Investors, firms joining forces to press gunmakers on safety issues

Some of Wall Street's heaviest hitters are stepping into the national debate on guns as investment firms ask firearms makers what they are doing about gun violence.

The firms speak softly, but because they own trillions of dollars' worth of stock, their voices travel far. And they're now joining forces with some unusual allies, including smaller and untraditional investors. In this context, the investment fund BlackRock, which owns big stakes in three different gunmakers, might end up working alongside a group of nuns.

Sister Judith Byron, director and coordinator of the Northwest Coalition for Responsible Investment, says her group and BlackRock appear to have similar ideas when it comes to gun manufacturers and retailers. Following the Feb. 14 killing of 17 students and teachers at Marjory Stoneman Douglas High School in Parkland, Florida, funds like BlackRock started asking gun manufacturers what they are doing to reduce the risks of gun violence, and asking retailers how much they make from selling guns.

Byron says her group, a coalition of religious communities and health care systems, invested in firearms makers a decade ago and has been working on gun safety issues for years. In the last few months the coalition introduced resolutions pushing American Outdoor Brands, Sturm Ruger and retailer Dick's Sporting Goods to give reports to investors about the steps they are taking to reduce gun violence.

"We're hoping we can engage these big investors and encourage them to vote for our resolutions," she says.

Some larger investors have similar views. The biggest public pension funds in the United States, CalPERS, recently refused to sell its investments in companies that sell assault rifles. It says that by remaining an investor, it's been able to get those companies to make positive changes.

The nuns aren't protesters, and they don't carry props or signs to disrupt board meetings, although they sometimes work alongside groups that use those tactics. Byron says some of the shareholder meetings she's attended have been downright pleasant, with investors and board members thanking her for asking questions.

Support from investment firms was crucial to the coalition's big success last year when, after decades of work, it backed a successful resolution that required oil giant Exxon Mobil to disclose the effects climate change is having on its business.

Erik Gordon, a professor at the University of Michigan's Ross School of Business, said activists like Byron deserve most of the credit for getting the larger funds to speak out.

"BlackRock didn't wake up one morning and say, 'We are going to take a different approach to investing, it's the right thing to do,'" he said. "It's a reaction to the activists."

The top priority of firms like BlackRock, State Street and mutual fund company Vanguard is to make as much money as possible for their clients. But because they own so much stock, they can wield a lot of influence: They can support new directors who want to change the direction of the company and back proposals that change the way it operates.

BlackRock is a major shareholder in gunmakers Sturm Ruger, American Outdoor Brands, and Vista Outdoor Brands. About a week after the shooting in Parkland, BlackRock said it wanted to speak with the three firearms makers about their responses to the tragedy. The fund said it is looking into creating new investment funds for investors that exclude firearms makers and retailers, and if many funds and investors followed suit, that would affect the price of those stocks.

In a letter to BlackRock, American Outdoor Brands said it supports steps that will promote gun safety while protecting the rights of firearm owners. The company said it backs measures including improved background checks and improved support for people with mental illnesses, but said it's opposed to "politically motivated action" that won't improve public safety. Sturm Ruger did not immediately respond to a request for comment.

Byron says she is encouraged by the response from corporate America.

"We see companies taking leadership roles in environmental and social issues, which is encouraging," said Byron, adding that as shareholders, "We own them."