As Supreme Court Weighs Abortion, Expect Shareholders to Push Companies to Strengthen Reproductive Healthcare

As the U.S. Supreme Court weighs a case that could allow states to ban abortion much earlier in pregnancy and considers tossing the nationwide right that has existed for decades, investors are pushing public companies to strengthen reproductive freedom for employees.

The high court seems poised to uphold a Mississippi law that bans abortion after 15 weeks of pregnancy. It's expected to deliver its ruling next summer. Such a decision would undermine Roe v. Wade, the historic 1973 decision that legalized abortion nationwide. There is substantial support among the conservative-dominated court to get rid of Roe altogether as well as Planned Parenthood v. Casey, which upheld Roe in 1992.

Abortion would soon become illegal or severely restricted in 21 states if Roe and Casey are overturned, according to the Guttmacher Institute, a research institute that supports abortion rights. For women who live in those states, it would increase the driving distance to the nearest provider by 630 miles from Louisiana, 567 miles from Florida, 525 miles from Texas, 428 miles from Mississippi, and 247 miles from Utah, according to Guttmacher.

Some investors have lately begun to tie reproductive health benefits to the attractiveness of an employer.

Don't be surprised to see shareholders asking companies to bolster healthcare coverage for women, by introducing new proposals to the proxy ballot in the coming year.

Rhia Ventures, an investor in reproductive and maternal health solutions, notes that reproductive healthcare is a critical part of corporate efforts to promote diversity and inclusion. Reproductive health services are widely used by women--99% have used contraception and 24% have had an abortion by the age of 45, according to Rhia. Nearly 90% of women say that controlling if and when to have children has been important to their careers. Meanwhile, reproductive health services are a key benefit for female employees, the majority of whom say they wouldn't apply for a job in a state that has recently banned abortion, Rhia says.

"We expect to have a dozen or more proposals on the [proxy] ballot for 2022" that address the subject of reproductive rights, says Shelley Alpern, director of shareholder advocacy at Rhia Ventures. She declined to share more specifics until Rhia's campaign is launched in January.

Shareholder proposals aren't binding, but if they receive enough support, corporate boards pay attention. Indeed, companies generally try to avoid shareholder resolutions going to a vote by negotiating with shareholders beforehand.

Activists argue that companies need to audit their own healthcare policies and political spending to mitigate brand and reputational risk, to attract female workers, and to moderate the effects of work losses owing to traveling long distances for reproductive healthcare.

In the most recent proxy season, Rhia filed four shareholder proposals around reproductive health, all connected to political spending.

One proposal asked Pfizer's PFE board to publish an annual report analyzing how its political and electioneering spending matched the firm's publicly stated values and policies. For example, Pfizer makes contraceptives and abortion medication and has said that "expanded access to health insurance coverage will help ensure that patients with under-diagnosed and undertreated conditions are able to address them; and that those who will benefit from Pfizer medicines are better able to have access to them." But Pfizer was also a top contributor to a political action committee "that funds state legislators' efforts to implement extreme antiabortion measures," according to the proposal. The proposal achieved 47% of the vote.

Rhia introduced a similar proposal at Home Depot HD, pointing out that while the company publicly promoted its strong commitment to gender diversity, including strong reproductive health and maternity benefits, over the past three election cycles, Home Depot and its employee PAC donated to politicians and organizations "working to weaken access to abortion." The proposal won 38% of the vote. Similar proposals at JPMorgan JPM garnered 30% and Federal Express FDX received 37% of the vote.

None of these proposals won a majority, but the outcomes were strong enough that the companies likely took note. Alpern says Rhia is now in conversations with Pfizer about next steps.

In the past, conservative groups have pushed companies to restrict charitable donations to organizations that offer reproductive healthcare services. According to Jackie Cook, stewardship director at Sustainalytics, a Morningstar company that provides environmental, social, and governance research, ratings, and data, there were about 20 such challenges between 2004 and 2018, earning an average support of 3.7%.

Recent public opinion polls show the landmark abortion rights case still has strong support. An ABC News/Washington Post survey from last month found that 60% of Americans say Roe v. Wade should be upheld.

This year, Trillium Asset Management will file shareholder resolutions for the first time around the subject of reproductive rights.

"There's a war for talent, and if you're a person of childbearing age, a company that provides coverage for exercising one's reproductive rights, and even transportation and lodging" in the event of an employee needing to travel out of state for an abortion, is practicing "basic human capital management," says Jonas Kron, chief advocacy officer at Trillium Asset Management.

"We cannot have meaningful gender equity in this country if people of childbearing age don't have control over their reproductive lives," Kron continues. "Companies have been very articulate in explaining why gender equity and freedom are important in this country. They have an important role to play."

You can keep track of shareholder proposals through Proxy Preview, a joint project of nonprofits Sustainable Investments Institute, As You Sow, and Proxy Impact.