What does the Roe v. Wade ruling mean for investors?

The US Supreme Court’s decision to overturn Roe v Wade has raised pressing questions about the role of investors and their investee companies in contributing to the political landscape, and how decent work and human rights can be ensured for everyone.

The ruling ended the constitutional right to an abortion in the US and will impact other aspects of reproductive rights such as contraception, sexual health and sex education. There are also concerns that this ruling may set a precedent when it comes to other civil and human rights such as same-sex marriage.

The overturning of Roe v Wade is also projected to impact US maternal mortality rates, which are the highest amongst industrialised economies. Across the country, abortion clinics are closing, hindering access to other critical health services. The closures will likely be felt disproportionately by women, non-binary and trans birthing people, as well as low-income populations in states with abortion bans, where people will have to travel long distances and incur extra costs to access health services.

Without access to family planning services, individuals’ economic conditions will worsen substantially, especially in a country where basic and fundamental benefits such as family leave, childcare, and access to health care are not widely available.

Material and financial risks to investors

It is important to underline the material financial risks as a result of this ruling for investors. A lack of access to healthcare and increased inequality can impact financial and system-level stability. Evidence shows access to healthcare is directly linked to economic development and can impact productivity.¹ At a portfolio level, failure to consider near and long-term actions to support employees with access to family planning and childcare options can lead to reduced labour force participation and earning levels alongside increased employee turnover (the estimated cost to economies in abortion-restricting states is USD$105bn per year).²

Reproductive rights as human rights

Besides the financial and material risks, investors have a responsibility to respect human rights, formalised by the UN and the OECD. Where investors have caused, contributed or are linked to potential negative impacts, they should engage policy makers and companies to strengthen and drive human rights-related legislation and safeguards.

In particular, access to safe abortion is established as a human right by numerous international frameworks, including the UN Human Rights Committee, as well as regional human rights courts.³ A commitment to prevent unsafe abortion was also included in the Cairo Declaration on Population & Development signed by 179 governments in 1994.⁴ The report also outlines that the World Health Organization first recognised unsafe abortion as a public health problem in 1967, and in 2003 it recommended states pass abortion laws to protect women’s health.

Decent work means access to healthcare

Access to a safe and healthy working environment is a fundamental right. In June 2022, the International Labour Organisation included health and safety within its Fundamental Principles and Rights at Work – a landmark for workers because it means that ILO member states commit to respect and promote the fundamental right to a safe and healthy working environment.

As our recently published paper on decent work outlines, access to benefits, health and safety and social protection are the minimum standards that companies should provide to employees and their supply chain workers. These standards are necessary to drive positive worker outcomes, in line with Sustainable Development Goal 8 (decent work and economic growth).

There are specific actions companies can take to improve employees’ access to healthcare. Where companies incorporate reproductive health within their broader benefits, there should be a clearly stated plan for when healthcare access may be curtailed.⁵ Where relocation is allowed, companies could support employees through temporary relocation to states that are supportive of reproductive rights. A number of companies, including Amazon and Starbucks, have already extended health benefits to cover travel costs for those seeking an abortion.

Engaging policy makers responsibly

As outlined in our paper on the investor case for responsible political engagement, investors should pay attention to how their investee companies are shaping the regulatory landscape in the same way as they consider how these companies impact society and the environment through their operations, products and services. If investors do not take a holistic risk management approach, investee companies may weaken social safeguards while proclaiming unwavering support for human rights.

Investors should first identify how ESG stewardship activities can include corporate political engagement, based on international standards such as the ILO Conventions and the United Nations Guiding Principles on Business and Human Rights. As highlighted in our responsible political engagement paper, investors should also use stewardship to clarify their expectations to companies, advocate for stronger commitments to respect these frameworks as well as mitigate against material risks. For instance, recent shareholder proposals have requested companies such as TJX and Walmart to issue a report evaluating any risks and costs associated with the recent laws restricting reproductive rights.

The issue of access to healthcare is far-reaching for investors, businesses and employees alike. Investors should be cognisant of their potential to safeguard reproductive rights across their portfolio companies and ensure that political engagement activities reflect international human rights standards.

This blog is written by PRI staff members and guest contributors. Our goal is to contribute to the broader debate around topical issues and to help showcase some of our research and other work that we undertake in support of our signatories. Please note that although you can expect to find some posts here that broadly accord with the PRI’s official views, the blog authors write in their individual capacity and there is no “house view”. Nor do the views and opinions expressed on this blog constitute financial or other professional advice. If you have any questions, please contact us at [email protected].