Nike Faces Investor Challenge Over Gender-Transition Surgery for Minors

A group of conservative investors is pressing companies to stop covering gender-transition surgery for minors in employee health plans, and Nike Inc. is their latest target.

Inspire Investing, which oversees $5.4 billion, is leading an investor campaign that includes the Southern Baptists and the state of Nebraska against 242 large employers, saying that offering insurance coverage for gender-related surgery for minors may expose companies to legal trouble and reputational damage. The group will present a related shareholder proposal at Nike’s annual meeting on Tuesday, and has enlisted a former college soccer player to make its case.

In anaudio recording shared with Bloomberg, the former athlete will argue that Nike faces legal risk by supporting transgender surgery for minors.

The push is the latest effort by conservative shareholder groups to challenge companies over diversity, equality and inclusion practices. Inspire said it has already gotten Walmart Inc. and Charles Schwab Corp. to aver that they don’t cover the surgeries for minors and wants Nike to do the same. Critics, which include Human Rights Campaign, the largest LGBTQ workplace advocacy group, say the conservative groups’ mission has little to do with shareholder returns and reflects anti-LGBTQ bias. Conservative investors counter that the issue has direct financial implications: With gender-affirming care for minors banned in more than half of US states, companies may draw lawsuits and public backlash for covering related surgeries.

For Nike, which is already facing an Equal Employment Opportunity Commission investigation of its DEI practices, the attention comes at a time of slumping sales and financial uncertainty. Its shares recently hit a 12-year low and are on pace for their worst year since 1993. The pressure also comes after the US Supreme Court cleared the way for states to restrict gender-affirming surgery for minors and bar transgender athletes from some sports. Nike is urging shareholders to reject the proposal and, when asked for comment, referred to its proxy statement, which says its existing policies are already in the best interests of investors. The company declined to comment on the EEOC investigation.

Inspire and other conservative groups are using the Human Rights Campaign’s Corporate Equality Index to identify companies to focus on, said Tim Schwarzenberger, Inspire’s director of corporate engagement. He said the list of 242 companies was drawn from those that received top scores on the index. A perfect score on the index can indicate that a company covers gender-transition surgery for minors. The group is asking companies to disclose whether they cover such procedures. According to Schwarzenberger, Walmart confirmed it doesn’t cover gender surgeries for minors, while Schwab said it had in the past but no longer offers the coverage. Walmart and Schwab didn’t respond to requests for comment.

“We feel that this is an important topic, there’s regulatory, legal and financial risks,” Schwarzenberger said. “We think shareholders have a right to know, have a right to transparency.”

Advocates who want companies to continue coverage of gender-affirming care, including surgery when necessary, say such treatments can be life-saving for transgender teens, who are more likely to report depression, anxiety and suicidal thoughts than their peers. The American Medical Association and American Academy of Pediatrics have said decisions about gender-related care for minors should be made on a case-by-case basis by patients, their families and their doctors. A recent Harvard study found that gender-affirming surgeries among transgender minors are rare: 2.1 per 100,000 insured 15- to 17-year-olds in 2019, with no procedures recorded among those 12 and younger.

As recently as a few years ago, companies consideredhigh scores on HRC’s equality index a badge of honor. Now, facing pressure from conservative activists, employers including Tractor Supply Co. and Walmart have stopped participating in the survey. Overall, participation is down by almost two-thirds, according to HRC.

“There is no question that extraordinary political and legal pressure has made some companies less willing to publicly document their LGBTQ+ workplace practices,” Jonathan Lovitz, a senior vice president at HRC, said in a statement. “But less disclosure doesn’t mean…that they have actually changed practices internally.”

Lovitz added that conservative campaigns have yet to translate into broad shareholder support. Investors at almost every major US corporation have overwhelmingly rejected proposals targeting diversity and inclusion in recent proxy seasons. And while the number of US companies earning a perfect score on the HRCequality index has slipped since 2023, more than 530 still hold that distinction.

Early in his second term, President Donald Trump signed an executive order to restrict gender-affirming care for minors, calling it “destructive and life-altering.” The Department of Health and Human Services has rolled back related Biden-era policies and pursued additional limits such as restrictions to Medicare or Medicaid coverage. In February, the American Society of Plastic Surgeons recommended delaying gender-related surgeries until age 19, citing “insufficient evidence” that benefits outweigh risks for children.

Inspire, the country’s largest provider of Christian-based exchange-traded funds, brought the issue to roughly a dozen companies last year. At meetings of Home Depot Inc., American Express Co. and Merck & Co., women who later detransitioned after undergoing such procedures as minors presented the proposals.

“To me it’s not really a political ask, it’s a basic fiduciary one,” said Soren Aldaco, a detransitioning woman who spoke at an American Express annual meeting in March in support of an Inspire proposal seeking a review of the risks of such coverage. The measure drew little shareholder support, but Aldaco said the goal was to bring more attention to the issue. In June, the Texas Supreme Court allowed her lawsuit against her therapist and counseling company to proceed.

For Nike’s annual meeting, Inspire has tapped Sophia Lorey, a recent Vanguard University graduate and a member of the conservative California Family Council, to urge the board to reconsider some of its policies. The company’sad campaigns, such as “Play Like a Girl” and “Get Her in the Game,” she is set to say, are at odds with supporting groups that endorse policies allowing transgender women to compete alongside biological women. Her remarks support a proxy proposal asking Nike to assess the risks tied with its charitable giving, including its relationship with HRC.

“Given the EEOC’s current high-profile investigation into Nike over ‘systemic race discrimination allegations’ occurring partially as a result of the company’s diversity, equity, and inclusion initiatives, investors are right to be concerned about what further brand politicization could do to company performance,” the proposal states.

Nike is recommending shareholders reject the proposal, saying its existing charitable-giving policies are sufficient and that an additional report would be an unnecessary use of time and resources. “Charitable partnerships are approved…only after a robust due diligence review of the proposed recipient organization,” Nike’s board said in a regulatory filing. A preliminary tabulation indicated the proposal was rejected by shareholders, Nike said at the end of the meeting Tuesday.

Inspire’s coalition has grown to include investors with more than $100 billion under management, Schwarzenberger said. Late last month, the group sent a letter to each of the 242 companies on its list, pressing them on transgender health coverage and other diversity policies.

Photo: Nike headquarters campus in Beaverton, Oregon. Photographer: Natalie Behring/Bloomberg