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Sturm Ruger shareholder proposal
Reuters/Eric Thayer
Taking stock in Sturm Ruger.
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A gun maker has been pushed by investors to issue a safety report on its products

By Oliver Staley

There’s a long history of socially motivated shareholders noisily calling on corporations to improve their record on progressive issues, only to watch their proposals whither and die when big institutional investors side with company management.

That’s what makes a vote yesterday (May 9) among shareholders of Sturm, Ruger & Co., a US gun maker, so noteworthy.  A majority of shareholders approved a resolution calling for the company to issue a report on how its guns are used and how it can mitigate the harm of gun violence.

The board of Sturm Ruger opposed the resolution (pdf), saying the misuse of firearms by criminals was beyond its control, but at the company’s annual meeting, CEO Chris Kilroy said the report would be produced as requested. He insisted, however, that “what [the resolution] does not do and cannot do is force us to adopt misguided principles created by groups, who do not own guns, know nothing about our business and frankly would rather see us out of business,” according to a transcript.

But by lashing out at activist groups, Kilroy ignored the role Wall Street played in the resolution’s passage.

While the proposal was introduced by a tiny shareholder—Sisters of the Holy Names of Jesus and Mary, an Oregon-based Catholic group—it couldn’t have passed without the support of major institutional investors, according to Reuters. A majority of Sturm Ruger shares are owned by six investors—BlackRock and Vanguard together own or oversee accounts holding about 25% of the company. The proposal also was endorsed by proxy advisors such as ISS and Glass Lewis, which said gun violence poses a reputational risk and that the company should investigate safety measures like smart-gun technology.

The resolution’s successful passage shows how much the landscape for gun makers has changed in the months following February’s school shooting in Parkland, Florida, as a growing number of banks and retailers are cutting ties to the gun industry. It also reflects an increased willingness on the part of the world’s biggest investors to use their financial clout to push for change.

BlackRock CEO Larry Fink, in particular, has been pushing for companies to consider their responsibility to society as part of their obligation to shareholders. After years of preferring to work behind the scenes to influence companies, this year Fink announced “a new model of shareholder engagement” in his annual letter to CEOs and suggested the company wouldn’t shy away from using the power of its $6.3 trillion in investments to vote in its interests. (BlackRock couldn’t immediately be reached for comment about how it voted on the Sturm Ruger measure).

BlackRock is the largest or second-largest institutional shareholder in four of the largest publicly traded gun companies. If Fink has decided gun safety is in the interest of BlackRocks investors, the gun makers of the world had better take notice.