This post is a guest-authored commentary piece discussing the findings of  Diligent Institute and Corporate Board Member’s 2023 What Directors Think survey and report. This is the fifth blog in a series of global commentary pieces analyzing board and governance trends in the US compared to other regions. 

This year’s edition of What Directors Think captured a sense of weariness toward ESG issues. But despite almost 50% of respondents telling our survey that the topic is getting too much attention in the boardroom, the headaches keep coming. 

While some ESG issues, such as climate change, have been gathering steam for years and may soon have a set of norms to help companies understand what investors expect of them, others are a mixture of crisis management, investor priorities, and addressing longer-term structural problems. 

One relatively new challenge in the boardroom – at least for some boards – is the issue of reproductive rights. Even before the June decision by the Supreme Court in Dobbs v. Jackson Women’s Health Organization that allowed states to ban abortion after a gestational period of 15 weeks, a leaked opinion in the case allowed lobby groups to mobilize and present shareholder proposals.  

The activism shows no signs of slowing down, either. Data collected by Insightia, a Diligent brand, suggest that at least 31 companies can expect to receive shareholder proposals on reproductive rights this proxy season, up from 10 in the whole of 2022. Several proposals last year received 30% support, a relatively high level for a new topic. 

Shelley Alpern, director of corporate engagement for the Reproductive Health Investor Alliance (Rhia Ventures), confirmed to Insightia that the catalyst for this year’s wave of activism was the 2022 U.S. Supreme Court ruling to overturn Roe v. Wade and that support snowballed quickly after the first few proposals were filed. “I started hearing from investors, even those we [Rhia Ventures] had not worked with before, saying they wanted to get involved,” she told Insightia. 

So far, companies with large workforces in states that have or are likely to ban abortions have received proposals, including in the retail and entertainment sectors. Healthcare providers, including insurers, and payment processors have also been targeted. 

The timing is challenging for boards, who have to consider a range of issues from the risk of falling into a political spat with local or national politicians, investor demands transparency in their political contributions, the cost of healthcare at a time of contracting margins, and the greater mobility of labor. 

One investor told Insightia that “businesses that are unable to provide access to comprehensive reproductive care will suffer in terms of increased employee turnover and time off and will struggle to recruit talent compared to companies in less restrictive states.” 

Proposals have so far asked companies to disclose more information on their existing healthcare policies, risks to their workforce and operations caused by new legislation, and data privacy – the latter in light of a Texas bill allowing citizens to turn in people aiding or abetting abortion for a cash reward. Some companies may face questions over how they will handle requests from law enforcement for customer data. 

A smaller number of proposals will also come from a different perspective. At least one company that stated its opposition to laws restricting reproductive rights has received a proposal from the National Center for Public Policy Research (NCPPR), arguing that taking a public position exposed the company to potential “reputational, legal, and financial” risks and “can only serve to alienate consumers, employees, and investors, and impact the company’s bottom line.” 

A small but significant number of companies are already adjusting their strategies to ensure that their businesses were positioned to navigate the reputational and operational challenges created by the Dobbs decision, according to What Directors Think. More than one-in-five respondents said their company had changed its employee healthcare policy, while 8% said it had affected site location and expansion planning. Some companies had shifted their customer strategies or political donations. 

Whatever issues boards face this proxy season, fulsome insights into investor engagement trends and organizational data will remain an essential part of their toolkits. 

Further reporting on this issue can be found at www.insightia.com