Sturm, Ruger & Co. shareholders are pressing the gunmaker to hire an outside firm to assess the human rights impacts of its policies, practices and products, given the “inherent lethality” of its business.
The resolution’s backers, led by the nonprofit hospital chain CommonSpirit Health, contend the company has “a responsibility to conduct enhanced human rights due diligence,” according to regulatory filings. An outside human rights impact assessment, they said, is critical to uncovering risks “which, if left unaddressed, could prove devastating to Ruger’s customers, suppliers, employees, shareholders, and society.”
Connecticut-based Ruger did not immediately respond to questions about whether it would follow through with the proposal. But in its opposition statement, it argued that such a study could not be undertaken without destroying the company, Securities and Exchange Commission filings show.
Backers said the idea “that an assessment of any company’s potential human rights harms would be fundamentally at odds with its survival is an indefensible position regardless of its business.”
Corporations are being confronted with a rising tide of investor activism that casts social responsibility — regarding the climate crisis, the pandemic, gun violence and more — as necessary to stave off threats both to the public and to companies’ reputations and profits.
Activist investors buy shares and seek to control board seats as a means of having sway in how a company is run. Such entities filed more than 529 resolutions on environmental, social and governance issues in the 2022 proxy season, up more than 20 percent from last year, according to Proxy Preview. The heightened activity comes in the wake of a SEC rule change in 2020 that made it more difficult to file and resubmit shareholder resolutions.
But most shareholders proposals face “long odds,” said Steve Sosnick, chief strategist at Interactive Brokers. “The prospects for the gun manufacturers depend very heavily upon what goes on in the legislative bodies around the country and in court. I can’t think of an industry whose source of revenues is so dependent upon a regulatory and legislative climate.”
A main challenge to such initiatives is that most gunmakers are not publicly traded and don’t have to answer to shareholders, said Jonathan Metzl, who researches gun policy as director of the Department of Medicine, Health and Society at Vanderbilt University. What’s more, federal law shields gun companies from the kinds of lawsuits that have targeted many other consumer product manufacturers.
“This would be a totally different conversation if there was talk of liability — as in the case of cigarettes and cars,” Metzl said. “Shareholder actions would have a much greater impact if the company itself had to account for liability, which isn’t the case.”
But Sister Judy Byron of the Northwest Coalition for Responsible Investment, who is a co-filer on the proposal at Ruger and is leading a similar measure at Smith & Wesson, is undeterred.
“Shareholders know that these days are challenging for those involved in the firearms business,” Byron said in a statement. “We will support and pray for them as they conduct this assessment and determine what changes to their business they will need to make in order to respect human rights, protect their stakeholders and make our society safer.”
American children and adolescents are more likely to die by gunfire than any other cause, according to the most recent available data from the national Centers for Disease Control and Prevention. In 2020, automobiles — long the leading cause of death for youth in the United States — were eclipsed by guns for the first time. More than 2,200 young people died because of guns in 2020, by far the highest total in the past 20 years.
There have been more than 230 mass shootings in the United States this year, according to the Gun Violence Archive. One of the most recent occurred Wednesday, when police say a man gunned down four people at a Tulsa hospital before killing himself. He reportedly was armed with an AR-15-style rifle that had been purchased about an hour before the attack, as well as a .40-caliber handgun. Both weapons were acquired legally.
While public outcry has surged in the aftermath of the Uvalde massacre, with many Americans calling for new legislation to restrict access to high-powered weaponry, a parallel reality has emerged on Wall Street. Some of the nation’s largest gun and ammunition makers saw their stock prices rise following the shooting.
Shares of Sturm, Ruger & Co. are up 9.4 percent since the attack, while Smith & Wesson Brands has climbed by nearly 14 percent, both outpacing the broader stock market.
Such upswings have been seen after mass shootings or significant events that pull the debate around gun control into the national spotlight. The pattern stems from the view that there will be a rush on guns, ammunition and accessories in advance of political efforts to limit access. During the summer following the initial outbreak of the coronavirus, when masses of people took to the streets to protest racial injustice, shareholders of gunmakers also enjoyed a rally.
Political leaders advancing gun restrictions will ramp up their messaging on reform in the coming days and weeks.
President Biden will deliver a prime time address Thursday and call on Congress to pass “common sense laws” in the wake of mass shootings in New York, Texas and Oklahoma. The president will focus on the need to “combat the epidemic of gun violence that is taking lives every day,” according to the White House.
Meanwhile, the House Judiciary Committee is debating legislation billed as an emergency response to mass shootings. One bill under consideration could pass the House as early as next week but is not expected to advance in the Senate.