ISS shifts on reproductive rights proposal with advice on Coca-Cola

Influential proxy advisor believes disclosure on controversial issue puts drinks giant at risk, despite support for similar request last year.

Institutional Shareholder Services (ISS) is recommending shareholders vote against the reproductive rights proposal at Coca-Cola on Tuesday, despite supporting the request last year at US companies. 

The influential proxy adviser warned in its advice of the risks posed to the US drinks giant by being too explicit on the controversial US topic.  

“On balance, the risks stemming from issuing the requested report appear to be greater than the risks to the company associated with its current disclosure and practices.”   

Coca-Cola is called upon in the proposal to improve disclosure around risks and costs to the company posed by US state policies severely restricting reproductive rights, including details of any strategies beyond legal compliance undertaken by firms to mitigate them.

ISS acknowledged that greater disclosure “may help mitigate some related workforce risks”. At the same time, it added, if the company “more explicitly details strategies that it may deploy for employees who are seeking abortions”, it may face risks related to being accused of contravening local law.

“It may also face greater reputational risks in that case as well,” ISS added.

The same proposal was filed last year at US retailers Walmart, Lowe’s and TJX, attracting substantial backing from investors, especially for a first-time proposal. Responsible Investor understands that ISS supported all three resolutions. 

Legal restrictions

Close to 600 laws restricting abortion access have been introduced in the US in recent years, according to filer As You Sow.  

Such restrictions have an economic cost to employers and employees, the US non-profit argues, citing data from the Institute for Women’s Policy Research which estimates that state-level abortion restrictions may annually keep more than 500,000 women aged 15 to 44 out of the workforce. 

Last year’s reproductive rights proposals were filed before the US Supreme Court overturned the landmark 1973 Roe v Wade ruling in June 2022 – a decision that ended women’s federal right to an abortion. 

In its advice on Walmart from last year, ISS backed the request, in part because “the likelihood that the company’s female workforce will be impacted has increased”.

“Additional information on the potential risks to Walmart caused by such policies, and how the company plans to address such risks would be beneficial to shareholders,” the advisor said.    

Speaking to RI, Shelley Alpern, Rhia Ventures’ director of corporate engagement, said that what ISS is essentially saying is that, to avoid risk, “Coca-Cola should keep its head down and not say anything”.

“That’s not going to make the risk that we’ve identified go away,” she added. “In fact, the risk to workers is even greater this year, much greater than it was last year.” 

Rhia Ventures is a US impact fund focused on women’s reproductive and maternal health. It has been involved in the filing of 30 proposals on the issue this proxy season, more than doubling the tally from last year.  

Disclosure benefits

When it comes to the type of disclosure being requested, Alpern said that filers “are not talking about a separate standalone report waving the abortion flag”.

“We’re talking about enhancing disclosures to employees, making sure that they know what benefits are available and how to access them.” 

Close to half of the proposals filed this year have been withdrawn, Alpern told RI. “There are good stories to tell [about them] when we can.”  

Alpern said some proposals were withdrawn following private commitments from companies to explore the feasibility of extending support for women such as abortion travel benefits or contraceptive coverage. 

On the legal and reputational risks, Alpern stressed that no company that has publicly affirmed their employees’ right to abortion and come out with supportive policies has been targeted with legal action to date nor have there been any boycotts, as far as she is aware.

She also added that most major companies would be exempt from state level law like Texas’s SB 8, since their insurance provisions are regulated at the federal level.  

“If you’re a self-insured company doing business in Texas, you can and many are still offering insurance for elective abortions and insurance for abortion related travel because you answer to a higher power, the federal government. 

A spokesperson for ISS told RI that it does not comment beyond what is in its reports.