A priest, a nun, and a rabbi walk into a shareholder meeting. It sounds like the start of a joke, but this proxy season it’s very much a reality for firearm manufacturers and those who do business with them – one that could portend significant change.
Religious groups tried for years to push through climate change proposals with oil companies. Last year, in a “stunning reversal,” a group of nuns from Philadelphia won 62 percent support on Exxon’s ballot. Similarly, religious groups have tried in vain to get gun makers to make changes. This year, they’re back at it. A group of nuns with the Northwest Coalition for Responsible Investment have filed proposals asking rifle-makers Sturm Ruger & Co. and American Outdoor Brands to research ways to make guns safer and also to report on the financial and reputational risks of gun violence to their businesses. Could another reversal be in store?
There’s no doubt that in the aftermath of the Parkland shooting, gun manufacturers, their business partners, and their advocates have faced ramped-up pressure to end business as usual from a variety of sources. Delta Airlines, Hertz, and Met Life Inc. are among several corporations that have dropped NRA discount programs, while the nation’s largest private bank discontinued an NRA Visa card. Bank of America has promised to “examine what we can do to help end the tragedy of mass shootings”; for a start, it has said it will press clients that make assault weapons on ways that they can aid the cause.
Another considerable source of pressure for gun manufacturers is the loss of investment dollars. After Sandy Hook, the University of California’s $10 billion endowment fund sold its gun stocks. Now, Florida teachers are upset that their retirement funds have been invested in gun stocks, and analysts expect more state funds to divest from them. One massive investor, however, cannot vote with its dollars. The world’s largest asset manager, BlackRock, owns huge stakes in gun-related stocks through its index-tracking ETFs. As long as those gun stocks appear on relevant indices, BlackRock is wedded to them. It owns more than 11 percent of American Outdoor Brands and nearly 17 percent of Sturm Ruger & Co.
Which gets us back to the shareholder proposals. The gun-related proposals above have the support of the Interfaith Center on Corporate Responsibility, the membership of which includes 300 institutional investors managing $400 billion in assets. Even more votes sit in the hands of BlackRock, which could very well swing the vote for gun-safety proposals one way or another.
But how will BlackRock vote? Just a month before the Parkland shooting, it sent a letter to the nation’s CEOs, telling them that their companies had an imperative to make “a positive contribution to society.” That might suggest support for the proposals, but BlackRock has only gone as far as saying that it will “engage” with gun manufacturers so that it can “understand their response” to the shootings. It has refused to state whether it will support the proposals.
When we reported on BlackRock’s letter, we said that it raised a number of questions, including “how seriously investors should take BlackRock’s emphasis on social responsibility.” If BlackRock believes in the cause of gun safety, this proxy season presents an opportunity to answer that question. And if it does, the religious leaders who walk into those shareholder meetings could come away with some long-denied victories.