Activist investing has come for fossil fuels. What about guns?


The message after a mass shooting, this time at a Texas elementary school, was clear: People who want to curb gun violence should “cast their vote in November.” That was how Sen. Chuck Schumer, D-N.Y., the majority leader, put it Wednesday.

But not everyone will have to wait until then. This Wednesday, when the shareholders of the Connecticut-based gun maker Sturm, Ruger log in to the company’s virtual annual meeting, they can vote on a shareholder proposal that states because of “the inherent lethality of firearms,” Ruger must hire an outside firm to study its impact on human rights, “above and beyond legal and regulatory matters.”

The human rights study is an unlikely crusade at Ruger, similar to an effort at Smith & Wesson, another rare publicly traded gun company in a largely privately owned and opaque industry. The nonbinding proposals pit a nun, who is leading one activist group, and a hospital executive, leading another, against gun makers who have so far been unwilling to compromise.

They may not be typical Ruger investors, but they are representative of a certain kind of activist investing: buying shares in a public company in order to have a say in how it is run.

Shareholder activism can mean several things. Some activists want to take over a company and govern it differently for financial reasons. Some, such as the ones urging Ruger to study human rights, invest in companies in order to push them to change on social issues.

On Wall Street, the field of ESG is expanding. That stands for environmental, social and governance issues in corporate stewardship, and making decisions with an ESG viewpoint leads some investors to avoid certain industries, including fossil fuels, private prisons and tobacco, while others agitate for change within organizations.

In Ruger’s case, investors led by CommonSpirit Health, a nonprofit hospital chain based in Chicago, want the company to do a human rights impact assessment on its products and business practices. The push is part of a larger effort coordinated by the Interfaith Center on Corporate Responsibility.

Ruger has no public relations department. Company representatives did not respond to calls and emails seeking comment.

“If we can move corporations, that is a really big leverage point for systemic change because of the money and power that corporate America really has today,” said Laura Krausa, CommonSpirit’s director of advocacy.

Krausa and her allies have little to lose and a growing precedent to follow for successfully nudging companies’ behavior.

The increasing focus on ESG issues has led banks and other financial companies to pare back financing of the dirtiest fossil fuels. It has also forced myriad companies to diversify their corporate boards by adding more women and minorities.

The changes brought about by individual shareholder resolutions are not momentous on their own. But together they have pushed companies to greater awareness of how their actions affect the wider world.

Shareholders’ willingness to vote in favor of ESG-oriented proposals is rising. In 2021, for instance, 44% of shareholders in Smith & Wesson voted in favor of an investor proposal that the company adopt a human rights policy. That was higher than the 36% of shareholders who supported a similar proposal filed in 2019.

“It’s kind of a Hail Mary,” said Dr. Jonathan Metzl, director of the Department of Medicine, Health and Society at Vanderbilt University, whose research focuses on guns in America. Shareholder resolutions are weak, Metzl said, because they can only influence one company at a time and, without broader, more coordinated pressure, individual gun makers have no incentive to act.

Ruger opposes the current proposal on human rights and has described CommonSpirit’s interest in the actual day-to-day business of the company as tenuous. “Despite minuscule ownership of company stock, the proponents are using the proxy system to advance the gun control agenda they have been unable to achieve through legislative and other means,” Ruger wrote, urging shareholders to vote down the proposal.

Even if it passes, the resolution will not force the company to act. But activist investors view any kind of influence over the gun industry as better than none at all.

The recent history of agitating for change from corporations, as gun control advocates tell it, is largely a history of failure.

When Ed Shultz, who was Smith & Wesson’s CEO in the late 1990s, struck a deal with the Clinton administration to adopt new safety measures for its products, retailers and the National Rifle Association boycotted the company and almost bankrupted it, driving Shultz out of the industry.

When companies such as Citigroup, retailer Dick’s Sporting Goods and Delta Air Lines have declared support for gun-control measures and vowed to promote gun safety by changing their own business practices, groups such as the NRA have campaigned against them.

Investors, though, can be harder to ignore. Boards have a duty to listen and respond.

In 2018, a measure urging Ruger to produce a study on the safety of its products won a majority of shareholder votes and the company responded with a two-dozen-page report.

“The criminal misuse of firearms is a complex societal issue, resistant to solution through more laws or new technologies,” the report said. “We have long warned that there is no such thing as a foolproof gun, and there is no substitute for personal responsibility and common sense in the safe handling, use and storage of firearms.”

Activists said it did not actually answer their questions, but at least it was a start.

Some investors also have campaigned to remove Ruger’s board members, including Sandra Froman, the former NRA president who the left-leaning group Majority Action revealed had worked with eugenicist William Shockley in the early 1970s to make his theories about the inherent inferiority of Black people publicly palatable.

Froman said at the time she did not remember working with Shockley.

Big asset managers such as BlackRock, State Street, Vanguard and Charles Schwab, as well as quantitative fund manager Renaissance Technologies, make up a large portion of Ruger’s shareholders. On Wednesday, Krausa emailed some of these large shareholders asking for their support.

Representatives of each of the companies said they could not comment on how they would vote. But on Thursday, Vanguard executives held a phone call during which Krausa and others made their case for the assessment.

Advocates such as Krausa know a human rights report is far from a law that would, for example, ban AR-15s or require people to be at least 21 years old to purchase a semi-automatic weapon. But they see it as better than the current posture of heads in the sand.

“This resolution is poised to help the company understand their role in addressing what is a crisis of colossal proportions,” she said of CommonSpirit’s human rights assessment proposal.

Metzl saw only slim prospects for change. It did not help, he said, that gun stocks have flourished during the coronavirus pandemic, when gun sales shot up and images of people waiting in around-the-block lines to buy them prompted manufacturers to increase their production.

“We should try everything we possibly can,” he said, “but I would say if this is the only avenue, it’s a reflection of a much bigger problem.”


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