This report was written by Julia Rock.
The gun lobby is pushing a Trump administration proposal that would make it harder for private pension systems, 401k plans and workers to shift retirement savings out of the firearms industry, after mass shootings have propelled a movement to divest from gun manufacturers. The move comes as gun violence is surging across the country —and only a few months after the gun divestment movement got a major boost from the state pension fund in Connecticut, the site of the Sandy Hook mass shooting.
As TMI previously reported, a new rule from the Trump Labor Department could shield controversial industries from divestment actions. Though the Trump rule would only cover private pensions and 401k plans, such federal rules can end up setting industry-wide investment standards.
Proponents of the rule say it is designed to compel financial managers to prioritize investor returns over any other criteria. Opponents say the rule would make it harder for workers to move savings into so-called ESG investments that factor in environmental, social and corporate governance considerations.
Fossil fuel companies took advantage of the public comment period on the new rule to voice their support for the change. Now the gun industry is weighing in.
“In recent years, both ERISA plans and publicly traded firearm manufacturers have faced third party pressure to meet political demands from activists through ESG investments or actions,” wrote Lawrence Keane of the National Shooting Sports Foundation, a firearms industry trade association, in a letter supporting the proposal. “Driving these efforts are ESG ratings firms profiting from the promotion of non-pecuniary ESG investing factors, rather than shareholder value.”
Keane’s letter suggests that ESG rating firms aren’t properly considering firearm manufacturers’ own sustainable investing efforts.
“Rather than offering information or analysis on the safety programs, community outreach initiatives or other efforts taken by firearm and ammunition companies, these firms operate under blind standards with no disclosure of our industry’s extensive ESG work,” he wrote.
The Gun Lobby Wants Protection
With government paralyzed, divestment movements have become a popular, effective way for activists to voice their dissatisfaction with corporate behavior. In recent years, such movements have cut into the profits of increasingly unpopular industries such as private prisons, fossil fuels and firearms.
Gun manufacturers and their lobbying groups have been targeted for divestment with substantial success as the number of mass shootings across the country mounts. In February 2018, following a #BoycottNRA online campaign, a number of businesses re-evaluated their involvement with gun companies and the lobby.
The First National Bank of Omaha stopped offering NRA-branded Visa cards, citing “customer feedback.” Car rental service Enterprise Holdings ended its benefits program with the organization. In New Jersey, lawmakers took actions to restrict the state pension funds from investing in gun manufacturing companies. And most recently, Connecticut State Treasurer Shawn Wooden announced in December that his state will begin divesting its retirement funds from civilian firearms manufacturing companies.
The NSSF letter attempts to undermine the key premise of the divestment movement, arguing that retirement plans are not the place to address “social or policy goals that are not in the interest of the beneficiaries.”
A Campaign To Defang Divestment
Of course, divesting from weapons manufacturers might actually be in the financial interest of beneficiaries -- gun stocks fluctuate widely based on the political moment or time elapsed since the last mass shooting.
Gun stocks are performing well right now, because sales rose in response to the pandemic, police brutality protests, and New York Attorney General Letitia James’ announcement last week that she was moving to dissolve the National Rifle Association. But over the past decade, ESG investment funds have outperformed the rest of the stock market, according to recent research.
Just a couple weeks ago, the Remington Arms Company, one of the largest firearm manufacturers in the United States, filed for bankruptcy for the second time in two years. The company had been struggling ever since a Bushmaster AR-15-style rifle manufactured by Remington was used in the Sandy Hook massacre, and was drained by legal fees and divestment pressure. (Commentators noted that Remington’s bankruptcy wasn’t reflective of trends in industry).
And retirees have publicly demanded that their savings be divested from gun manufacturers. After the Sandy Hook shooting, thousands of customers of the TIAA-CREF, which provides retirement services for college and university employees, demanded that the fund divest from gun and ammunition manufacturers. The California Federation of Teachers also pressured their retirement system to divest from Cerberus Capital Management, which owned Remington at the time.
The Zachor Legal Institute, one of the leading foes of the Boycott, Divestment, and Sanctions (BDS) movement against Israel, joined the gun industry’s support of the Labor rule in a comment.
Zachor Legal president Marc Greendorfer cited free market theorist Milton Friedman in an 18-page comment.
“The esteemed economist Milton Friedman provided the most succinct theory of the corporation, and strongly implied that CSR (corporate social responsibility) has no place in a traditional corporation other than as a means to the end of wealth maximization: ‘In [a free economy] there is one and only one social responsibility of business -- to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game’” Greendorfer wrote.
His comment includes a short manifesto against the BDS movement, which he calls “a recent mutation of the longstanding Arab world effort to weaken, and ultimately eliminate, the State of Israel.” Greendorfer says that corporate social responsibility programs are being used by “various hate groups who seek to harm investors and companies for political purposes.”
Photo: Rose Pineda / Wikimedia Commons
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