Last month, the United States Supreme Court struck down Roe v Wade women’s rights legislation, removing the constitutional right to choose abortion. From now on, each state will decide individually whether or not to allow abortions, with 22 out of 50 US states already on the verge of banning them immediately.
This decision was felt hard socially and politically, but at first glance it may seem that Roe v Wade has little connection to the world of financial services.
However, as Lee Wild, head of equity strategy at Interactive Investor, said ESG considerations are now “firmly on the agenda” for investors and fund managers.
Suzanne Biegel, co-founder of GenderSmart, has been investing in this perspective for many years. If fund managers want to properly manage investment risk, they need to have a vision on this, she said. Investment Week.
Roe v Wade shows gender matters in investing, now more than ever
Many managers will want to “feign ignorance” to protect themselves from being called out if an operation is on the “wrong” side of this issue, she said. “They might say, ‘We don’t look at that – that’s not the purpose of our fund, or we don’t think that’s a material risk’.”
However, according to Biegel, this is not the right way to approach it. Managers need to depoliticize the issue because it is something that will fundamentally affect their outlook, she argued.
“If they’re supposed to look at ESG risks and opportunities, you have to consider the risk of investing in a company that could lose employees because they don’t have access to abortion-related healthcare,” she added.
“Or [they] may lose customers because they don’t want to do business with someone whose values don’t match them. For me, it is a material risk. […] They’re supposed to be looking at the risks ahead, not just looking back.”
Numerous US companies made public announcements immediately after the news, including Microsoft, Apple, Meta, Amazon, Starbucks and Disney.
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Biegel continued, “I think Roe vs Wade is both a moral issue and a human rights issue and a business risk and opportunity issue, it’s both. […] I agree that there is a direct link between Roe vs Wade and investment risk.”
At the time of writing this article, several asset managers with large US allocations or those who have spoken out on shareholder engagement were approached by Investment Week for comment but declined to participate, some fearing the topic was “too political”.
Fund managers from Baillie Gifford, BlackRock, EdenTree Investment Management, Mirova, Rathbones and Troy Asset Management have been approached for comment.
Annabel Brodie-Smith, director of communications at the AIC, said their reluctance to comment on the issue comes as no surprise, adding that “most people have a very personal reaction to Roe’s upset against Wade.”
While few were willing to speak publicly, Wild said that for asset managers entrenched in the ESG space, “it seems inconceivable that this issue has not been discussed.”
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Yahoo! Finance got an internal email where BlackRock’s head of human resources announced that starting July 1, the company’s healthcare plan would cover travel expenses incurred for reproductive services.
Not all managers were silent on the subject. Richard de Lisle, manager of the VT De Lisle America fund, said Investment Week: “We are keeping an eye on this matter, but the legal ramifications will take time to sort out.”
From an investment perspective, de Lisle said that once the legal scope of this is confirmed, they will add the update of the ESG questionnaire of its holdings to include a question on elective abortion.
He added: “We think it’s likely that good employers – especially those headquartered in states that allow abortion – will quietly find workarounds, but they need to make sure they don’t. not find themselves criminally liable under state law.”
What can investors do?
There are ways for individual investors to engage on this issue, particularly on the closed sector. ii’s Wild said private investors can “make your point heard at general meetings, especially if you think what the company has said just isn’t clear enough.”
“Having a say in the companies in which you hold a stake at a general meeting is a valuable and important aspect of investing. The opportunity for private investors is huge, but the key is to leverage their collective power,” she added.
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Brodie-Smith echoed this, adding, “Investors are increasingly interested in voicing their views on ESG and other issues.
“The ‘G’ in ESG often has to fight for its share of attention, but it’s important that investors can voice their opinion on how their business is run and can voice their views. The right to voting is a major benefit of investing in an investment company.”