TENANTS SAVE US FROM THE PAINT ON THE WALLS...PLEASE PLEASE PLEASE...OMG IT'S OPPRESSING ME...IT'S OPPRESSING ME *SOBBING...MORE SOBBING* I NEED MY SAFE SPACE NOW...*CURLS INTO A BALL* (liberalism requires absolute respect for free speech first and foremost, all other things follow after, so no true liberal in any sense of the word would care about Sugiyama's beliefs in terms of his work or anything he's related to, only his actions based on those beliefs as actions have real meaning and impact).
I have no respect for the opinions or life of anyone who gives a hoot about Sugiyama's words. I care if he takes direct action, like advocates for Trans people to be put in concentration camps or denied basic rights. Other than that, as abhorrent as they are, they are words, and words mean only what you want them to.
2) Most civilians don't actually care, it's only those who indulge in identity politics, but that's due to forced indoctrination in schools since the 1970's, though in colleges since the 1950's. Though the original identity politics was at least about true equality. So I respect what I was taught, because it was just that white or black or gay or straight or whatever...who cares, let people be as they are. Self defense only if someone tries to force their political crap on you. Then just argue it out, unless they're idiots, in which case, walk away. If they physically need you to believe their world view...fight back. That was it. Plain and simple. Liberalism at its purest. Then it changed to Political Correctness and just devolved into the crap we see today. Mindless droning on with repetitious statements. Mass mobs where literally not one person is willing to talk or listen. People playing so hard into identity politics, now suddenly we're back to a point where we have to separate people again? For what purpose? For rights people already have that they claim they don't...oh, you mean special privileges from people where 80+% had nothing to do with your familial plight in the past, and most of whom have the same slavery bs in their history, but we just focus on one group? Whatever dude, get over yourself.
Most don't want to defend someone like Sugiyama, but are forced to when dumbshits give a rats behind when someone has a stupid opinion but can't do anything specific about it because the whole of his/her country (or near enough) couldn't care less.
3) Japan doesn't care, as they take generally 1950's viewpoint on personal opinions versus work, which is the same way most liberal and conservatives in the US tend to think (except for those who actually care about identity politics).
4) Assuming SE should care, because it's supposed to be some modern age where we now have "right think" and "wrong think," not positions one can make their mind on, they still can't do anything and their hands are tied because Sugiyama owns the musical rights through his company Sugiyama Kobo. This means if they part ways, and if SE wants to release any Dragon Quest from that point forward, they would require a new composer, and would require remaking every composition from scratch, and not one of them can sound like the original music. The only things we would have access to are the already released copies of games and any CD the company Sugiyama Kobo decides to release. All digital versions would be scrapped and changed before rerelease to the new revisions.
So essentially if SE did cut ties, they would be totally #$*!ed. They have to wait for him to retire and that's that. Any action to the contrary would kill the series in Japan. I don't think for one second the Japanese people would appreciate having someone condemned who is well respected (for their work), and I don't think for one second they would be happy replaying older DQ releases with new music, or new DQ releases with music that doesn't sound remotely like Dragon Quest so as to avoid a potential theft lawsuit from Sugiyama Kobo, which would likely happen even after his death, due to bad blood after having ties cut.
Sugiyama isn't even an SE employee anyway, so even if they wanted to directly impact his life to quell things, they couldn't.
5) Square Enix owes the LGBTQ community nothing. Literally nothing. Sugiyama is Sugiyama, SE is SE. In capitulating and somehow doing something to "make amends" they become complacent and inherit guilt by default. They essentially claim ownership of his own words and opinions. Nevermind any concept would be giving into a certain entitlement culture. What's next, a son says he didn't like his mom's baking so she gets compensation? Are we only supposed to say things now that make people feel better about themselves? How far does that go? We've already seen where PC culture has headed in the West, and NONE, not ONE SINGLE DROP is remotely good. Not even a shred. It is evil, because it forces everyone into a sense of worry that anything they might say is somehow going to be taken the wrong way. So we start this same bs in Japan? No thank you. I want the culture dead gone and buried, because it doesn't belong. You don't get to demand compensation when someone says words you don't like. If this were a common practice, no one would be able to own anything, you'd be paying out the ass each month, and any payment gotten would be given out the next second. Nevermind it opens up the door for anyone to find anything hurtful or "hate" speech or a "hate crime" or "offensive."
Here's a protip on life for those who don't get it. Offense is taken, not given. Everyone in this world will eventually meet someone who will be offended by the very fact you exist. That you wake up in the morning and take a breath of fresh air. That you make coffee. Offense for waving.
Back in the 90's we learned to grow a backbone. Ok, so someone doesn't like me...whoopdie doo. They said something I find offensive...ok, maybe I'll throw some words back out, maybe I'll argue the point to convince them otherwise, or maybe I'll just not give a #$*! and walk away. Or hell, maybe I'll throw them the bird and walk away. Lots of other options.