BlackRock, the world’s largest money manager, will consider designing index-based funds that exclude gunmakers as public frustration mounts following the massacre of 17 people at a Florida high school.
The New York-based company is the largest investor in American Outdoor Brands Corp, the producer of the AR-15 semi-automatic rifle that police say 19-year-old Nikolas Cruz used in his Valentine’s Day rampage at Marjory Stoneman Douglas High School, and has holdings in the two other publicly-traded U.S. firearms manufacturers: Vista Outdoor and Sturm Ruger.
The stakes are all held through index-linked funds that BlackRock manages for clients, which means it can’t remove the firearm stocks unless customers request it. Executives have contacted the gunmakers, however, as well as retailers and distributors to discuss their business practices.
“The recent tragedy in Florida has driven home for BlackRock the terrible toll from gun violence in America,” the company said in a statement posted on its website Friday. “We believe that this event requires response and action from a wide range of entities across both the public and private sectors.”
The financier headed by CEO Larry Fink is part of a swath of American companies reevaluating its relationship with the weapons industry amid the #NeverAgain and #BoycottNRA social media campaigns. Firms from Delta Air Lines to insurance provider Chubb and car-rental firms Avis and Enterprise have ended relationships with the National Rifle Association.
Lawmakers and President Trump, meanwhile, have discussed measures from arming teachers to raising minimum-age requirements for weapons purchasers. Three retailers — Kroger, Walmart, and Dick’s Sporting Goods — all of which count BlackRock among their top investors, said this week they will no longer sell guns to customers under 21, and Dick’s said it would also discontinue sales of assault rifles.
Kroger, a grocery chain that sells firearms through its general merchandise Fred Meyer outlets, has “taken a hard look at its policies,” which already rigorous training and federal background checks for staff who handle the transactions, a spokeswoman said.
“For manufacturers and retailers of civilian firearms, we believe that responsible policies and practices are critical to their long-term prospects,” said BlackRock, which handles assets of $6.3 trillion. “Now more so than ever.” The money manager noted that none of its so-called active funds, those whose holdings are selected by individual portfolio managers, include gun stocks.
Client in “passive funds,” which are typically linked to a stock index, may pull out of individual companies, choose from funds based on social, environmental, and governance criteria or keep their money where it is. “Of course, it is our clients’ decision when and how to use these products to achieve their goals,” the company noted. “It is their money, not ours.”
Gunmakers can direct research “towards the development of safer weapons and violence reduction,” she wrote in a letter to BlackRock’s Fink that noted his previously expressed views that businesses can only succeed by proving they benefit all their stakeholders — from shareholders to workers, customers and local communities.
Firearms producers “can take additional actions in conjunction with their distributors, retailers, and other business partners,” Warren added. “None of these actions would substitute for action by the federal government, but each would help reduce gun violence.”
