Why Do US Companies Support Their Employees' 'Abortion'? [Jjinbit]

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] American companies are stepping up one after another to support their employees' access to abortion. This move came after the U.S. Supreme Court officially overturned the so-called 'Roe v. Wade' ruling, which guaranteed women's abortion rights, on the 24th of last month (local time). According to reports from the New York Times (NYT) on the 1st, major big tech companies such as Microsoft (MS), Apple, Netflix, and Tesla announced financial support related to essential medical services, including abortion. Global companies like Nike, Starbucks, JP Morgan, Goldman Sachs, BP, and Shell also declared their support for 'abortion tourism' for their U.S. employees regardless of industry. One of the representative support measures is reimbursing costs when employees travel to another state to have an abortion.

Debate continuing since last year... "Employer benefits are the only way to afford the costs"

In fact, it is hard to imagine companies in Korea supporting abortion tourism funds. This support movement by U.S. companies began last year. Originally, the U.S. allowed abortion up to 24 weeks of pregnancy under the 1973 Roe v. Wade ruling, which guaranteed women's abortion rights based on women's autonomy. However, the situation changed last year when Texas enacted a near-total abortion ban law prohibiting abortion after six weeks of pregnancy. In response, companies located in that region opposed the law and first pledged financial support to employees seeking abortions in other states.

In the U.S., many people enroll in health insurance through their employers. Most of the abortion cost support announced by companies recently is also provided through workplace health insurance. Ultimately, whether companies provide support directly affects abortion costs. CNN reported, "Millions of people seeking abortions may soon have to travel to other states to access the procedure, adding to already high medical service costs," and added, "Many employers' benefit packages may be the only way for them to afford abortion costs."

Growing demand for corporate activism... ESG shareholder proposals flood this year

[Image source=Reuters Yonhap News]

The reason U.S. companies are taking such steps appears to be the growing demand for corporate activism. In recent years, as corporate social responsibility has been emphasized, there has been a surge in demands from consumers and employees for companies to publicly state their positions on social issues. Pressure was also intense for companies to take clear stances on incidents such as the George Floyd case in 2020 and Florida's anti-LGBTQ policies this year. After the recent ruling was overturned, Amazon employees sent an open letter to management demanding the company cease operations in states that ban abortion.

Morris Schweitzer, a professor at the University of Pennsylvania's Wharton School, told CNBC on the 24th of last month, "All major institutions have health insurance. The question is how far coverage extends. Will it include travel for abortion?" He assessed that the Supreme Court's decision would pressure corporate leaders. He pointed out that it has become difficult for corporate leaders to remain silent, and that such decisions could expose companies to lawsuits or backlash from consumers or employees.

This strengthening activism atmosphere is also evident in shareholder proposals presented at U.S. companies' annual general meetings this year. According to data from consulting firm Georgeson analyzed by Harvard and cited by Axios last month, the number of ESG (Environmental, Social, and Governance)-related shareholder proposals submitted at annual meetings of companies in the Russell 3000 index is expected to reach a record high of 924 this year. This is a significant increase compared to 754 in 2020 and 837 in 2021. Examples include Oxfam's push for expanded access to COVID-19 vaccines, Amazon's racial equity policy audit, and McDonald's improvements in pig farming conditions. The UK Economist reported in April that shareholder proposals demanding companies fulfill social responsibilities beyond mere profit-making are increasing, and shareholder approval rates are rising accordingly.

[Image source=Reuters Yonhap News]

Additionally, the fiercely competitive U.S. labor market is intertwined with this trend. To avoid losing talent interested in social issues, companies are taking supportive stances and offering benefits. The Society for Human Resource Management (SHRM) interprets employer support related to abortion as "a form of support for talent acquisition." Sandra Sucher, a professor at Harvard Business School, told U.S. political media The Hill on the 28th of last month, "Employers are asking themselves: If I don't clearly state my position, some employees might leave. But if I do, can I endure the possibility of lawsuits related to this?" Employers are thus caught between legal issues and talent retention.

Risks for companies include lawsuits and political clashes

The controversy surrounding the overturning of Roe v. Wade is expected to continue in U.S. society for some time. Companies appear to be mindful of the risks of political disputes or lawsuits even as they take positions. Instead of explicitly using the term 'abortion,' they cautiously use expressions like medical services or family planning. Meta, Facebook's parent company, added the condition "within the limits permitted by law." Meta also prohibited employees from publicly discussing the recent abortion ruling internally, which led to some employees openly opposing it. The New York Times reported that some global companies like Walmart and Coca-Cola are maintaining silence.

There is also potential for clashes with political forces. States that have banned abortion or anti-abortion groups may file lawsuits against companies. Texas state legislators, who are Republican and oppose abortion rights, have already warned Citigroup, which promised abortion-related support. Some Republican lawmakers sent a letter last month to Logan Green, CEO of Lyft, stating that swift and decisive action would be taken if the company supports abortion tourism. CNN reported, "Abortion-related corporate benefits are worsening relations with the Republican Party."

Following global trends, companies are expected to face increasing demands for social responsibility. Companies that previously stood back during major social debates are now in a position where they must speak out front and center. Beyond solving economic issues such as supply chains, logistics, and labor shortages, companies have taken on the mission to provide 'wise solutions' to social issues, and their future actions will be closely watched.

Editor's Note[Jjinbit] is short for 'Jeong Hyunjin's Business Trend' and 'Real Business Trend,' a corner that showcases trends in corporate management such as organizational culture and personnel systems. Based on analyses from foreign media and major overseas institutions that have not received much attention before, we will deliver fresh and differentiated information and perspectives.