BlackRock Goes Public With Questions To Gun Industry-- 3rd Update
March 02 2018 - 7:34PM
Dow Jones News
By Sarah Krouse
BlackRock Inc. went public with the questions that it is asking
gun makers and sellers in the wake of the school shooting in
Parkland, Fla., an unusual step by the world's largest money
manager by assets.
The notice, posted to BlackRock's website Friday, is the latest
sign that some 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.
"We cannot dictate what a company should do," BlackRock said,
but warned it generally has the ability to vote against individual
directors or in favor of shareholder proposals.
Blackstone Group LP 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 U.S. 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 this past 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 its index-tracking funds, those companies account for
0.01% of assets under management.
The New York money manager has met with clients, including
pension funds and other institutional investors, to discuss ways
they can exclude gun stocks from their portfolios if they wish to
and what BlackRock 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.
BlackRock and other large money managers that control funds tied
to market indexes say they prefer not to use their heft to make
immediate demands such as putting an individual on the board or
divesting business units, in contrast to more aggressive dictates
from activist directors. Instead, they say they like to work behind
the scenes and question their portfolio companies routinely about
their policies and plans.
But it is rare for BlackRock to make those questions public.
Last year, BlackRock stopped short of detailing the types of
questions it asked company boards and executives in a paper that
broadly laid out how it engaged with its portfolio companies on
climate-change risk.
In the notice Friday, BlackRock called gun violence "an issue of
tremendous urgency."
The questions the firm said were being posed 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 BlackRock 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 that it planned to meet with
weapons-related companies but stopped short of publicly
articulating what type of information it planned to seek from them.
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.
Write to Sarah Krouse at sarah.krouse@wsj.com
(END) Dow Jones Newswires
March 02, 2018 19:19 ET (00:19 GMT)
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