New SF Chronicle Op-Ed – Make a Difference: Disinvest From Guns

Boston, MA // March 5, 2018 – On Friday, March 2nd, The San Francisco Chronicle published an op-ed authored by Trillium Asset Management’s Director of Shareholder Advocacy Jonas Kron titled, “Make a difference: Disinvest from guns”. Read the full op-ed below and on www.sfchronicle.com.
Important Disclosure: This is not a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. The specific securities were selected on an objective basis and do not represent all of the securities purchased, sold or recommended for advisory clients.

Make a difference: Disinvest from guns

Corporate America and Wall Street have spent the last two weeks coming to terms with a reality they have long sought to avoid: that business and investment decisions about guns affect society. This has led Americans to search for ways to get guns out of their savings plans.
Fortunately, because the sustainable and responsible investing community has understood for decades the impact of investing in firearms, we have choices. Many have already sought out those choices. As the US SIF-Forum for Sustainable and Responsible Investment has documented, just prior to the Newtown school shootings, managers of some $74 billion in investor assets would not invest in weapons-related companies, including the clients of my firm, Trillium Asset Management. By 2016, that number had grown to $845 billion. As a result, if Americans want to go “gun-free,” they can find mutual funds to invest in. And they can make their retirement plan administrators aware of these options as well.
There are many moral and financial reasons people may want to screen out firearms companies from their investment portfolios. Many people simply do not want to profit from a product that, when functioning as intended, kills people.
For others, firearms companies present a poor financial choice. These companies are under the constant risk of regulation and political pressure. In addition, the National Rifle Association exerts its own control over both the regulators and the companies. These pressures make it difficult for CEOs to engage in long-term planning for their business’s success.
For someone thinking about retirement or college savings, it’s not hard to see why they would want to divest from guns. But Wall Street often offers an excuse: We cannot divest because these gun companies are in the “index.” The index, it is explained, is a neutral algorithm, free from human whims and flaws. It represents the victory of efficiency and the wisdom of the market. So although the three publicly traded stocks of gunmakers are too small to really affect the performance of an index such as the Standard & Poor’s 1000, they still sit in investment portfolios of Americans who don’t want to invest in guns. Why? Because “the index” says they can’t be removed.
This is fiction. Humans write that algorithm. If people don’t want a company in their index, they can keep it out. In fact, just last year, S&P and FTSE Russell kept Snap Inc. out of many of their indexes after large investors objected to Snap’s decision to issue shares without voting rights.
The other fiction that businesses have been confronting is that they can stay “neutral.” For decades, CEOs have sought to avoid the idea that the products and services they make and sell influence our society and our environment. However, the gun debate — as well as rising awareness of corporate roles in LGBT rights, diversity, climate change, health care, immigration and social media — is making this painfully obvious. As Dick’s Sporting Goods CEO Edward Stack explained, “When we saw what happened in Parkland, we were so disturbed and upset. We love these kids and their rallying cry, ‘Enough is enough.’ It got to us.”
It’s getting to a lot of people, as hour by hour we see investors and businesses finding a way to do something about it. What if the credit card industry made it more difficult for people to purchase assault rifles, high-capacity magazines, and bump stocks, as the New York Times’ financial columnist has suggested? At Trillium, we thought the idea had so much merit that we are pressing banking and credit card companies to take action.
Members of the Interfaith Center for Corporate Responsibility have spent years pressuring gunmakers to make safer products. They have filed shareholder proposals asking the companies if they are researching ways to produce safer guns and to report on the financial and reputational risks of gun violence to their operations. For years, Domini Impact Investments filed shareholder proposals with retailers asking them to do what Dick’s Sporting Goods and Kroger finally decided to do last week — stop selling assault-style semiautomatic rifles.
Investment choices and business decisions do affect society. Will investment managers and CEOs close their eyes to those effects and get pushed around by the decisions of others? Or do they proactively choose what kind of impact their companies or investments have? You as an investor can help them decide.

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Contact: Caroline White, Communications Manager, cwhite@trilliuminvest.com