Abortion rights activism in the US – a case study replicable on all topics
Abortion right becomes a boardroom topic in the USA, and also a case study for activism and anti-activism tactics. Shareholders resolutions on this matte ris reaching record level this year in the US, as high as calls for climate change and workplace diversity. This all started after the June 2022 Supreme Court decision to abolish the federal right to abortion, leaving the states free to individually vary their law on the subject. The 2023 AGM season is the first opportunity for shareholders to put the issue on the table. The potential impact of a “no” vote on share prices is of course a key consideration.
Credit card company Amex has held shareholder meeting last week and faced two shareholder proposals from CSR investor Change Finance. Change Finance has filed shareholder proposals on abortion with several financial companies seeking more information about when the businesses give police customer information in states that have criminalised abortion access. Change Finance hold today more than $1mn of the group’s shares.
These two dissenting resolutions were rejected by shareholders, but Amex did not disclose how they scored.
Like many American companies, Amex board members were faced with a difficult case.
On the one hand, they promote the values of the company, the reputation of the group internally and externally, and the ability to recruit employees worldwide. This is, unanimously for all these groups, in favour of protecting the privacy of the women concerned. Immediately after the Supreme Court’s decision in June 2022, a number of large US companies organised ‘abortion travel benefits’ for their female employees. American Express was one of the first to speak out. The company said it would cover travel and other related expenses for employees and their dependents if they need an abortion or gender-affirming treatment that is not available where they live.Amazon, Microsoft, Meta, Walt Disney, Netflix, Citigroup, JP Morgan Chase, Starbucks, Uber, Goldman Sachs have announced that they are also implementing equivalent benefits.
On one hand, they promote corporate values, group reputation and ability to retain staff worldwide. On the other hand, they are accoutable to their investor base, largely composed of American funds, which are themselves fighting on the currently divisive issue of abortion in the USA.
On the other hand, of course, US companies must follow the law. Federal law, and the law of the state where their headquarters are located. How to reconcile all these constraints, when the state concerned is one of those that has banned abortion? Most states require the communication of data on women’s movements, health expenses; data that until now fell within the scope of protected data, by measures equivalent to the European RGPD. The legal protection barrier has fallen, and companies must choose, or not, to protect their employees and customers themselves, while respecting the law.
Finally, these same companies are also accountable to their investor base, which funds them and elects them to governance positions. This investor base, largely composed of US funds, is itself divided on the abortion issue that currently divides the US. At one end of the US investor chain, no one is neutral on this issue anymore, and everyone is angry. At one end, ESG investors and NGOs like Change Finance have submitted dissenting resolutions to more than 30 US companies so far, asking for more details on their abortion policies. At the other end, conservative activist investors, such as the National Center for Public Policy Research, a conservative-leaning non-profit organisation, have also filed shareholder proposals requesting more information about the potential risks of implementing supportive policies, such as paying out-of-state travel costs in response to anti-abortion laws, as well as legal costs. The Indiana-based pharmaceutical company Eli Lilly, for example, is facing this case.
Companies have traditionally tried to keep the issue off the agenda of shareholder meetings. The traditional approach, which usually works quite well, is to ask the Securities and Exchange Commission (SEC) to reject shareholder proposals on the grounds that they cannot be voted on. American Express, Eli Lilly and HCA Healthcare, which operates hospitals in the US and UK, have done this. But the SEC said that investors must be given the opportunity to vote on these abortion-related shareholder proposals, no matter where they come from.
The boards of directors then had to take a clear position. American Express declared itself “neutral” on all dissenting proposals, regardless of their affiliation. Eli Lilly and HCA have been outspoken in their opposition to the conservative investors’ demands for police disclosure and neutral on the progressive investors’ demands for greater transparency on corporate behaviour in this area. The other 27 US companies involved have not yet voted.
The American Express and Eli Lilly meetings have just been held and dissenting proposals from both sides have been rejected, both progressive and conservative. As has been the case with all shareholder proposals on this subject to date. But the scores are climbing: some got as high as 32% at Lowe’s, a US retail company in North Carolina, where abortion up to 20 weeks is legal but difficult. This score is much higher than the record scores achieved by shareholder proposals on other issues such as climate or diversity. Of course, in Europe, such a debate is not possible today, thanks to GDPR laws. But with the progress of “non-financial performance measurement”, social debates are increasingly entering the arena of shareholder dialogue. And with them, there is always this possible gap between law, the historical culture of the company, and an investor base which is often itself divided on these subjects. Time for listed corporates to be vigilant on all activists topics
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