Copyright : Puttawat Santiyothin

The mass shooting news cycle isn’t going away. In the wake of the Parkland, Fla., shooting in February, hundreds of thousands of protesters descended upon Washington for the March For Our Lives, a show of force aimed at generating support from U.S. lawmakers to take action on gun control.

Just this past Tuesday, a young woman entered YouTube’s headquarters in San Bruno, Calif., and opened fired on a group of employees she reportedly didn’t know. She injured three of them before taking her own life, according to CNN.

North of the border, Canada hasn’t shied away from the gun conversation in recent weeks. On March 20, 2017, the federal government introduced new legislation providing for the enhancement of background checks for those seeking to buy firearms, as well as the standardization of best practices for gun sellers when it comes to keeping records, inventory and sales.

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As the debate continues, some institutional investors are examining their exposure to gun-related investments. While the violence resulting from increased access to firearms is far more of an issue in the United States than Canada, no Canadian pension plan can tout itself as being serious about environmental, social and governance factors if it has investments in a gun manufacturer, says Ruo Tan, president of Segal Rogerscasey Canada. “It’s not socially responsible. It’s not socially sustainable,” he says.

Several of Canada’s larger players declined to reveal their exposure to gun companies to Benefits Canada, although some of them do disclose their stakes in major weapons manufacturers, such as Lockheed Martin Corp. While such holdings are obviously distinct from the gun-control issue in the wake of mass shootings, the U.S. debate has included attempts to broaden the discussions about how pension funds should respond to concerns about their investments in the area.

One large plan facing such calls is the California Public Employees’ Retirement System, which has announced it won’t be making any immediate changes to its investments despite urging from the state’s treasurer, John Chiang. Chiang is also a Democratic candidate for governor and a member of CalPERS’ board of administration.

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Back in 2013, CalPERS did divest from two U.S. gun manufacturers, Smith & Wesson Holding Corp. and Sturm Ruger & Co. Inc, citing the fact that the companies made guns that are illegal in California. However, when it comes to companies that sell guns rather than manufacturing them, the plan is taking a different approach. In the wake of the Las Vegas shooting in October 2017 that left 58 dead and 851 injured, the plan sent letters to the five companies in which it currently holds stock to ascertain their plans to help decrease gun violence.

“We wrote to those five companies that we identified, and our intention was to hold the boards accountable,” said Anne Simpson, investment director for sustainability at CalPERS, at the board’s most recent investment committee meeting on March, 19, 2018. “I think this is our appropriate role, as the share owners of these companies. We asked the companies to carry out a review of the revenues which are associated with the sale of weapons banned for sale in California and consider the risks to the company.”

Simpson noted that all of the five companies involved in Chiang’s request, which include Dick’s Sporting Goods Inc., Walmart Inc., Sportsman’s Warehouse Holdings Inc., Big 5 Corp. and Kroger Co., did indeed conduct a review of their policies at the request of CalPERS. Four out of the five have committed to taking several actions, according to Priya Mathur, president of the CalPERS’ board of administration. They include discontinuing the sale of assault weapons, if the companies still sell them, as well as high-capacity magazines and other accessories like bump stocks. In addition, the companies have raised the minimum age to acquire a firearm in their stores to 21 from 18.

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“Through that engagement . . . we have supported the students’ efforts and the efforts of those advocating against gun violence in this country, providing the investor voice, how this issue is a real business issue,” said Mathur, referring to the protests led by students affected by the Parkland tragedy.

Walmart isn’t specifically a gun store, of course, but a much broader retailer. Indeed, Walmart was one company that took quick action in the wake of the Parkland shooting, raising the minimum purchasing age for any gun to 21 and going so far as to ban the sale of anything even resembling an assault-style weapon, including children’s toys. Not surprisingly, several large Canadian pension plans hold shares in U.S-based retailers such as Walmart. The Canada Pension Plan Investment Board, for example, owned a $370-million stake in the U.S. retailer as of March 31, 2017. As for the Ontario Teachers’ Pension Plan, it owned about $18 million worth of Walmart shares and $26 million in Kroger shares as of Dec. 31, 2017, according to information posted by Nasdaq. The Ontario Municipal Employees Retirement System held $8 million in Walmart shares as of that time, the Nasdaq figures show.

As for CalPERS, the debate continued at the committee meeting in March, with Chiang suggesting the actions taken by the retailers in question was far from adequate. “If thoughts and prayers could be converted into currency, our pension fund’s US$139 billion unfunded liability would have been zeroed out long ago. When will bold action replace the hollow platitudes?” he asked those assembled.

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Questions of morality aside, the risks of gun-related investments were evident on March 26, 2018, when Remington Outdoor Co., a 202-year-old gun manufacturer, filed for Chapter 11 bankruptcy protection. After the Parkland shooting, Remington’s owner, Cerberus Capital Management, came under pressure from investors to sell the company, the Guardian reported. However, the hedge fund had trouble finding a buyer and had to settle for allowing investors to sell their shares in Remington.

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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