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Global investors against SB6

From the inbox:

Led by New York City Comptroller Scott M. Stringer and Trillium Asset Management, a group of some of the largest investors in the world, with a combined $11 trillion of assets under management, today spoke out against Texas Senate Bill 6 (or SB6), a “Bathroom Bill,” as well as similar discriminatory legislation. In the wake of hundreds of millions of dollars in lost economic activity in North Carolina after HB2 – a similar bill – was signed into law in that state, major investors are standing up against this discriminatory legislation.

The 40 signatories include some of the biggest investors in the world, such as BlackRock, State Street Global Advisors, T. Rowe Price, and AllianceBernstein, as well as New York City Comptroller Scott M. Stringer, California Controller Betty Yee, Connecticut Treasurer Denise L. Nappier, New York State Comptroller Thomas DiNapoli, Oregon Treasurer Tobias Read, Rhode Island Treasurer Seth Magaziner, and Vermont Treasurer Elizabeth Pearce.

The investors’ letter urges Texas Governor Greg Abbott, Lieutenant Governor Dan Patrick, and House Speaker Joe Straus to oppose the legislation, which would discriminate against transgender individuals in Texas. This not only makes it more difficult for companies to attract and retain the best talent, but could have real effects on the Texas economy by undermining businesses operating there and delivering extraordinary reputational harm to the Texas business environment. The state could lose hundreds of millions – if not billions – of dollars in economic activity. Tourism dollars, sporting and other entertainment events, and corporate expansions – all are vital to Texas’s economy and could be at risk. As just one indication of the potential impact, organizations including the National Football League and the NCAA have already warned that the siting of future events in Texas would be jeopardized.

The investors’ letter also highlight opposition to SB6 from more than 1,200 companies doing business in Texas, including major firms like American Airlines, Dow Chemical, Southwest Airlines, Texas Instruments, and Waste Management.

“This bill is the 2.0 version of North Carolina’s HB2, and we saw how that bill impacted North Carolina. Not only is SB6 wrong for Texas residents, it also undermines anyone who is invested in companies in that state. SB6 would take Texas in the wrong direction,” New York City Comptroller Scott M. Stringer said. “This group of investors represents a truly extraordinary level of assets, and the market is unquestionably speaking out about the economic consequences of such bills. We hope that message will be heard. I couldn’t be prouder to lead this massive effort to protect not just the interests of New York’s retired firefighters, police officers, and teachers, but also fundamental human rights.”

“The evidence is overwhelming that inclusive corporate and public policy that embraces diversity and equality are essential to strong businesses and financial success. Trillium Asset Management, and the trillions of dollars of assets that support this letter, unequivocally and emphatically urge Texas legislators to maintain a healthy and vibrant climate for business in the State of Texas,” said Trillium Asset Management, CEO Matthew Patsky, CFA. “Senate Bill 6 must be defeated and not allowed to negatively impact the economy of Texas, the second largest in the United States.”

SB6, introduced in early January 2017, is similar to North Carolina’s HB2’s bathroom restrictions, and requires individuals to use the public restroom that aligns with the gender on their birth certificate, discriminating against transgender individuals. The bill also eliminates municipal bathroom access non-discrimination laws, effectively legalizing discrimination against the LGBT community in both public and private accommodations. SB6 allows the Texas Attorney General to impose fines of up to $10,500 a day for violation of bathroom access regulations.

North Carolina has faced significant financial harm since enacting a similar bill, HB2, in March 2016. In the months since the bill was enacted, sporting events, concerts, TV shows, and conventions were canceled and business expansions were halted. By some estimates, the cost to the state reached over $600 million.

To read the investor letter, and see a full list of signatories, click here.

Here’s a Chron story about this letter.

[Trillium CEO Matthew] Patsky told the Chronicle, “We didn’t have this level of support for divestment from South Africa during apartheid.”

[…]

Stringer and others said the state lost more than $600 million in economic activity after passing HB2, with the NBA and NCAA pulling championship games. Given that Texas’ economy is the second largest in the country, Stringer said there is fear that negative economic impact in the state as a result of passing the bathroom bill here could be felt across the nation.

“I’m worried that pension fund investments could suffer,” he said.

Patsky said Trillium Asset Management, which has business ties to Texas, has previously coordinated efforts to get investors to speak out against the North Carolina law. He said it didn’t take much to convince them to speak out against the Texas proposal.

T. Rowe Price and others echoed the concern over an economic backlash.

“Our decision to participate was taken out of concern for the likely adverse economic impact of the proposed legislation and its inconsistency with our commitment to fostering diverse and inclusive communities,” a T. Rowe Price spokeswoman said in a statement.

A representative of BlackRock said the company has previously signed a letter to North Carolina lawmakers in opposition of their law as well as signed an amicus brief in defense of marriage equality when the Supreme Court was reviewing it.

Patsky said passage of the bill also could deter venture investors looking for startup activity in the state or companies that might look to expand here. He also projected municipal bonds could be hurt as investment falls.

He also questioned the rationale behind the bill and said he recalled seeing misleading campaign ads during an effort in Houston a year and a half ago to overturn the city’s equal rights ordinance that guaranteed protections for transgendered people seeking to use the bathroom where they feel most comfortable.

No comment on this from Abbott or Patrick. I guess telling these folks to “stay out of politics and stick to business and finance” would sound weird even to them. It’s certainly possible that as with that TAB study that Stringer and Patsky et al are overstating the possible effects of SB6, but even if they are there’s no question that the effect we will have will be negative. A lot of investing comes down to perception in how things are and belief about where they are going, and the passage of SB6 would negatively change both of those things about Texas, for no real purpose. That is what this debate has always been about.

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