Top Investors Join Nuns in Pressing Gunmaker to Report Risks

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By Andrea Vittorio

Top financial institutions joined nuns and other faith-based investors to voice concerns with gunmaker Sturm, Ruger & Co. after a Parkland, Fla., school shooting this year sparked protests of gun violence nationwide.

Funds at BlackRock Inc., Vanguard Group Inc., and State Street Corp.'s investment management arm all backed a proposal asking Sturm Ruger to report on reputational and financial risks related to gun violence, according to voting disclosures due to regulators Aug. 31. The proposal passed with support from close to 70 percent of Sturm Ruger shareholders.

It was put forward by a group of religious investors, including Catholic sisters and Catholic health care systems, that hold the company’s stock so that they can advocate for gun safety.

“We hoped we would receive enough support,” said Colleen Scanlon, chief advocacy officer at Catholic Health Initiatives, which led the proposal. “We were surprised by how overwhelming it was.”

Their advocacy got added momentum as BlackRock, Vanguard, and State Street contacted companies in the firearms industry in the wake of the Parkland shooting, which left 17 dead.

BlackRock, the world’s largest investment manager, asked firearms manufacturers and retailers to answer a series of questions about their business, focusing on reputational risk. Second-largest Vanguard’s talks also touched on risk oversight and “how each company plans to remain relevant in the long term,” according to a recent report. State Street, the third-largest asset manager, likewise said after the Parkland shooting that it would engage with weapons makers.

Company Response

Sturm Ruger, which has a policy of not meeting with investors, has pledged to issue a risk report in response to the shareholder vote by early next year. The company’s CEO has made clear that it’s just a report and the company’s business won’t change as a result.

A similar proposal seeking a risk report from American Outdoor Brands Corp., the maker of Smith & Wesson firearms, is up for a shareholder vote in September. American Outdoor Brands’ board is telling shareholders to vote against it because such a report wouldn’t “advance gun safety, mitigate criminal gun violence, or better educate our stockholders,” according to a pre-vote filing.

Another proposal at Dick’s Sporting Goods Inc. was withdrawn after talks with investors. The retailer said after the Parkland shooting that it would halt the sale of assault-style rifles and raise its firearms purchasing age to 21. It has since hired a firm to lobby Congress on gun control.

Dick’s is one of several companies that have stepped up their response amid continued gridlock on gun control in Washington. Walmart Inc., Kroger Co., L.L. Bean Inc., and Orvis Co. also made changes to their firearms offerings following the shooting. Others such as Enterprise Rent-A-Car and Avis Budget Group have pledged to cut business ties with the National Rifle Association.

“We’re going to have guns in our society. But what can we do to ensure the safety of the weapons and the people who have access to them?” said Sister Judy Byron, who directs the Northwest Coalition for Responsible Investment and co-filed the resolutions. “Companies have a role to play in that, and we want them to be accountable.”

To contact the reporter on this story: Andrea Vittorio in Washington at avittorio@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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