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ANALYSIS: Corps Face Stakeholder Benefit Inquiries After Dobbs

Aug. 17, 2022, 9:00 AM

The monumental impact of the US Supreme Court’s June ruling in Dobbs v. Jackson Women’s Health Organization is still unfolding. US companies should prepare for a flood of inquiries into how the evolving patchwork of state reproductive health care laws will impact their employee benefit offerings.

To address these concerns, companies will need to weigh whether and how to communicate benefits to employees, shareholders, and other key stakeholders. Some companies have already anticipated stakeholder interest by publicly announcing plans to address employee access to reproductive health care.

Companies of All Types Announce Benefit Changes

The S&P 500 ranks large-cap US-based public companies based on overall risk, return, and performance in the large-cap (over $10 billion) equities market. I pulled the top 100 companies from the S&P 500 index and determined whether each company publicly announced employee reproductive benefits after the Supreme Court’s decision Dobbs.

However, the absence of a public announcement about reproductive benefits doesn’t necessarily mean that a company didn’t take internal action.

Of the top 100 companies on the S&P 500 Index, the communications, consumer discretionary, financial, and technology sectors had the most public announcements. Together, these sectors make up a significant portion of the S&P 500 index, accounting for four of the top five sectors overall. The remaining sector in the top five is the health-care sector, which only saw a few public announcements (such as those from CVS Health Corp., Cigna Corp., and Gilead Sciences Inc.).

When considering whether to make an announcement about reproductive health care benefit information (whether it’s to offer additional benefits or halt benefits), companies may want to pay particular attention to sector and industry peers to gauge how similar companies addressed stakeholder interest.

Reaching Corporate Stakeholders

Companies with US operations should anticipate that inquiries into reproductive health care information will come from a variety of stakeholders, including shareholders, employees, and customers. And should a corporation determine that a statement (public or internal) is the right course of action for the organization, the following are ways stakeholders can be reached.

Reach Customers, Suppliers Via Statements

Public announcements, as mentioned above, may be the best method for a corporation seeking to announce benefit information to current and potential customers and suppliers.

Zoom, Mastercard, and Disney (all companies with sweeping customer bases) publicly announced reproductive health care information. But as customer and supplier interest in corporate reproductive health care benefits is likely to continue into the foreseeable future, they may want to consider making public statements available on their websites.

Reach Shareholders Through Proxies

This proxy season, shareholders and companies have been requesting corporate transparency on reproductive health care benefits through proxy materials. Companies should plan to engage in both sides of the conversation—responding to shareholder proposals and considering whether to include any reproductive benefit plan information (whether benefits are offered or not, for example) in corporate statements—on the topic.

Shareholders are already asking for reports on the risks that the state-specific framework for reproductive health care may have on the company. For example, Lowe’s Cos. Inc., Walmart Inc., and TJX Co. Inc. all received shareholder proposals requesting reports on how the targeted company could be impacted by known and potential risks brought about by changes to reproductive health care laws. The proposals also requested the targeted companies to disclose how they plan to mitigate the risks of state-specific reproductive health care laws (above and beyond litigation and legal compliance).

Companies should not only anticipate that shareholders are interested in how changes to reproductive health care could impact company value but also that shareholders are interested in what companies are doing to comply with changing laws.

But even before a shareholder proposal is submitted, companies can anticipate shareholder interest. For example, Citigroup Inc. didn’t receive a shareholder proposal on the matter, but elected to release a public statement outlining reproductive health care benefits, and to mention the benefits in its 2022 proxy materials. By taking this proactive step, Citigroup was able to reach shareholders at crucial time: ahead of the annual shareholder meeting.

Reach Employees Through Benefit Guides

Employees are additional stakeholders that companies will need to consider in the wake of Dobbs.

The tech sector, for example, saw considerable employee discussion surrounding the Dobbs decision and reproductive benefit policies. And while many companies have sent employee letters about reproductive health care benefit information (as seen with Amazon), the conversation is likely to extend to the application of those policies as well.

Jurisdiction-specific reproductive laws could leave employees confused about whether existing benefits and new company announcements regarding reproductive health care benefits apply to them.

Companies should try to thwart this confusion by being transparent. They could offer state-specific reproductive information guides, for example, that outline where benefits aren’t available due to conflicts with state law. These guides would require updates, which could be disseminated through corporate HR platforms or on the company’s website.

In related pieces, Rachael Pikulski’s Aug. 18 analysis looks at what the Dobbs ruling means for law firms, and Francis Boustany’s Aug. 19 article covers the labor and employment implications of Dobbs.

Bloomberg Law subscribers can find related content on our new In Focus: Abortion Law page, our ESG Practice page, as well as our Practical Guidance: Shareholders page.

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