by When I was a child growing up Catholic, I was taught to respect and admire nuns. These women religious had taken vows of poverty, chastity, and obedience. They served the poor and the downtrodden, they worked to heal those that were ill, and they taught children in all phases of their education. Indeed, my Great-Aunt Tessie, one of my maternal grandfather’s older sisters, was a Sister of Charity who took the name Sr. Joseph Scholastica.
Thus, I am dismayed and angered when I see the continuous effort at gun prohibition by certain orders of Catholic nuns. Their tool is to buy a minimal number of shares of a firearms company and then submit a shareholder proposal advocating for certain reports on “gun violence” or adoption of the UN’s Guiding Principles on Business and Human Rights. If they can get buy-in from one of the proxy advisory firms such as Glass Lewis or Institutional Shareholder Services (ISS), they have a good chance of passing their proposal regardless of the harm it will do to the firearms company and its business. This is because many institutional investors just go along with whatever the proxy advisor says to do.
Such is the case in an effort by the Adrian Dominican Sisters of Adrian, Michigan with their shareholder proposal now before shareholders of Smith and Wesson Brands, Inc.
Their proposal, states in part:
As investors, we seek to identify and assess human rights risks and impacts in portfolio companies because they can have direct implications for shareholder value and, depending on how they are managed, can affect a company’s long-term viability.
Given the lethality of firearms products and the potential for their misuse, the risk of adverse human rights impacts is especially elevated for all gun manufacturers, including SWBI…
While SWBI has a number of corporate policies, including a Corporate Stewardship Policy and a Code of
Ethics, the information available on its website does not mention a public commitment to respect human
rights.
This is utter nonsense. I wonder if the good sisters are now pushing any other shareholder proposals that call out the many companies that have recently stated post-Dobbs that they will pay for travel expenses for employees to get an abortion. Abortion is most certainly against Catholic doctrine. Meanwhile, Catholic doctrine since the time of St. Thomas Aquinas and his Just War Theory has recognized the right to self-defense. The current Catechism of the Catholic Church recognizes the moral duty to defend not only one’s own life but that of others. This includes, if necessary, the use of lethal force and the killing of the aggressor.
Smith & Wesson is not caving to these demands. Indeed, they are calling them out on it.
First, they note that this is the fifth year in a row that the Adrian Dominican Sisters have submitted such a shareholder proposal and that the company has engaged them and other shareholders directly on their concerns.
Then they point out:
Our approach is guided by the knowledge that we are responsible for safeguarding stockholder value in a highly politicized environment. These safeguards are swept aside by the proponent’s insistence on the singular path of the UNGP, the essence of which is to require companies to “remedy” harms that are identified by third-parties that have no financial interest in those companies. Indeed, the proposal on its face insists that we do so “regardless of legal requirements.” Multiple groups estimate these extra-legal
“human rights costs” at $280 billion per year.It is not necessary to expose our stockholders to this risk. Our proven approach – of working with stockholders to identify and manage specific financial risks and impacts through active oversight – is superior to the proponent’s imposition of an external convention that supplants stockholder control.
S&W points out they have established a Environmental, Social, and Governance Committee on the board, published fact sheets dealing with environmental factors as well as the firearms market, established a video library on safe firearms handling, and adopted a corporate stewardship policy.
S&W then brings out the big guns, so to speak:
The proponent now has acknowledged that the proposal seeks to harm our business. For the past five years, we have explained that the proponent is part of a well-funded and well-organized campaign that aims to damage our business. The proponent has recently confirmed our concerns by:
• Calling for a ban of lawful firearms, including some of our most popular products.
• Calling on stockholders of service businesses, particularly banks and insurers, to engineer a boycott
of our industry.
• Targeting credit card companies to compel them to cease processing payments for certain firearm
products.
They document each of these assertions in the footnotes.
Finally, they point out the experience of Ruger with these nuns and other like groups in which these so-called human rights groups with no financial stake in the company would “design the program that will establish Ruger’s liability– liability ‘above and beyond legal and regulatory matters.'”
I don’t know whether this proposal will end up passing or not. A lot will depend upon how institutional investors such as pension funds and mutual funds vote. My personal opinion is that the managers of index funds should not have a vote on proxy matters. They only invest in the stock because it is part of an established index and not because of the product, the management team, or how it is governed. But that is only my own personal opinion in which others may differ.
Who decides which shareholders have a vote? Corporate policy? Government regulators?
All individual shareholders have a vote of course. That is, if you own even one share of stock you have a a proportionate vote.
The issue becomes who votes those shares held by the institutional shareholders. If you own mutual fund X which holds Smith & Wesson or Ruger among its holdings, you don’t actually own the stock in Smith or Ruger. You own shares of the mutual fund. Now the fund managers could poll the holders of their fund to see how they should vote but they don’t. They either don’t vote or they just follow the proxy advisors who trend, shall we say, to the Left.