Four years ago, BlackRock CEO Larry Fink was forced to confront his gun problem.
Following the Parkland, Florida, school shooting that left 17 people dead, focus turned to the fact that BlackRock, the world’s largest asset manager, was the largest institutional shareholder of three publicly traded gun manufacturers, including the one that made the gun used in the Parkland shooting.
That wouldn’t have been surprising had Fink not written an open letter to business leaders that year calling for corporate chiefs to start caring about their firms’ “societal impact” if they wanted to stay in BlackRock’s good graces. His apparent turn toward corporate activism was considered a watershed moment for socially responsible investing.
So, after Parkland and subsequent public pressure, BlackRock pledged to make modest changes.
Today, as the US comes to grips with yet another school shooting, this one claiming the lives of 19 elementary school students and two adults in Uvalde, Texas, BlackRock remains both an advocate of conscious capitalism and the largest shareholder of four of the biggest gun and ammunition companies in the US. And it’s unclear that any of the actions BlackRock took in 2018 have made a difference.
To be clear, as BlackRock pointed out in 2018, it owns gun maker stocks through its massive investments in index funds, rather than as direct investments. “Because the companies in an index are determined by third-party index providers, when a client chooses an index that includes a firearms manufacturer, we are unable to sell those shares regardless of our view of the company,” the company explained in an open letter that year. BlackRock said none of its actively managed funds included gun or ammunition companies.
Following the Parkland shooting, BlackRock created two ETFs that exclude civilian gun and ammunition companies, and it removed retailers that sold guns, including Walmart and Kroger, from its ESG index products, as Bloomberg reported.
It also promised to hold meetings with the offending companies “regarding business policies and practices.” It’s unclear what came of those.
What could BlackRock do to put pressure on gun companies?
Andrew Behar, CEO of As You Sow, a non-profit that tracks how well companies live up to their environmental and social pledges, isn’t convinced that BlackRock will do anything differently this time. He charges that companies like BlackRock hide behind the “it’s in an index” excuse.
As for the engagement meetings with the firearms industry? They are toothless, he feels: “BlackRock could say, ‘Here’s the data. Here’s the risk. Here’s what you’re scoring. Here’s how your competitors are scoring,” and if you don’t want to do what we’re asking of you, we’re going to escalate this to a shareholder resolution.”
Instead, Behar charges, “They go, ‘Hi. We’d like you to do something, but we’re not going to escalate this. What’s for lunch?’”
In 2018, the New York Times’s Andrew Ross Sorkin described other measures that BlackRock could take with its “enormous influence” over gun companies and retailers. It could press for higher age limits on AR-15-style rifles, or even “push gun makers to stop producing such weapons altogether,” he said. If BlackRock wasn’t seeing enough voluntary changes at a company, it could vote to have its board replaced.
But BlackRock appeared to be taking a “lighter touch,” Sorkin concluded.
These days, Fink is reserving his heavier touch for other issues. He has positioned BlackRock, which now manages $10 trillion in assets, as a champion of climate action and of racial equity in corporate boardrooms. The money manager has even has been celebrated for quantifying its tremendous carbon footprint.
But Behar has not been impressed. “Larry Fink has the power to get companies to shift, but [BlackRock] just doesn’t take any action,” he told Quartz. BlackRock has voted against shareholder resolutions that support ESG goals, he says.
BlackRock has warned that it will not support as many climate-related shareholder proposals in 2022 as it had last year, saying that too many resolutions are now aimed at micromanaging companies. In 2021, the firm voted in favor of social and environmental proposals just less than half of the time (47%), according to the company.
BlackRock’s current “investment stewardship” principles mention climate risk and the environment, human rights, and how well a company treats its workforce.
It doesn’t make any mention of guns or gun violence.