By Kristin Jenko
Gun violence in America continues at an alarming rate. According to the Centers for Disease Control, more than 33,000 people die each year in firearm-related deaths in the US. On an average day, 96 Americans are killed by guns, including seven children and teens. There have been 239 school shootings nationwide—an estimated five each month—since the Sandy Hook school shooting in 2012 [1]. Meanwhile, the racial justice implications of gun violence are especially pronounced as black men are 13 times more likely than white men to be shot and killed with guns.
We find ourselves in a disturbing reality where, after each tragedy and period of national mourning, nothing changes. Legislators continue to be driven by partisan efforts on both sides, unable to take action on gun control. Responsible investors must ask themselves: if policy makers can’t—or won’t—impose regulations on guns, how can we move toward more peaceful progress?
In June, Boston Common’s Lauren Compere spoke at a Boston event co-convened by BASIC and Boston alumni from the Marjory Stoneman Douglas High School (Parkland, FL), on ways in which investors can engage companies beyond the gun manufacturers.
Boston Common has used both strategic divestment and active engagement to alert companies to investors’ concerns and advance the conversation on gun control. Like many Responsible Investors, we do not invest in companies engaged in gun manufacture through their direct operations. In addition, we review portfolio companies to identify trade relationships and supply chain connections that could expose them to potential risks. Through Active Engagement, we bring these risks to light, and urge action by companies.
This quarter, we joined 44 other investors, representing $634 billion in assets, calling on gun manufacturers, retailers and distributors—as well as companies with financial ties to these industries—to review their operations, supply chains, and policies and take meaningful action on this public safety concern.
Among banks, Citigroup’s policy is probably the most advanced to date, as they will require new retail sector clients or partners to adhere to these best practices: (1) they don’t sell firearms to someone who hasn’t passed a background check, (2) they restrict the sale of firearms for individuals under 21 years of age, and (3) they don’t sell bump stocks or high-capacity magazines. This policy will apply across Citigroup’s financing activities, including to small business, commercial and institutional clients, as well as credit card partners, whether co-brand or private label.
We have already begun to engage 20 financial institutions that have either recently provided direct financing to firearms manufacturers or are involved in credit merchant processing. We are leading the outreach with PNC Financial and JP MorganChase and have participated in dialogues with Morgan Stanley and Visa since the letters were sent at the end of May. We are asking companies to:
- Prohibit lending or the use of credit cards/payment systems to gun manufacturers that sell, produce, or design the aforementioned weapons or ammunition. Pay Pal, Square, Stripe and Apple Pay already prohibit the use of their platforms for the sale of firearms.
- Prohibit lending to gun manufacturers and sellers that don’t support federal universal background checks and/or endorse the Sandy Hook Principles;
- Cease any liability coverage from insurance companies for owners of assault weapons; and
- Cease the financing or underwriting of gun shows and/or NRA-sponsored events.
One of our retail sector holdings, Kroger, first stated in March that it would raise age limits for guns and ammo purchases from 18 to 21 and stop selling magazines that feature assault rifles. Annual revenues from gun and ammunition sales accounted for just $7 million out of a total of $123 billion for Kroger overall.
As long-term investors, we believe companies should use their power and influence to contribute to the safety and well-being of the communities where they operate and, more broadly, to society as a whole. Pressure on manufacturers, retailers, distributors, and financial institutions from pro-active investors could, over time, empower companies to effectively create new policies that have the potential to prevent mass shootings from occurring in the future.
[1] https://www.nytimes.com/interactive/2018/02/15/us/school-shootings-sandy-hook-parkland.html
The information in this article should not be considered a recommendation to buy or sell any security.
