Deutsche Bank has frozen plans to expand in North Carolina after the US state passed a law that overturned protections for gay people, in the latest fight between business and conservative legislatures over social issues.
Germany's biggest bank, which employs 900 people in a software centre in Cary, North Carolina, had planned to hire a further 250 staff by 2017. But the lender on Tuesday said those plans had been put on hold after North Carolina passed a measure that excludes lesbian, gay, bisexual and transgender (LGBT) people from anti-discrimination protections.
The move, which comes during the presidential election campaign, is the latest twist in a battle between big corporations and conservative legislatures in several southern states over the balance between religious rights and anti-discriminatory measures, and whether companies and faith-based groups can refuse to serve same-sex couples on religious grounds.
The North Carolina measure — dubbed the "bathroom law" — also requires transgender individuals to use public bathrooms that match the gender on their birth certificates.
Responding to the criticism, Pat McCrory, the state's Republican governor, late on Tuesday signed an executive order that adjusted some of the controversial elements of the law but not the provision about bathrooms.
McCrory said the changes included expanding North Carolina's equal employment opportunity policy to "clarify that sexual orientation and gender identity are included". He also vowed to press the legislature to pass a law to "reinstate the right to sue for discrimination" in the state's courts.
But the changes came under immediate fire from human rights groups. Human Rights Campaign said McCrory's action was an "insufficient response to a terrible . . . law that continues to harm LGBT people on a daily basis".
"It's absurd that he'll protect people from being fired but will prohibit them from using the employee restroom consistent with their gender identity," Sarah Warbelow, HRC legal director, said in a statement.
Mississippi last week passed legislation that allows private companies to refuse to serve gay and transgender people if doing so would violate their religious beliefs. However, the governor of Georgia vetoed a similar measure that had been passed by the state legislature after opposition from business groups and Hollywood.
The Republican party had hoped to avoid "culture war" issues in the 2016 election in order to attract more members and boost its chances of taking the White House. But it has been stymied by the southern states' initiatives and by the rise of the two main presidential rivals, Donald Trump, and particularly Ted Cruz, the Texas senator whose campaign has adopted a much stronger focus on social issues such as opposition to same-sex marriage.
The Mississippi and North Carolina laws have sparked a broad backlash from large companies across the US — from Apple to Goldman Sachs to Starbucks — which argue the measures are discriminatory and also hurt business by alienating some customers and making it more difficult to hire a diverse, talented workforce. More than 130 business leaders last week signed a letter expressing opposition to the North Carolina law.
Musicians have also expressed outrage. Bruce Springsteen canceled a concert in North Carolina because of the anti-LGBT law while Bryan Adams, the Canadian musician, decided not to perform in Mississippi.
The controversy comes a year after Indiana and Arkansas tried to introduce religious freedom laws that critics said were discriminatory towards gays. The Republican governors of both states were forced to weaken the measures after an outcry from corporations and less conservative states across the US.
John Cryan, Deutsche's co-chief executive, said the bank took its commitment to building "inclusive work environments" seriously. "We're proud of our operations and employees in Cary and regret that as a result of this legislation we are unwilling to include North Carolina in our US expansion plans for now," he said. "We very much hope that we can revisit our plans to grow this location in the near future."
The bank's tech hub, located in the "Research Triangle Park" between the cities of Durham, Raleigh and Chapel Hill, is home to a number of highly skilled staff developing software. One person familiar with the situation said the decision would not affect outstanding job offers.
Suki Sandhu, founder and chairman of OUTstanding, the executive LGBT network, said the moves by Deutsche and PayPal — which cancelled plans to open a centre in Charlotte because of the new law — should be welcomed. "Large corporations in particular can set standards around the world and pave the way for societal change," he said.