How investors are engaging with companies over abortion access

Recent shareholder proposals over reproductive rights have been made at Lowe's, TJX and Walmart

The first corporate referendum on women’s reproductive rights since the US Supreme Court’s decision to overturn Roe v. Wade was leaked happened just over a week ago – and failed to get a majority approval.

Nonetheless, more than 30% of voting shareholders supported the resolution filed at Lowe’s – showing significant support for a first-of-its-kind proposal at a public company.

That resolution, filed by The Educational Foundation of America, could be an early indication of where shareholder engagement is headed, at a time when many women in the country will all but certainly see their access to abortion stripped away.

“Overturning Roe v. Wade is going to have multiple, ongoing disruptive impacts on the US workforce. Women who are denied abortions are three times more likely to leave the workforce than those who are not, and four times more likely to fall before the poverty line,” said Shelley Alpern, director of corporate engagement at Rhia Ventures.

“This diminishes the talent pool and will contribute to higher turnover in the workplace. Companies will also find it harder to recruit talent to work in states that have banned abortion.”

Other resolutions this proxy season have been filed at companies such as TJX and Walmart, with the former slated for a proxy vote Tuesday. The proposal at Walmart, filed by Clean Yield Asset Management, was voted on last Wednesday and did not see as much approval as the one at Lowe’s. Just over 13% of voting shares were in favor of the resolution.

New proposals

So far, the proposals have asked companies to assess the risks they would face amid severe restrictions on reproductive healthcare and disclose any strategies they have to minimize those risks.

“It’s a new shareholder proposal. It’s not unusual for shareholder proposals to get 10% [approval in their first year],” said Jonas Kron, chief advocacy officer at Trillium. The result seen at Lowe’s, “particularly on an issue that is a hot button issue … is a very high vote, and I think will send a pretty strong signal to the companies that investors want more information.”

Some companies began taking action as states took steps to restrict abortion access and as the Supreme Court indicated it would revisit Roe v. Wade. Businesses including Citi, Yelp, Amazon, Levi Strauss, Tesla, Microsoft, Starbucks and Mastercard have updated their benefits policies to cover travel expenses for employees who must go out of state for reproductive healthcare, according to a list compiled by Reuters.

State measures

Although abortion remains legal in all US states, some legislatures have passed laws that significantly restrict the circumstances under which that medical care is available. Texas’ SB8, for example, limits abortions to six weeks of pregnancy, even in cases of rape and incest.

Other states with conservative political leadership have quickly moved to ban abortion, anticipating that Roe v. Wade will be overturned. Oklahoma’s new law effectively outlaws abortion entirely.

“Should Roe v. Wade be weakened or overturned as is widely anticipated, many Lowe’s employees will face challenges accessing abortion care and other sexual and reproductive healthcare,” the resolution at that company stated.

“North Carolina passed a pre-Roe law that, if revived, would outlaw all abortions within the state. Should that occur, Lowe’s may find it difficult to recruit employees to North Carolina, or to the 20-plus states now considered likely to outlaw abortion if Roe is overturned,” the statement read. “This may harm its ability to meet diversity and inclusion goals, with negative consequences to performance, brand and reputation.”

Further, some states are exerting pressure on companies that have included travel policies in their benefits, Alpern noted.

“Corporations are also facing more legal vulnerability. For example, Texas and Oklahoma have made it illegal to insure abortions beyond the six-week gestation period, so we expect to see litigation at some point around that,” she said. “Texas lawmakers are also threatening punitive measures against companies that said they will cover employees’ costs for abortion-related travel.”

Ongoing engagement

Rhia Ventures has been working with about 40 institutional investors over the past three years’ corporate engagement around abortion access, covering “insurance, benefits, public policy and political spending,” she said. The investors have included the New York City Comptroller’s Office, Amalgamated Bank, the Rhode Island State Treasurer’s office and SEIU, she noted.

Shareholder proposals that have addressed political spending, where companies’ public stances differ from those of anti-choice candidates they support, have averaged 38% support in votes over the past two years, she added.

“This is a good beginning, but companies need to be hearing from more investment managers, calling on them to strengthen their insurance and benefits policies and to become involved in repealing these measures at the state (and ultimately the federal level),” she said.

Similarly, Trillium has been working on corporate engagement for years on the issue, something it started after the Trump administration passed a gag rule for Title X that restricted access to public funding for reproductive health services, Kron said.

Investor concern

Broadly, there are three general reasons why investors should care about reproductive rights and access to abortion, he noted. First, for businesses with employees in states that severely limit or ban abortion, more people in those markets could be forced to leave the workforce, either temporarily or permanently. It is estimated that companies have to spend about a third of a worker’s compensation to find a replacement, Kron said.

“We’re looking at some pretty meaningful headwinds, especially for companies that have a national footprint,” he said. For some large business, about 40% of workers are in states that are poised to ban or strictly limit abortion, he said.

Another reason is that gains in women’s equality has fueled economic growth, he noted.

“That is a mega trend in our economy that we don’t want to reverse.”

The third and most obvious reason is that reproductive rights are important for their own sake, he noted.

“Gender equity and reproductive rights are important to us,” he said.

Those points are conveyed to companies Trillium engages with, and the policies employers implement, such as travel expense reimbursement, can have big effects their workforces, he said.

“That can have a positive impact on the lives of hundreds of thousands, if not millions of workers around the country.”