The Trump administration has made its position on biological reality crystal clear. On January 20, 2025, President Trump signed an Executive Order on "Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government." That order explicitly states that it is the policy of the United States to "recognize two sexes, male and female," grounded in "fundamental and incontrovertible reality." It defines "sex" as an "immutable biological classification" and declares that "woman" means "adult … human females." Furthermore, the administration has committed to ending the "purposeful attack against the ordinary and longstanding use and understanding of biological and scientific terms."
In the face of this unequivocal federal policy, CVS Health is moving to silence shareholders who simply ask the company to address these same issues. Specifically, the National Center for Public Policy Research, where I direct the Free Enterprise Project, submitted a shareholder proposal asking the CVS board to issue a report assessing the risks of making business decisions that ignore biological reality. The proposal asked whether CVS’s business decisions implicating transgenderism are informed by (1) a definition of "woman" that limits the word to adult females, and (2) risks posed to females by allowing men who identify as women to forcibly insert themselves into women’s spaces and sports.
However, rather than allowing investors to vote on this proposal, CVS plans to exclude our proposal from its proxy statement under the cover of the Securities and Exchange Commission’s (SEC) new "reasonable basis" regime, asserting that they have grounds to kill the proposal without providing any legal analysis beyond baldly claiming the proposal improperly interferes with the company’s ordinary business and contains materially false and misleading statements.
As to the claim that our proposal improperly interferes with its "ordinary business" operations, the proposal merely requests a report; it does not mandate any specific action. This means that CVS’s managerial discretion would in no way be limited even if the proposal were supported by 100% of shareholders. Furthermore, related SEC rules include a "social significance" exception to the ordinary business exclusion, and the issues raised by our proposal—the privacy and safety of women and the erasure of biological distinctions—are clearly socially significant issues that transcend the day-to-day operations of selling prescriptions and toothpaste.
As to the claim that our proposal contains "materially false and misleading statements," our proposal relies primarily on a report by the 1792 Exchange for its factual basis and accurately reflects the content of that report. In addition, while I routinely offer to update or even withdraw a proposal in response to evidence that it contains incorrect information, CVS never responded with any corrections when I sent the following 8 items summarizing my recollections of our videoconference engagement:
1. CVS asserts that all the actions it takes to get a 100% score on the Human Rights Campaign’s Corporate Equality Index (HRC’s CEI) are required by equal protection law.
2. CVS believes in transgenderism (i.e., that a child can be born in the wrong body; a man can become a woman by saying so).
3. CVS believes that it is inappropriate for shareholders to see a proposal questioning the decision-making underlying CVS's support of transgenderism.
4. CVS believes that transgenderism poses no threat to women's rights.
5. CVS refuses to cooperate with Alliance Defending Freedom's survey while cooperating with HRC's survey.
6. CVS Legal Counsel laughed in my face when I said a person can believe that there are people who identify as transgender without believing that a child can be born in the wrong body or that a man can become a woman by saying magic words.
7. CVS believes the vast majority of shareholders and stakeholders support transgenderism.
In addition, when I told CVS I'd withdraw our proposal if CVS simply publicly disclosed some version of its positions as set forth in 1-7 above, I was told CVS would do no such thing.
Shareholders should not take this silencing lightly. If CVS refuses to allow its owners to vote on a proposal regarding such a fundamental governance risk, shareholders may have something to say about it by voting against the board members themselves. Note that proxy adviser ISS apparently “expects companies to articulate credible, well-reasoned justifications for any exclusion, and will scrutinize weak or conclusory explanations as potential governance deficiencies and flag them accordingly for its clients.” This policy makes sense given that board members have a fiduciary duty to address risks, not to hide them behind legal maneuvers that deny basic reality. This is particularly true given the potential conflicts of interest CVS may have when it comes to transgenderism, given the money it may make off “gender affirming care.”
But perhaps the bigger issue is what the Trump administration will do, given that CVS likely has contracts with the federal government. CVS has arguably thrown down the gauntlet, daring the federal government to enforce its stated policy on biological reality. The question now is whether the White House will let that challenge stand.
