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SCOTUS leak prompts investors to press companies on abortion

Leaked draft indicates court poised to overturn Roe v. Wade

The Supreme Court's ruling on abortion is expected by the end of the current term.
The Supreme Court's ruling on abortion is expected by the end of the current term. (Bill Clark/CQ Roll Call file photo)

Activist shareholders, seeking to galvanize support following a leaked Supreme Court draft opinion indicating that justices are poised to overturn  Roe v. Wade, are pressing companies to explicitly explain how they will support their workers’ access to abortion and reproductive health services.

Investors say they’re optimistic following strong support for shareholder proposals on the issue coordinated by social impact fund Rhia Ventures, such as a proposal that asks retailers to address the patchwork of state laws on abortion access that’s likely to result if the Supreme Court backpedals on the landmark 1973 decision establishing a woman’s right to an abortion.

It calls on companies to disclose the business risks and costs that would arise by “enacted or proposed state policies severely restricting reproductive rights” and explain what steps management would take besides litigation and legal compliance to reduce risks of losing employees, such as covering their out-of-state travel expenses.

Another of Rhia’s resolutions asked companies to “regularly report on the congruence of political and electioneering expenditures during the preceding year against publicly stated company values and policies.” 

This proposal aims to highlight what some call political spending misalignment, in which companies seek to recruit and promote women while executives or employee political action committees donate to campaigns and organizations that seek to limit access to abortion and reproductive health care. 

The resolutions were filed for companies’ annual general meetings well before the leak in early May, but they have gained much more attention following the appearance of the draft ruling, in Dobbs v. Jackson Women’s Health Organization, that would reverse the legal precedent set by Roe in 1973.

Shareholders will have voted on the political misalignment resolution at 12 companies by the end of June, including Abbvie, AT&T, Charter Communications, Cigna, FedEx, Pfizer and UnitedHealth Group.

The other proposal, on state law risk, will be voted on in the coming weeks at the annual meetings of Lowe’s Cos., The TJX Cos. and Walmart.

So far, the political spending resolution has received between 30 percent and 47 percent of votes cast by shareholders in support at Abbvie, AT&T, Charter, Home Depot and Cigna.

It is uncommon for shareholders’ resolutions to receive majority support, and activist investment firms view the results as positive momentum to hold companies accountable for their support for women.

“This is not a new issue, but I think there is an increased scrutiny of the role corporations play in the political process and what the impact is of corporate contributions,” said Molly Betournay, director of social research and shareholder advocacy at Clean Yield Asset Management. Clean Yield filed the political spending resolution at Cigna and FedEx and the state law risk proposal at Walmart. 

Cigna investors cast 46.8 percent of votes in support of Clean Yield’s political spending proposal at the company’s April 27 meeting, making it a “clear indication” that political spending misalignment is not only a hot ESG issue, but also a material business risk, Betournay said in an interview.

Betournay is hopeful that investors will view her firm’s resolution on risks for restrictive state laws as a human capital management risk proposal, especially in light of the recent events.

“I think the leaked SCOTUS document really underscores the risk that is here,” she said. “When we put forth these proposals, we were really looking at a shifting landscape of state laws, but with the expectation that Roe will be overturned in all likelihood. I think that really shifted the conversation from a ‘How might you?’ to ‘How are you going to protect workers?’”

Proxy firms’ advice

Bloomberg reported this week that Institutional Shareholder Services Inc., the largest proxy advisory firm in the country, recommended to its clients with shares in Walmart to vote for Clean Yield’s resolution on addressing the impact of state laws on employees’ access to reproductive health services at the company’s June 1 annual meeting. It also reportedly gave a recommendation of support on a similar measure from the Educational Foundation of America at Lowe’s meeting on Friday.

A spokesperson for ISS didn’t respond to a request for comment on the matter.

Glass, Lewis and Co., another major firm for proxy voting advice, recommended that shareholders at Walmart, Lowe’s and TJX vote against the measure.

In its note to clients, Glass Lewis said the proposal fails to argue why access to reproductive health services is a unique business risk to each company and that the issues raised in the measure are out of the companies’ control. It also said the companies could see financial consequences by acting on “controversial political issues that are somewhat removed from their own operations,” similar to what happened after The Walt Disney Co. criticized an education measure in Florida that critics called the “Don’t Say Gay” bill.

“We believe that the Company should ensure it is providing competitive healthcare benefits that enable it to attract and retain employees across its operations,” Glass Lewis said in all three vote recommendations. “However, we are concerned that directing the Company to produce the requested report could result in alienating a portion of its consumer and/or employee base.”

Proxy firms’ recommendations are critical because their clients, large institutional investors that hold major voting power in annual meetings, rarely stray from their advice, said Marcela Pinilla, director of sustainable investing at Zevin Asset Management. The firm is a co-filer on the TJX resolution, which is led by Trillium Asset Management.

“I doubt that they would veto that recommendation,” Pinilla said in an interview. “Proxy voting records are not great at these big institutional shops, but when they recognize ‘this is a risk, this calls for transparency,’ they are likely to vote in favor and stay away from the actual substance.”

As investors and ESG advocates wait to see how the votes shake out, some companies have taken action on employee access to reproductive health care before and after the draft opinion was leaked. 

So far, 30 major companies and consumer brands, including Citigroup, Lyft and Salesforce, have announced plans to help employees who would be impacted by the reversal of Roe v. Wade or restrictive state laws on abortion access in Texas, Oklahoma and others, according to a tracker from Rhia Ventures. 

While those actions are notable, the shareholder resolutions underscore that companies need to do more than react to legislation and government policies, said Shelley Alpern, director of corporate engagement at Rhia Ventures.

“You need them not just to say that they will support their drivers from litigation. You also need them to call for the repeal of abortion restrictions and also to call governments to provide insurance for those workers who are covered by government insurance,” Alpern said in an interview. “If they’re not going to cover that insurance for employees, then they should be working toward systemic reform so that insurance and travel are picked up by the public sectors.”

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