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Sustainable Investing

Vote in Favor of Reproductive Rights Proposals at Three Key Retailers, Morningstar Sustainalytics Says

Lowe’s, Walmart, and TJX asked to report on risks caused by states severely restricting abortion.

As the Supreme Court weighs reversing Roe v. Wade, the landmark court decision that guarantees the right to an abortion, Morningstar Sustainalytics, the sustainable research unit of Morningstar, recommends voting in favor of key shareholder proposals asking three major retailers to report on risks and costs to each company caused by state policies that severely restrict reproductive healthcare and to detail the company’s strategies to mitigate those risks.

Shareholders will vote on the proposals at the annual meetings of Lowe’s LOW on May 27; Walmart WMT on June 1; and TJX Companies TJX, which owns TJ Maxx, on June 7. They were crafted in part by investor Rhia Ventures and are similar. The proposals ask the companies, whose outlets dot the United States, to publish reports detailing risks and costs to the company caused by state policies that severely restrict reproductive rights. In Texas, for example, abortion is effectively outlawed after six weeks of pregnancy.

They also ask the companies to detail strategies, beyond litigation, that they might use to mitigate these risks. The proposals recommend that the company boards look into the effects on worker hiring, retention, and productivity and also decisions regarding closing or expanding operations in states with restrictive laws. Companies that already have taken steps to ensure access to abortion specifically cite their expectation that it will reduce risk and make them more attractive to future employees.

Lowe’s, Walmart, and TJX all recommend voting against the proposals.

In a note to clients about Lowe’s, Morningstar Sustainalytics said the leaked Supreme Court draft opinion on abortion rights, which raises the prospect that abortion may eventually be banned in about half the states of the nation, “has important implications for companies, in terms of employment benefits and progress on diversity and inclusion efforts, as well as in terms of reputational impacts on the company.” While Lowe’s objects to the proposal as being too broad, a report would address several considerations that apply to risks such as ongoing access to talent; the effectiveness of diversity, equity, and inclusion efforts; or reputational risks related to political advocacy. For example, the research firm wrote, the enactment of laws restricting abortion care may conflict with a company’s own healthcare coverage.

Since Lowe’s operates in all 50 states, many employees will face challenges gaining access to abortion care and other sexual and reproductive healthcare.

Morningstar Sustainalytics also recommended supporting similar proposals at Walmart, where women account for 50% of newly hired associates and 46% of total management promotions in the first half of 2022, and at TJX.

“Increasingly, in recent years consumer preferences have been evolving to favor companies that are not only disassociating themselves from practices that are seen to have a negative impact on employees and customers, but also companies that are actively campaigning against restrictive practices such as those that limit a woman’s right to abortion,” the research firm wrote.

Recently, Institutional Shareholder Services also recommended shareholders support the resolutions at Walmart and Lowe’s.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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