Investors Take a Stand on Reproductive Rights

Over 30 shareholder proposals have been filed at US companies this proxy season, calling for corporates to implement policies to protect the women in their workforce. 

On 24 June, 2022, the US Supreme Court overturned Roe vs. Wade, ending the 50-year-old law that guaranteed a woman’s right to obtain an abortion.  

Riots ensued, with the ripple effects still being felt today; some quarters of government, including US President Joe Biden, are continuing to attempt to restore abortion rights. 

Abortion is either banned or heavily restricted across 24 states, impacting 41% of women across the country. Four states have passed a constitutional amendment which explicitly declares that their constitution does not secure or protect the right to an abortion or allow the use of public funds for an abortion.  

For companies, the decision has made life complicated, as they nervously tread the line between supporting women in their workforce and maintaining harmony with lawmakers and consumers on both sides of the pro-life and pro-choice divide. 

“There’s been a very dramatic shift in the legislative landscape, and it’s impacting both genders, as it’s changed the ability of the companies they work for to provide the type of healthcare services they want,” says Meredith Benton, shareholder activist group As You Sow’s Workplace Equity Programme Manager and Founder of consultancy firm Whistle Stop Capital.  

But, in a country where companies are more directly responsible for a person’s access to healthcare than the government itself, investors are asking corporates to demonstrate that they have reproductive rights policies in place.

“It’s an issue for companies that the legislators are directly responsible for having created,” Benton tells ESG Investor. 

Over 30 shareholder resolutions on reproductive rights have been filed at US-headquartered companies this proxy season, with proposals ranging from employer-provided insurance and benefits to data privacy and political spending. 

One such shareholder proposal was tabled at Coca Cola, with lead filer, As You Sow, estimating that the multinational beverages brand has given more than US$1.8 million to politicians and political organisations seeking to limit women’s reproductive rights.  

The proposal is asking Coca Cola’s board of directors to publish a public report before 31 December, “omitting confidential information”, which details any known and potential risks or costs to the company caused by enacted or proposed state policies severely restricting reproductive rights, and the strategies it may deploy to minimise and mitigate these risks.  

The outcome of the vote, which was held 25 April and failed to pass with 19% of shareholders in favour of the proposal, may set the tone for the rest of the proxy season, but won’t deter investors concerned by the issue. 

“This is a time of crisis for abortion access,” says Shelley Alpern, Director of Corporate Engagement at Rhia Ventures, a non-profit that supports reproductive and maternal health through investments and corporate engagement.  

“Every company needs to determine what additional steps it can take to protect the health and wellbeing of their employees and their dependents.  

“Whether privately or publicly, it’s time for companies to weigh in and get abortion restrictions repealed,” said Alpern.   

The business case 

Irrespective of a company’s personal stance on abortion, businesses face a number of social risks and impacts if they fail to implement policies upholding and supporting reproductive rights.  

“Not only are abortion restrictions a violation of human rights, but there is also significant research that shows abortion restrictions ultimately hurt businesses,” says Julia Cedarholm, Senior Associate on ESG Research and Shareholder Engagement at Arjuna Capital, adding that, as an investor, Arjuna Capital is “very concerned” that abortion restrictions will lead to talent retention and acquisition issues.  

The Institute for Women’s Policy Research has estimated that state-level abortion restrictions already keep more than 500,000 women between the ages of 15-44 out of the workforce each year, disproportionately affecting people of colour and those with low incomes, who face greater barriers to contraceptive access.  

Eighty-six percent of women said that being able to decide if and when to have children has been important to their careers, according to additional research from the Guttmacher Institute.  

Further, nearly half of 4,400 surveyed working adults said they are open to moving to abortion-friendly states. 

“How can companies build talent pipelines and reach their diversity, equity and inclusion (DEI) goals if family planning is taken off the table by extremist lawmakers?” asks Alpern from Rhia Ventures.  

Cedarholm has concerns about companies’ awareness of and measures to protect data privacy. 

“[Arjuna Capital] is also engaging companies that collect large troves of consumer data, as we have recognised there’s significant risk to this data being obtained by law enforcement in abortion-restrictive states to prosecute those who have received abortions.”  

Last year, social media giant Meta submitted to a request from law enforcement to turn over Facebook messages between a mother and daughter, which led to both being charged with felony crimes related to the alleged illegal termination of the daughter’s pregnancy.  

“Companies must consider how they are collecting and storing data, and how they are responding to law enforcement data requests,” says Cedarholm.  

“Are companies responding narrowly to law enforcement data requests, or are they turning over data that they aren’t legally required to turn over? These are important new questions that companies need to consider, as this data may be weaponised against women receiving abortions.” 

There are also “substantial risks” to companies’ reputations and consumer loyalty if users cannot trust how their data may be accessed and used, Cedarholm notes.  

Kristin Hull, Founder and CEO at Nia Impact Capital, says that the firm is challenging companies like Pfizer on their political spending.  

“Pfizer offers reproductive health products, yet the company is also giving money to politicians in red states that have introduced anti-abortion legislation, which is incredibly wrong, and also doesn’t make any sense from a business perspective,” she tells ESG Investor.  

Rhia Ventures’ Alpern notes that US companies are historically “defensive” about their political contributions, but that must be encouraged to “think twice” about the harm they can inflict on their employees. 

Suffering in silence 

However, there is now a “culture of fear” that’s become pervasive for companies, where they are concerned of repercussions should they publicly speak out in favour of abortion rights, according to As You Sow and Whistle Stop Capital’s Benton. 

“Companies are concerned that they will suffer if they speak up on this issue, but we haven’t actually seen that play out. 

“When you’re talking about huge global brands like Coca Cola, I’d be cautious as a politician if I tried to exclude them from my state,” adds Benton. 

Some lines have been drawn in the sand, however, with investors like Catholic Investments excluding companies “whose activities include direct participation in or support of abortion”.  

Nia Impact Capital’s Hull refers to a conversation with one of its investee companies, which has a strong travel policy for women in its workforce seeking an abortion.  

“The company is talking internally with its staff on their options and the reproductive rights’ policies in place, but, because they view this as potentially sparking political and business issues across the red states in which it operates, they don’t want to go public,” says Hull.  

Exercising caution in an uncertain policy landscape, US drugstore chain Walgreens has confirmed that it will not dispense abortion pills – called mifepristone – in several states where they remain legal until it has received the required certification from the US Food and Drug Administration (FDA). 

US pharmacies, including Walgreens and CVS, were sent a letter by Republican state attorneys general in February which threatened legal action if they began distributing the drug in their states. 

Walgreens has said it is currently seeking the FDA certification to dispense mifepristone, and that it intends to “dispense mifepristone in any jurisdiction where it is legal to do so”.  

“Regarding Walgreens, [Rhia Ventures’] response to the mixed messages they have been sending about mifepristone was to request a dialogue, and we’ll be speaking with them soon,” says Alpern.  

Should investors encounter a company that is extreme [anti-abortion] in its views, some might determine that it reflects poorly on the overall quality of management and divest of the stock; others might continue to try to change the company’s view,” she adds.  

Going forward, companies will need to consider where they base their business operations, says Hull.  

“Is a company prepared set up shop in Texas, where the quality of life for its female employees is impacted? Are they willing to potentially lose out on talent because women don’t want to work in certain states?” 

“Do the right thing”  

But what do investors want to see from companies with regards to their reproductive rights policies? 

From Cedarholm’s perspective, the key is making sure that investee companies are “fully aware” of the business and social risks and have done everything they can to protect their workforce within restrictive states.  

Measures companies can take include exceeding the minimum federal requirements for insurance coverage of contraception, insuring elective abortion, covering out of state travel to obtain abortion care, ensuring privacy of employee health data, and making sure that companies have effectively communicated with employees about any changes to their reproductive healthcare benefits as they occur.  

Alpern notes that one of the biggest challenges for investors is to “come prepared for these conversations” and understand that the Affordable Care Act , for example, sets a floor and not a ceiling on contraceptive coverage for employers. Rhia Ventures urges companies to rise above that floor by providing coverage for vasectomies, for example, and extended prescriptions for oral birth control pills, which correlates with higher effectiveness.

But reproductive rights ultimately remains a complicated issue and is likely to split opinion when it comes time to vote on the proposals filed, says Benton.  

“We are all still on the learning curve of this issue, and it’s uncertain how it will play out this proxy season.” 

Hull from Nia Impact Capital insists that it’s vital investors “stand up and do the right thing” on the global stage.  

“We are going to raise our voice everywhere we can to make sure that other investors know that they have a voice as well,” she adds. 

This article has been updated to clarify Walgreens’ position. 

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