Big investors join list of heavyweights against North Carolina 'bathroom bill'

Morgan Stanley and RBC are among the 53 investors who signed open letter calling for a ‘full repeal to HB2’ and citing that it’s bad for business

Some of the world’s most powerful investors have added themselves to a growing list of business leaders, sports stars and performing artists demanding North Carolina overturns the state’s “bathroom bill” law that requires people to use public restrooms of their sex at birth and not the sex to which they identify.

The investor group, which includes Morgan Stanley Investment Management, RBC Wealth Management and the managers of public pension funds in New York and California, said the North Carolina House Bill 2 (HB2) “invalidate[s] the human rights of individuals across the state” and has “troubling financial implications for the investment climate in North Carolina”.

The letter, signed by 53 investors with $2.1bn of assets under management collectively, called for the “full repeal of HB2”.

“Quite simply, HB2 is bad for business and investors do not support legislation that limits discrimination protections and hampers the ability of our companies to offer open and productive workplaces and communities,” the open letter said.

The open investors letter – which is unusual as asset managers rarely speak out publicly about state legislation – comes after more than 200 of America’s biggest businesses, including Apple, Facebook, Pfizer and Bank of America, wrote to North Carolina governor Pat McCrory demanding the law be repealed. The business leaders, including Apple CEO Tim Cook and Brian Moynihan, CEO of Bank of America (the state’s biggest employer), said the HB2 law “overturned protections for LGBT people and sanctioned discrimination”.

Several businesses, including PayPal and Deutsche bank, already have cancelled plans for expansion in the state, and the Williams Institute, a sexual identity thinktank, estimates the state already has lost $40m in direct business investment.

The Williams Institute, which is part of the UCLA School of Law, said the HB2 bill could cost the state as much as $5bn in lost federal funding and business investment.

“As long-term investors in companies doing business in North Carolina, we are concerned that HB2 is making it difficult for our portfolio companies to provide the safe, open and inclusive environment necessary for a successful workplace,” the investors open letter published on Monday said. “Not only does HB2 make hiring top talent difficult, but it also has negative financial implications that reverberate across North Carolina.”

The investors said “prominent private equity investors have begun to boycott the state” and this placed North Carolina’s innovation economy at risk and warned that the state could even lose its triple-A grade credit rating.

“The law has suddenly placed the state’s long-standing AAA credit rating at serious risk for downgrade, which would lead to a much higher cost of capital for cities, local authorities, and the state as a whole, at a time when interest rates are beginning to rise,” the letter said.

North Carolina has also has come under attack from entertainment and sports stars. The The National Collegiate Athletic Association (NCAA) this month pulled seven championship events from the state and the NBA said it would move its 2017 All-Star Game from Charlotte because of the discriminatory law.

Bruce Springsteen, Ringo Starr, Pearl Jam, Demi Lovato and Nick Jonas have all cancelled concerts in the state in protest against the bill, and dozens more have spoken out agains the bill.


Rupert Neate in New York

The GuardianTramp

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