Arkansas governor stalls religious freedom bill. Is Wal-Mart to thank?

When Indiana governor Mike Pence signed his state’s controversial Religious Freedom Restoration Act into law last week, the backlash from the business community was swift. CEOs issued denouncements, business travel in Indiana was canceled, and state business owners displayed their opposition to the bill with stickers in store windows declaring, “this business serves everyone.”

It’s doubtful any of this was lost on Arkansas governor Asa Hutchinson, who has the world’s largest company sitting in his backyard. 

Hutchinson asked his state’s lawmakers Wednesday to re-work or scrap Arkansas’ version of an RFRA, House Bill 1228 Previously, the Republican governor had said that he would sign the bill if it came to his desk “in a similar form as to what had been passed in 20 other states.” Those laws mirror more closely a federal RFRA signed by Bill Clinton in 1993, something Hutchinson wants in an amended version of the bill he sent back. The governor also recommended additional language that would prevent the law being invoked for discrimination. 

“What is important from an Arkansas standpoint is one, we get the right balance…and secondly, we make sure that we communicate we’re not going to be a state that fails to recognize the diversity of our workplace, our economy and our future,” Hutchinson said in a press conference announcing his decision.

Indiana’s RFRA has been widely decried as a free pass for individuals and businesses to discriminate against the LGBT community.

When the bill cleared Arkansas’ House of Representatives on Tuesday, the state’s corporate interests came out in earnest to oppose it. Acxiom, one of the state’s largest companies, released a statement saying that the bill “inflicts pain on some of our citizens and disgrace upon us all.”  A statement from the Arkansas Chamber of Commerce said that the controversy surrounding the bill could jeopardize Arkansas’ reputation as a state “filled with accepting, hospitable people and forward-thinking businesses."

But the biggest voice of dissent was from Wal-Mart, the retail behemoth headquartered in Bentonville, Ark. “Today’s passage of House Bill 1228 threatens to undermine the spirit of inclusion throughout the state of Arkansas and does not reflect the values we proudly uphold,” Wal-Mart CEO Doug MacMillon said in a statement posted on the  Wal-Mart Newsroom’s Twitter account Tuesday. “For these reasons, we are asking Governor Hutchinson to veto this legislation.”

Wal-Mart has a heavy presence in its home state. It’s the largest employer in Arkansas outside the government. Its rebuke of the RFRA bill was surprising, in part, because the retailer has more typically been the target of social activism, not a supporting voice. It’s not known as a place for the socially conscientious shopper.

The Arkansas legislation is  "an area that I would have guessed Wal-Mart would have stayed out of years ago," says Alan Ellstrand, a professor and head of the marketing department at the University of Arkansas' Walton College of Business in Fayetteville (which is named after Wal-Mart founder Sam Walton). "I think it had a huge effect on the governor ultimately backtracking." 

Part of the likely reason Wal-Mart got involved in a local political issue, Ellstrad notes, is because it needs to be able to lure top-level talent to its corporate offices in Arkansas. "Beyond direct concerns about the LGBT community, they have to attract people from all over the world, and any signals that Arkansas is not a welcoming place aren't good for that."

It would also be bad for thousands of Wal-Mart's supply partners, like Procter and Gamble and Unilever, because hundreds of them have large offices located in the state for the sole purpose of working with the retail giant, he adds.  

But America’s businesses have been united in their opposition to bills like Indiana’s, and similar ones percolating in states like Georgia, and the threat they could pose to their bottom lines, regardless of customer base. Indiana’s RFRA has been denounced by no less than NASCAR, which called it “disappointing,” and pledged to “not participate in inclusion or intolerance.”

As the Monitor’s Harry Bruinius points out, that’s less the result of a businesses leaning left than a response to  rapidly shifting social demographics. “These companies are not promoting liberal idealism over profits, business analysts say: Their vociferous response is a recognition that – at least when it comes to the issue of gay marriage – social activism is also good business.”

Indeed, over half of Americans now support gay marriage, including 8 out of 10 young adults, according to the Gallup polling organization.

Wal-Mart, meanwhile, has been working over the past year to re-brand itself as a more socially responsive company under Mr. McMillon’s year-old leadership. In February, after years as a prime target of a protest movement fighting for better treatment of America’s low-wage workers, the retailer announced it would raise its minimum pay rate to $10 by next year and invest heavily in a worker training program. “We have ears and we care,” MacMillon told the Associated Press in February. “Sometimes, you can learn more from criticism than you can from flattery. So we listen to all of it, but at the end of the day, we are doing what we need to do for our business.”

Editor's note: This story has been updated.