Can responsible investors avoid taking sides in the US abortion debate?

Although the US Supreme Court decision to strike down Roe vs Wade had been leaked, it still came as something of a shock to large swathes of Americans when officially published in June. Demand for “morning after” pills surged to such an extent Amazon was forced to ration sales.

In what looks a lot like a losing battle, Meta (formerly known as Facebook, Inc) has reportedly sought to put “strong guardrails around social, political and sensitive conversations” and told employees that they are not allowed to discuss abortion. Good luck with that one.

By removing protection at a federal level, the decision has thrown decision-making back to individual states, creating a patchwork legal framework. In some 13 states, severe restrictions came into force immediately, with a further 13 moving rapidly to impose limits.

The Centre for Reproductive Rights summed it up succinctly: “Utter chaos lies ahead, as some states race to the bottom with criminal abortion bans, forcing people to travel across multiple state lines… Today’s decision will ignite a public health emergency.”

Corporate actions

As corporate lawyers Jenner & Block explain: “Because almost every company will need to resolve what it will cover in its employee health plan, and will possibly be faced with employees needing to travel out of state for care… it will be very difficult for any company to stay completely on [the] side lines.”

Some companies had already come out with policies supporting employees’ abortion-related travel expenses after the leak in May, including Starbucks, Netflix, Tesla, Yelp, Airbnb, JPMorgan, Levi Strauss and PayPal.

They have now been joined by other big names such as Apple, Disney and Goldman Sachs. Addressing all employees, Adidas said it “stands firm in support of the right to choose appropriate healthcare for yourself”, offering to cover up to $10,000 in expenses.

But some companies have yet to comment, and for those headquartered in anti-abortion states the dilemma is very real. Take Walmart, based in arch-conservative Arkansas with more than 14,000 employees at its corporate office in the town of Bentonville and 30 percent of all staff in states that have already triggered restrictions. Its 1.6 million US employees represent roughly 1 percent of the country’s total workforce.

Will some firms be forced to move state, and some states no longer attract investment?

In recent years there has been an exodus of companies and individuals from high-tax states to low. Take Tesla moving from San Francisco to Austin, and Citadel from Chicago to Miami. But many of those favoured destinations are in anti-abortion states. Recruiting young professionals may become a challenge in future. When choosing an employer, Perry Undem found that 80 percent of “top talent” regarded abortion access in the state an important consideration.

Legal Liability

Certainly, the decision has created a legal minefield for companies. As Jenner & Block point out: “In the piecemeal and uncertain environment of abortion law in a post-Dobbs America, risks for companies can vary significantly even within states with abortion bans.” Attorneys general and district attorneys have broad discretion in how they enforce state abortion statutes. Some now feel they are “on a mission”.

Some pro-life activist groups are even urging states to use Racketeer Influenced and Corrupt Organisations (RICO) statutes to go after companies. And Texas state lawmakers have already threatened legal repercussions for Citigroup and Lyft over their travel reimbursement policies. A group of Republican lawmakers wrote to Lyft CEO Logan Green last month threatening “swift and decisive action”.

It is a frighteningly complex situation. As Jenner & Block continue: “The likely greatest legal risk for companies based on these bans is the threat of being caught up in civil investigations launched by state attorneys general and/or criminal investigations led by district attorneys, and the subpoenas and data requests that may flow from them.”

Tech companies have a particular challenge here. Will emboldened prosecutors seek to use data from a woman’s phone or laptop to demonstrate criminal liability? Four years ago, a Mississippi woman whose baby was stillborn was charged with second degree murder after searches for abortion pills were found on her phone.

Interestingly, on the day of the judgement, Flo introduced an anonymous mode on their period tracker app, stating: “You deserve the right to protect your data.” Will prosecutors seek to bust that?

What should investors do?

Employee action groups are entering the fray. A letter was leaked from a group of pro-choice Amazon employees demanding corporate leadership take “immediate and decisive action”, including donations to bail funds and abortion access providers, expanded remote work for employees seeking an abortion, and an audit of all Amazon political donations.

That last point is very moot and throws down the gauntlet to shareholders.

An investigation by Popular Information exposed a dirty “Baker’s dozen” – 13 corporations that have been top donors to politicians who have worked to overturn Roe vs Wade. Together, these 13 corporations donated more than $15 million. Top donors include Coca-Cola ($2.6 million), GM ($2.4 million), Comcast ($1.7 million), AT&T ($1.5 million), CVS ($1.4 million), Walmart ($1.1 million), Amazon ($0.9 million), and Verizon ($0.9 million).

The investigation asserts considerable corporate hypocrisy. In AT&T’s 2020 Diversity, Equality and Inclusion Annual Report, CEO John Stankey said one of the company’s “core values” was “gender equity and the empowerment of women”. Yet AT&T has also been a top PAC donor to individual state politicians pushing abortion bans.

Historically, there have been a number of shareholder proposals around this issue, such as the one from Clean Yield Asset Management at the Walmart shareholder meeting. None of them has so far won majority support (although one at a Pfizer AGM attracted 47 percent of shareholders).

Maybe this should change – not least as worse may be to come. In a statement accompanying the Supreme Court judgement, one of the most conservative justices, Clarence Thomas, threatened to go a lot further, suggesting that laws covering contraception, sodomy laws and gay marriage could be reconsidered.

It may be time for responsible investors to examine their “red lines”.

Christopher Walker is a writer on business and politics. He sat for several years on the asset allocation committee of a major asset manager.