BlackRock Goes Public With Questions To Gun Industry--Update
By Sarah Krouse
BlackRock Inc. went public with the questions that it is asking of gun makers and sellers in the wake of the school shooting in Parkland, Fla., an unusual step by the world's largest asset manager.
The notice posted to BlackRock's website Friday is the latest sign that money managers are ramping up pressure on companies that make and sell weapons. The questions range from litigation risks and gun safety to background checks and staff training.
Investing giant Blackstone Group last weekend asked outside fund managers to detail their ownership in companies that make or sell guns. State Street Global Advisors, another big money manager, has said it also plans to reach out to gun makers with questions.
A number of American companies have reassessed their relationships with the gun industry and the National Rifle Association following last month's shooting at Marjory Stoneman Douglas High School. Major retailers including Kroger Co., Walmart Inc. and Dick's Sporting Goods Inc. said earlier this week that they would stop selling guns to anyone under 21 years old.
BlackRock is the largest shareholder in gun makers Sturm Ruger & Co. and American Outdoor Brands, formerly known as Smith & Wesson, as well as a large shareholder in firms such as Walmart and Dick's Sporting Goods. BlackRock said in the notice that it doesn't own any gun makers in its actively managed stock funds, and in index-tracking funds those companies comprise 0.01% of assets under management.
The New York money manager has met with clients, including pension funds and other institutional investors, about ways they can exclude gun stocks from their portfolios if they wish to and what the money manager is asking of executives at companies that make or distribute guns, according to people familiar with those efforts.
It held one such conference call for large customers as recently as Friday morning with executives focused on corporate stewardship and client relationships.
It isn't unusual for BlackRock to ask specific questions of its portfolio companies, but it is rare for the firm to make those questions public. It called gun violence "an issue of tremendous urgency" in the notice posted on its website Friday.
The questions being posed by BlackRock to gun makers and distributors include broad inquiries such as how they measure the "financial, reputational and litigation risk" of those respective businesses and what actions they take to support gun safety and education.
But it is also posing specific queries of gun makers, such as if they monitor whether the distributors of their weapons "have a high volume of their guns identified as having been used in crimes"; if they are spending money on research to improve gun safety; and if they require retailers to train their staff or certify that they conduct background checks.
For gun distributors, BlackRock asked what steps they take to make sure gun laws are followed such as "prohibiting felons or domestic abuse offenders from purchasing firearms; sales to minors of certain products; training provided to employees so they comply with applicable laws and regulations."
BlackRock previously said it planned to meet with weapons-related companies but stopped short of publicly articulating what type of information it planned to ask them for. It and other managers of index-tracking funds typically keep the contents of their engagements with portfolio companies private.
"We are fundamentally looking to understand whether the company has the appropriate policies and controls in place and is sufficiently managing the risks associated with these issues," the new BlackRock notice said.
Shareholders like BlackRock are able to vote against individual directors or in favor of shareholder proposals if companies don't make progress toward the goals they seek or provide the information requested.
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March 02, 2018 12:26 ET (17:26 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.