Companies are responding in a myriad of ways to the US Supreme Court’s ruling in Dobbs v. Jackson Women’s Health Organization (Dobbs), including by expanding healthcare travel benefits to reduce barriers to accessing care in areas where abortion is restricted; limiting data collection and storing practices given anticipated subpoenas from state law enforcement agencies; and issuing public statements confirming their commitment to protecting reproductive rights.
In addition to these executive-led company responses, shareholders are placing increasing pressure on companies to protect abortion access for employees as new state laws threaten access to reproductive healthcare. Some investment managers and shareholder activists have referred to reproductive rights as the “newest ESG frontier.”
During the 2022 proxy season leading up to the Dobbs decision, investors pressed companies to respond to the workplace and political implications of reduced abortion access in the United States.1 Kroger, Lowe’s Companies, TJX Companies and Walmart Inc. received proposals that sought to require companies to issue public reports “detailing any known and any potential risks and costs to the company caused by enacted or proposed state policies severely restricting reproductive rights, and detailing any strategies beyond litigation and legal compliance that the company may deploy to minimize or mitigate these risks.”2 The proposals encouraged companies to consider how a reversal of Roe could affect their workforces, especially in the areas of hiring and retention. The Lowe’s proposal, for example, cites research that women who cannot access abortions are more likely to leave the workforce, as well as surveys showing public support for companies that promote employees’ access to reproductive healthcare. The proposal states that “Lowe’s may find it difficult” to recruit and retain employees in states likely to severely restrict abortion if Roe were overturned.
Shareholders also submitted proposals seeking to require companies to assess and report on the alignment between their stated values, including reproductive health-related values, and political and electioneering expenditures. Members of a coalition of institutional investors announced the submission of 11 such proposals, up from three such proposals in the 2021 season.3
While none of these proposals received majority shareholder support, some garnered votes over 40 percent, while others were withdrawn following negotiations. In at least three instances, companies sought no-action relief to exclude reproductive healthcare proposals on the basis that they related to the ordinary business operations of the company. In each case, the staff of the US Securities and Exchange Commission denied the “no action” request on the basis that the proposal “transcends ordinary business matters” under Rule 14a-8(i)(7).4
Investors critical of ESG policies have also signaled that they are focused on companies’ responses to Dobbs. Several have submitted proposals challenging corporate support of abortion rights in recent years. In addition, a group of Texas legislators has threatened legislation that not only would allow shareholders to sue directors and officers of any publicly traded company that pays for “elective” abortions or reimburses abortion-related expenses but also would make such actions by a company a per se breach of directors’ and officers’ fiduciary duty and prohibit indemnification.
Given the interest from investors, employees and the public in corporate responses to Dobbs, companies should expect shareholders to submit additional reproductive health-related proposals in the 2023 proxy season and should consider their options for proactive engagement on these issues.
The WilmerHale team monitors trends in this area and regularly advises companies on navigating developments. Please contact the WilmerHale ESG team to learn more.
1 Similar proposals were submitted during the 2020 and 2021 proxy season, including at Church & Dwight, Macy’s and Progressive Corp.; these proposals were withdrawn and were not included in the proxy statements.
2 The above quoted language was included in the proposals for each of Kroger, Lowe’s Companies, TJX Companies and Walmart Inc. The proposal at Kroger was withdrawn. The proposals at Lowe’s Companies, TJX Companies and Walmart Inc. were included in those companies’ proxy statements.
3 In 2021, shareholders at Pfizer, Home Depot and FedEx submitted values misalignment proposals, receiving an average of 38% in support; Pfizer’s proposal received over 47% in support.