The rollback of abortion rights in Republican-controlled states across the US has become a key issue in November 5 elections, and European investors warn the hit to individual liberties and talent attraction weigh on their investment decisions. 

Despite many domestic and foreign firms’ vocal opposition to governments taking away reproductive rights, the issue is only anecdotally affecting their decision-making. At a macro level, FDI into states with the most restrictive laws doesn’t seem affected.

Since the Supreme Court ended the constitutional right to an abortion in 2022 by overturning Roe v Wade, 14 states with Republican-controlled legislatures have introduced near-total bans on abortions. European companies and advisors tell fDi that impeding women’s rights plays into their decision-making to varying extents when deciding where to invest.

“Abortion is a big issue which is discussed within the company....[even though] it has nothing to do with our business [line],” says Michael Suess, executive chairman of Swiss advanced materials provider Oerlikon, which has seven sites across the US. “But in the end, it will not be decisive for an investment decision.” 

Beatrice Praeceptor, CEO of Austria’s Greiner Packaging, which has operations in Pennsylvania, a state that has maintained abortion access, says: “For us, it’s really important that we operate in a location with which we share the same values … but I don’t think this would be a deal-breaker.” 

One US-based FDI advisor, however, tells fDi that laws restricting reproductive rights, along with same-sex marriage, are among the biggest barriers to US investment for its European clients. “ESG agendas are coming into conflict with some states going very [Republican],” he said, speaking on the condition of anonymity. 

He says fintech clients have excluded states from location shortlists because of strict abortion laws. Their concern, he said, is not being able to offer US employees the same reproductive healthcare rights as those in Europe.

Companies are raising the issue with economic development organisations (EDOs) in states with the toughest restrictions, like Texas. Stacy Schmitt, senior vice president at Opportunity Austin — a liberal city in a conservative state — says she’s “heard both sides of that” issue. “There's such a difference among company cultures [on the topic] … so it’s something we try to stay out of,” she adds. 

Indeed, data from fDi Markets shows that in states with near-total abortion bans — Alabama, Arkansas, Idaho, Indiana, Kentucky, Louisiana, Mississippi, Missouri, North Dakota, Oklahoma, South Dakota, Tennessee, Texas and West Virginia — FDI is outperforming the national average. Comparing the 26 months before and after Roe v Wade was overturned, FDI project announcements in these destinations have collectively grown by 32% compared with 22% for the US as a whole. 

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‘Our staff feel under attack’

While headline FDI has not been hit, investors are wary of longer-term competitive disadvantages foreshadowed by nationwide polls revealing that large percentages of Americans will avoid working and moving to these states. 

Most recently, a survey conducted by CNBC and Generation Lab in May found that 62% of 18-34 year-olds wouldn’t live in a state that banned abortion. “If our customers start leaving the states they live in, this affects our business,” says Carleen Pickard, advocacy and activism manager at UK cosmetics retailer Lush which has some 200 stores across the US. 

It’s also a problem for talent attraction and retention, particularly for firms like Lush, given that 80% of its workforce identify as women. “Our staff heavily feel under attack,” adds Ms Pickard. A nationwide poll by research group PerryUndum in August 2022 shows more than half of female 18-44 years-olds wouldn’t apply for a job where abortion is banned. Oerlikon’s Mr Suess notes that restricting abortion access “starts you wondering whether the social environment is one where people want to live”.

Local firms attest to these problems. Liz Monteleone, chief legal officer of Austin-headquartered dating app Bumble — a vocal corporate campaigner for reproductive rights — says it faces “increasing challenges ... attracting and retaining talent in Texas and other states with restrictive abortion bans”. fDi understands the state’s September 2021 abortion ban sparked up to 30% of its local workers to move states. The legislation also sparked San Francisco-based Salesforce to offer to relocate its Texas-based workers and their families to another state.

Emily Harbison, a Houston-based partner at law firm Reed Smith, says law firms “with big operations in Texas are having trouble getting as many female applicants from law schools”.

Reproductive rights have become a flashpoint in November’s election, and Democratic governors have seized on the workforce issues it creates. Echoing comments by Massachusetts governor Maura Healey, North Carolina’s governor Roy Cooper told fDi in June that reproductive rights are “absolutely” a business issue. “You may turn away people who would be innovators or great employees,” he said, adding: “Diversity helps us with our foreign direct investment.”

Democratic nominee Kamala Harris has promised to enshrine abortion rights into national law if she becomes president, while the three Supreme Court justices appointed by Donald Trump when president were instrumental in overturning Roe v Wade.

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