"We share the nation's grief over the incomprehensible and senseless loss of life at Parkland, Florida, and we share the desire to make our communities safer," reads a letter that American Outdoor Brands Chairman Barry Monheit and CEO James Debney sent to the BlackRock investment firm's stewardship team on March 6.
The letter makes it clear that American Outdoor Brands, the holding company for Smith & Wesson, supports better enforcement of existing gun safety laws and is not opposed to the development of "mart gun" technology, but is opposed to legislation that would require the use of such technology.
The nine-page statement was the company's response to a similarly lengthy message from BlackRock CEO Larry Fink, who announced in early March that BlackRock would initiate a series of discussions with the three publicly traded companies whose primary business is firearms manufacturing: American Outdoor Brands, Vista Outdoor and Sturm, Ruger. BlackRock invests in all three companies through index funds.
American Outdoor Brands--the manufacturer of the AR-15-style rifle used to kill 17 students and teachers at the Marjory Stoneman Douglas High School in Parkland in February--is the only gunmaker so far to have responded publicly. Whether the comments will satisfy BlackRock remains to be determined, but at their annual meetings between May and September of this year, all three gun companies will face additional shareholder scrutiny over how their products are being used.
The Parkland shooting, and the student activism following it, cast a greater spotlight than ever on the role gun makers themselves play in making weapons available to people who might go on a murderous rampage--as well as retailers that sell guns, lenders that provide financing, and companies that offer discounts to NRA members.
A Quinnipiac University National Poll that came out the week after the Parkland shooting found that 66% of American voters overall and 50% of those who owned guns supported stricter gun laws, the highest levels ever measured by the poll.
"Guns join opioids, cyberhacks, sexual harassment, human rights and climate change as top-of-mind risks that shareholders will want to discuss with boards during engagements and at annual meetings," says Patrick McGurn, special counsel at Institutional Shareholder Services, which provides governance and responsible investment advisory services to investors.
BlackRock and other big institutional investors, including State Street, Vanguard and Capital Group, have begun to see gun safety as an issue they can't ignore. They're concerned that there could be a long-term decline in value, plus they have to answer to their own portfolio clients who have said they don't want to support the gun industry.
Although the holdings in index funds are determined by third-party providers, BlackRock has announced that, to accommodate requests from clients, it is exploring ideas for new index funds that exclude gunmakers.
At the same time, Fink's message to the gunmakers says the firm plans to drive change through private dialogue. After outlining a long list of questions for gun makers, including how they're managing the reputational, financial and litigation risk associated with manufacturing civilian firearms, and what steps they are taking to support the safe and responsible use of their products, the message adds that BlackRock will monitor gun-related companies "to assess their policies and practices in light of evolving societal expectations."
Expectations are evolving enough that directors of gun manufacturing companies should champion corporate responsibility as a competitive advantage, maintains Andrea Bonime-Blanc, the founder and CEO of...