Studies estimate that the US had the second-highest number of gun deaths in the world between 1990 and 2016, in absolute terms. Health.com states that gun homicides kill 13,000 people a year in the US, a rate 25 times higher than in other developed countries. The same study shows that 1300 children die gun-related deaths in the US each year, the third highest cause of death for children.
The 2012 Sandy Hook Elementary School shooting, in which 20 children and six staff where shot dead at a school in Connecticut, set off a groundswell of emotional backlash against the horror of gun violence. However, at that time there was no consensus as to what responsible corporate practices investors should advocate with respect to the gun industry.
This has now changed.
A coalition of 13 institutional investors, co-ordinated by the $229.2 billion California State Teachers’ Retirement System (CalSTRS), has drawn up a set of investor principles to improve the safety and responsibility of the firearms industry.
Working with a coalition of investors whose assets total nearly $5 trillion, the Principles for a Responsible Civilian Firearms Industry serve as a starting point for investors to begin discussions with organisations that manufacture, distribute, regulate or fund the firearms industry, with the goal of creating safer products and reducing investment risk.
The principles serve as engagement points for investors seeking to protect and enhance long-term portfolio values by ensuring risks are being appropriately monitored and addressed. They are not prescriptive in any way and each signatory will interpret and apply them on their own as they see fit. The principles document states:
“As asset owners and asset managers, we have a duty to our beneficiaries, who depend on us for financial security; such obligations compel us to assume responsibility for reducing risks that we and our beneficiaries face if and when we hold a financial interest in both private and public firearms-related enterprises.
We believe that enterprises involved in the manufacturing, distribution and sale and enforcement of regulations in the firearms industry are well positioned to support pragmatic transparency and safety measures that contribute to the responsible use of firearms. Through this framework, we assert our role as investors in encouraging such practices, and we identify expectations for the firearms industry that will reduce risks and improve the safety of civil society at large. Further, we commit to monitoring progress by companies over time and engaging with them regularly on this issue, especially in support of enterprises that champion adoption of responsible practices.
The Responsible Civilian Firearms Industry Principles are meant to be sensible and not intended to be prescriptive in nature. We recognise that there are many ways to apply a principle; companies are free to apply the Principles in a manner they deem appropriate. We also recognise that the civilian firearms industry is highly regulated by both federal and state entities with respect to the manufacture, sale, use and transfer of firearms. However, we also recognise that more can be voluntarily done by companies within these existing regulatory boundaries to advance safety and the responsible use of civilian firearms.”
The five principles, downloadable at FirearmsPrinciples.com, are:
Principle 1: Manufacturers should support, advance and integrate the development of technology designed to make civilian firearms safer, more secure, and easier to trace.
Principle 2: Manufacturers should adopt and follow responsible business practices that establish and enforce responsible dealer standards and promote training and education programs for owners designed around firearms safety.
Principle 3: Civilian firearms distributors, dealers, and retailers should establish, promote, and follow best practices to ensure that no firearm is sold without a completed background check in order to prevent sales to persons prohibited from buying firearms or those too dangerous to possess firearms.
Principle 4: Civilian firearms distributors, dealers, and retailers should educate and train their employees to better recognise and effectively monitor irregularities at the point of sale, to record all firearm sales, to audit firearms inventory on a regular basis, and to proactively assist law enforcement.
Principle 5: Participants in the civilian firearms industry should work collaboratively, communicate, and engage with the signatories of these Principles to design, adopt, and disclose measures and metrics demonstrating both best practices and their commitment to promoting these Principles.
The principles are deliberately written so that each investing institution can decide for itself what to ask of companies and how to respond to what the companies decide to do or not do. Building in this flexibility was important to each institution, given they all have different models for engaging their portfolio companies.
The Firearms Principles set the stage for global institutional investors to engage with companies in the civilian firearms industry by having productive discussions on how these principles can be applied over the long term to address gun safety while reducing investment risks. There are a variety of outcomes that could unfold within the next many years but the best one for all would be to engage in constructive dialogue across the civilian firearms industry about what companies can do to keep society and our future generations safer.
Working with Chris Ailman and CalSTRS to convene these institutional investors at Harvard to write the Firearms Principles was just the beginning. We invite and call upon global institutional investors of all types to become signatories to these principles to reduce risks and encourage progress on gun safety issues in the US.
Christianna Wood is advanced leadership fellow at Harvard University.
Interested investors may send an email to FirearmsPrinciples@CalSTRS.com
Members of the coalition
California Public Employees’ Retirement System
California State Teachers’ Retirement System
Connecticut Retirement Plans and Trust Funds
Florida State Board of Administration
Maine Public Employees Retirement System
Maryland State Retirement and Pension System
Nuveen, the asset manager of Teachers Insurance and Annuity Association of America
OIP Investment Trust
Oregon Public Employees Retirement Fund
Rockefeller Asset Management
San Francisco Employees’ Retirement System
State Street Global Advisors
Wespath Investment Management