Shareholders have placed abortion-rights proposals on the proxies at three big retailers this spring: Walmart Inc. WMT 1.64%▲ ; Lowe’s LOW 2.30%▲ Cos.; and TJX TJX 2.03%▲ Cos., the owner of off-price chains including TJ Maxx. Many more could follow next year.
That development is pressuring asset managers such as BlackRock Inc., BLK 3.96%▲ Vanguard Group and State Street STT 4.55%▲ Global Advisors to confront the issue because they hold significant stakes in those and other companies on behalf of millions of other investors.
Activist investors submitted the shareholder proposals in December. Broadly, they ask each company to compile a report evaluating the risks and costs of restricted reproductive rights, including on employee hiring and retention. In early May, a leaked Supreme Court draft opinion suggested that the court could overturn Roe v. Wade, the 1973 decision that established a constitutional right to an abortion.
Trillium Asset Management submitted the shareholder proposal for TJX, while Clean Yield Asset Management did so for Walmart. Both financial firms are focused on environmental, social and corporate-governance concerns. Educational Foundation of America, a private foundation that makes grants to nonprofits and invests with social and environmental impacts in mind, submitted the proposal for Lowe’s.
Asset managers such as BlackRock, Vanguard and State Street have grown rapidly in recent years. Investors have flocked to them hoping that passive, index-tracking funds can get them steady gains at low cost.
One consequence is that the firms have accumulated voting power in thousands of public companies. They can influence corporate decision-making on a host of issues, including some they might prefer to avoid.
Abortion rights is a polarizing issue nationally. In a new Wall Street Journal poll, conducted with the nonpartisan research organization NORC at the University of Chicago, 68% of respondents said they wouldn’t like to see the court completely overturn Roe, while 30% supported such a move.
Urska Velikonja, a law professor at Georgetown University who focuses on securities regulation and enforcement, predicts that if Roe v. Wade is struck down, there could be hundreds of abortion-related shareholder proposals on company proxies next year.
“We expect for these large asset managers to consider abortion in the same way they consider other social-policy issues like climate change and diversity audits,” she said. “This one seems more head-on a business issue given that it affects a substantial portion of the employees.”
The financial firms have at times initiated their own campaigns to pressure companies to pursue social changes. In 2017, State Street publicly identified more than 1,500 companies with all-male boards as part of its Fearless Girl campaign. Since then, 60% of those companies have added at least one female director. In 2018, following the deadly school shooting in Parkland, Fla., BlackRock stripped retailers that sell guns from some of its environmental, social and corporate governance-focused exchange-traded funds. BlackRock has said its positions are about long-term returns, not politics.
Shareholder proposals often don’t pass, and activists said their intent was to get companies’ attention. As proposals get more support, companies often work out compromises with the sponsors and implement the changes outside the proxy process.
Lowe’s and Walmart, which held their annual meetings in the past week,said the abortion-rights proposals didn’t pass. Walmart said that 13% of participating shareholders voted in support. Lowe’s said it would release more details in the coming days.
TJX’s annual meeting is scheduled for next week.
BlackRock, Vanguard and State Street are required by the Securities and Exchange Commission to eventually detail how they voted, though they have until the end of August to release that information. The firms declined this week to say how they voted.
Ben Colton, global head of asset stewardship at State Street, said the company approached the abortion proposals “with our general framework on social and environmental shareholder proposals.” The firm evaluates social proposals “with a focus on creating value and fulfilling our fiduciary duty,” he said.
Vanguard and BlackRock declined to comment. Together, the three firms own 20% of Lowe’s, 18% of TJX and 10% of Walmart.
The shareholder groups asked the companies to address whether they plan to close or expand operations in states that enact antiabortion laws.
Trillium Asset Management, which led the shareholder proposal at TJX, has reached out to all three asset-management firms, said Trillium’s chief advocacy officer, Jonas Kron.
“Universally, the asset managers tend to keep their cards pretty close to their chest,” Mr. Kron said. “We’ve seen a fair amount of nodding heads in these meetings, but they’re not going to give a weather report on how they will vote.”
David Stocks, executive director of Educational Foundation of America, which filed the proposal at Lowe’s, said the retailer was “chosen strategically” because it operates across the country with a large female employee base. “These big companies are the deciders of healthcare benefits for all these people because that is how America works,” he said. “These companies are now thrust into this issue whether they want to be or not.”
Management at the three retailers recommended investors vote “no” on the proposals, and they highlighted company benefits and programs for female employees. Lowe’s and Walmart said the proposal was too broad. “It would be extremely difficult for any company operating in all 50 states to create a document that would be of utility for our shareholders, associates and other stakeholders,” Lowe’s said in its response to the shareholder proposal.
TJX, whose workforce is 77% women, said there was no need to compile a report when its current healthcare coverage offers many reproductive benefits, including abortion.
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