Why a Group of Nuns Has Been Buying Up Firearm Shares

YouIt was Sister Judy Byron’s years of teaching in the Seattle Catholic Schools that made her sensitive to gun violence. “We had fire drills in Washington, we had earthquake drills, but never in my wildest imagination would I ever have thought someone would have come in with a firearm to the school where I was,” she says. Then came Columbine’s school shooting, followed by Sandy Hook many years later. “I remember thinking at the time, if we don’t do something now, when we’ve murdered all those little first graders, we never will. And of course we didn’t.”

Gunmakers were the largest stakeholders in gun violence, she knew. She was able to do more. “Every time there’s an incident you hear from everyone—even the NRA will put out a statement—but we never hear anything from the firearms manufacturers,” says Byron, who is an Adrian Dominican Sister, an order of about 400 nuns with a motherhouse in Michigan. “They have to be part of the solution to this.”

Almost a decade after Sandy Hook but only months after horrific shootings in Buffalo, New York and Uvalde, Texas, Byron, together with an unlikely group of activists, is going head to head with the U.S.’s biggest gun manufacturer, Smith & Wesson. This renowned gunmaker will host an online shareholder meeting on September 12. Along with the usual run-of-show for these events—re-electing board members, ratifying some salaries, approving an omnibus stock plan and officially re-installing its auditors—shareholders will be asked to vote on Item 5, a proposal to get the gun manufacturer to adopt a comprehensive human rights policy. Byron and her investors want to push the company’s business activities to be more considerate of the rights of others.

Continue reading: Inside History of Guns and How They Are Sold in America

Byron is the leader of a consortium of 14 religious shareholders, the Northwest Coalition for Responsible Investment, who have hatched an ambitious—and possibly quixotic—plan to open another avenue for conversation about the fraught issue of gun ownership in America, which despite dozens of deadly incidents since Sandy Hook has been stuck in a cycle of finger-pointing and inaction. Although most Coalition members are from other religious orders and therefore unlikely gun investors they want to leverage shareholder power to force gun companies to think about the effects of firearms on America. The idea was born out of conversations Byron had with the Interfaith Coalition for Corporate Responsibility in 2016, a group of investors who are both faith-based as well as ethics-based. They have a combined $4 trillion of managed assets and have used investments for years to engage with corporate America.

This unusual initiative from shareholders is not binding and appears modest. It asks that the company “adopt a comprehensive policy articulating its commitment to respect human rights,” and asks for “a description of proposed due diligence processes to identify, assess, prevent and mitigate actual and potential adverse human rights impacts.”

Sister Judy Byron, director and coordinator of the Northwest Coalition for Responsible Investment, in her office in Seattle, March 2018. (Elaine Thompson—AP)

Sister Judy Byron is the director and coordinator for Northwest Coalition for Responsible Investment. She was in Seattle in March 2018.

Elaine Thompson—AP

The proponents of the policy say that Smith & Wesson needs to explore and communicate the risks it may be facing—and thus shareholders may be facing—as a manufacturer of a dangerous product. These include reputational risks, that people will suddenly find the stock abhorrent and sell their shares after a horrific event involving a product the company makes (the Marjory Stoneman Douglas High Schoolshooter in Parkland, Florida used a Smith & Wesson weapon); financial risk, that the company will be sued and have to pay damages—as Remington was and did—and legal risks, that a change in gun laws may one day limit the company’s profitability. Smith & Wesson’s board has asked shareholders to vote against the proposal. But Sturm Ruger’s board opposed a similar initiative brought by members of the same group in June. It passed almost with two-thirds vote.

“Our lens for this is that they need to take a very holistic look at their policies, procedures, products and practices,” says Laura Krausa, the assistant director of advocacy programs for Commonspirit Health, another member of the coalition, who was also one of the lead petitioners at Sturm Ruger. “They need to have a third-party auditing firm really talk with the wide spectrum of stakeholders to understand where they have some rights risks that could impact their bottom line.”

Laura Krausa, director of advocacy for CommonSpirit, a nonprofit hospital chain, at her home in Wheat Ridge, Colo., in May 2022. (Daniel Brenner—The New York Times/Redux)

Laura Krausa (director of advocacy, CommonSpirit), a non-profit chain hospital, was at home in Wheat Ridge in Colo. in May 2022.

Daniel Brenner—The New York Times/Redux

In its advice to shareholders, Smith & Wesson says that it has already taken steps to identify and manage any financial risks it faces and that the originators of the proposal have a gun-control agenda rather than the best interest of shareholders at heart. The activists among shareholders are not in agreement. “We believe, honestly, that reasonable and sensible solutions to prevent gun violence and to promote gun safety both can and should peacefully coexist with the Second Amendment,” says Krausa. Smith & Wesson declined several interview requests made by TIME to its media representative

Whether as a result of this tactic or the increased regulatory scrutiny weapons manufacturers have been under since President Biden came into office, Smith & Wesson has recently gone on the offensive, stepping up its communications with its shareholders and customers, releasing several documents about its products, procedures and operating principles. August 15th, CEO Mark Smith came out swinging on social media, accusing the “government and its lobbying partners in the media” of causing “the surge in violence and lawlessness” and then “shifting the blame on to Smith & Wesson” and other gun companies and gun owners.

Arguments for gun control based on the faith

Many Christians are guns-rights supporters, but the group attempting to influence Smith & Wesson say their faith has led them the other way. Commonspirit Health is a non-profit, large health system that has about 1,000 clinics across 21 states. Krausa works with violence prevention and shareholder advocacy. She sees engagement with gun companies as part of a larger approach to addressing the violence that often sends victims through Commonspirit’s doors. “Obviously, one reason we’re very interested in this is that we see this coming into our facilities,” she says. “Gun violence is rampant. In FY ’21, we had 3,200 incidences of injuries that came into our facilities. This cost $32 Million. And the human cost is far worse.”

She feels like Byron that gun manufacturers are missing the key to reducing gun violence. “There’s a lot of people trying to solve this problem,” she says. “But so far, the gun manufacturers haven’t joined that group. And because they do happen to make the product that is part of the problem, it seems very reasonable that they should come to the table and discuss solutions as well, and really look at how rights are being violated or potentially violated by their products.”

The Reverend Doug Fisher is an Episcopal Bishop from western Massachusetts and was another shareholder. He also became involved in response to the Sandy Hook attack when local church leaders founded Bishops United Against Gun Violence. In 2012, they started trying to help craft state and federal legislation to address what he calls “the absolute public health crisis of gun violence.” Progress in that area stalled, says Fisher, “and so we thought, ‘Well, maybe if we get in dialogue with the gun manufacturers, we can invite them to be part of the solution rather than part of the problem.” And so the Episcopal church took gun companies off the list of stocks it would not hold and became weapons investors.

However, there has been little progress in engaging with the gun companies. The first shareholder proposal at Smith & Wesson was in 2018, asking for a gun safety report. The proposal passed but groups felt that the report, which was largely copied from the internet, wasn’t original and had been done in haste. In 2019, the human rights policy was again proposed. Last year 44% agreed.

Since then, Byron says executives from Smith & Wesson have met with representatives from the group several times, but the two sides were unable to persuade each other of the merits of their position. She is frustrated by this. “You know, even Philip Morris International has a human rights policy,” she says.

The advantage faith-based advocates have over the rest is their willingness to accept the inevitable. The ICCR was created in 1971 by the Episcopal church, who bought General Motors shares and requested that it disinvest from South Africa. This it did. The fall of apartheid took 23 additional years. Recent work has been done by the group with pharmaceutical companies and hotel chains in relation to HIV and AIDS drug trafficking.

While they may lose more than wins, they still need the losses. Despite a failed shareholder vote by Gilead Sciences, in 2000 the pharmaceutical company decided to increase HIV drug availability in developing nations. “[The company] really became a leader in addressing HIV AIDS,” says Byron. Recenty, investors rejected a Tyson shareholder proposal to create a Tyson Human Rights Report. But, by the end, Tyson had agreed that an independent third party would conduct such an audit.

Continue reading: When There’s Talk of Gun Control, Gunmakers Play the Jobs Card. They’re Often Bluffing

Byron, the kind of nun who favors Hawaiian shirts, tries to be even-handed about what Smith & Wesson is doing. “One good thing they do that I wouldn’t have known [before meeting the corporate secretary] is they don’t let any of their product be shown in video games—the shooter video games kids use,” she says. But she cannot hide her disbelief that the firearms manufacturer couldn’t do more. Her group would like them to “really look at that supply chain and see if there are any places where guns are disappearing or being sold where they shouldn’t be sold,” and “to look at how they market the products and who they market them to, and where they market them now.”

She is most concerned about safety. “We get the same song and dance all the time about why technology doesn’t work in guns,” she says. “In the future I see that guns will have to be technologically smart.” She uses the example of passcodes and facial recognition on smartphones. “You know, if you couldn’t use my cell phone here on my desk, there’s no reason why if I had a gun on my desk, you should be able to pick it up and use it. I mean, it’s just, I don’t think it makes sense in this age.”

Fisher says improving its products’ safety features would make Smith & Wesson a better company. “Car companies are always trying to make their cars safer,” he says. “I can safely pull out of the parking lot outside right now because there’s a rearview camera. Why can’t gun companies do the same thing? Why can’t they do things to make their products safer?”

This is a particularly sensitive point for Smith & Wesson, since a former CEO, Ed Shultz, agreed to start to develop more safety mechanisms in 2000, in return for the withdrawal of lawsuits against the company mounted by several states. This was followed by a flurry of boycotts by gun retailers and wholesalers. The company was eventually dropped by the law firm that represented it and was sold to British investors. Shultz was forced from office and his plan for a new safety system was scrapped. Ever the nun, Byron is sympathetic to the company’s travails. “That trauma is in their DNA,” she says. “They feel that, you know, they’re not gonna make that mistake again.”

But she points to the example of Edward Stack, the CEO of Dick’s Sporting Goods, another company in which the shareholder activists invested and had more success. Stack was already motivated by 2018 Parkland shooting when they first met. He said that he had removed rifles and large-capacity magazines from the stores. It was a bruising blowback. 65 people quit and sales plummeted. The company recovered, and Walmart and Kroger followed suit. “All it takes is, you know, a leader who really sees what the problem is and what they could do about it,” says Byron.

Ed Shultz’s departure was 22 years ago, before the tragedies at Sandy Hook, Parkland and Uvalde, Texas. Recent polls have revealed that a growing majority of Americans support stricter gun laws. Will shareholders be successful now? Smith & Wesson’s largest investors are institutional fund managers such as BlackRock, Vanguard and the hedge fund Renaissance Technologies. Both the activist group and Smith & Wesson have met with these investors’ representatives on several occasions, as well as with governance groups that advise shareholders, such as Glass Lewis and Institutional Shareholder Services (ISS). When a similar proposal requesting a human rights impact study passed at Sturm Ruger in June, that company’s CEO, Christopher Killoy, blamed the institutional investors, who “blindly followed the guidance” of governance groups. Both Glass Lewis and ISS have recommended voting in favor of the proposal at Smith & Wesson this year. But they also recommended that last year, when it didn’t pass.

Smith and Wesson President and CEO Mark Smith, left, and Tennessee Governor Bill Lee prepare for a ground breaking ceremony for the new Tennessee location for the firearms manufacturer, November 2021 in Alcoa, Tenn. (Scott Keller—The Daily Times/AP)

Smith and Wesson President and Chief Executive Officer Mark Smith and Tennessee Governor Bill Lee get ready for a groundbreaking ceremony to mark the Tennessee facility for the firearms maker. This will be held November 2021 at Alcoa in Tenn.

Scott Keller—The Daily Times/AP

In the meantime, business is good for gun manufacturers, including Smith & Wesson. Most analysts that follow the company’s stock recommend buying in. In the first year of the pandemic, Smith & Wesson’s revenues increased by 27%. According to Smith & Wesson, sales totalled $875m for the April fiscal year, and the gross profit margin was 43%. The board seems to be happy with the new CEO. Smith was appointed as CEO in 2020. According to ISS Smith’s base salary has increased 77% since then. This, along with additional incentives has brought his earnings up to $2.8million.

The vote at Ruger took place shortly after 19 elementary school students and two teachers were killed in Uvalde, and it’s unclear if, in the absence of such a tragedy, voters will feel as motivated to call on the gun companies to reexamine their role. It’s also unclear if such a non-binding proposal is worth the investment the shareholders have put in. Byron says it is. In 2020, according to the CDC, there were more than 45,000 firearm-related deaths in the U.S.—about 124 people a day. That’s about 12% more Americans than died from car crashes, and half as many as died from drug overdoses. Over half the gun deaths in America were due to suicide, and 40% of them were caused by homicides. “We have 400 million guns [in America] now,” she says. “It’s gonna take more than my lifetime to change this, but you know, we just have to do something.”

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