A mass shooting at an elementary school this week left 19 students and two teachers dead, renewing a debate over gun control.
The Uvalde, Texas, massacre was the 27th school shooting this year, according to Gun Violence Archive, an independent data-collection organization.
Faith-based investment funds have long tried to reduce gun violence through advocacy, with some success.
One fund family, Praxis Mutual Funds, has worked on this issue in conjunction with other faith-based groups for at least 20 years. The fund manager follows pacifist values, so it has no weapons investments in its $2 billion asset pool.
Since the company’s funds don’t own gun stocks, company management doesn’t directly engage with gun companies, unlike other denominations, such as the Adrian Dominican Sisters.
Instead, the fund, which is connected to the Mennonite Church in the U.S., approaches gun violence from a cultural basis, advocating with retailers and banks to limit their business with the gun industry.
An early success, the company says, was a 2004-2008 campaign with other concerned investors around improving implementation of video-game rating systems, which was relatively new at the time.
Mark Regier, vice president of stewardship investing and director of sales for Praxis Mutual Funds in Goshen, Indiana, spoke to MarketWatch about the company’s work, some of the limits of investor advocacy and a solution he wishes for.
This is an edited transcript.
MarketWatch: Faith-based investment funds have tried to reduce gun violence for many years now. What are some of Praxis’ efforts?
Regier: Starting in 2018-2019, we started looking at how the credit-card companies and banks are involved. Citigroup
imposed new restrictions on lending to retail clients involved in the gun business. Car rental companies like Hertz
and Alamo, national hotels like Wyndham
and Best Western, airlines like Delta
stopped offering National Rifle Association-related promotions.
We’ve been involved with conversations that led to Dick’s Sporting Goods
ending the sales of some of their weapons. Kroger
has chosen to exit the firearms business.
MarketWatch: Gun investments are a complicated issue, aren’t they? When Russia invaded Ukraine, there was talk about whether ESG funds should own defense companies, and now we’re talking about another school shooting.
Regier: [Ukraine] just gets to the complexity of this issue. In that case, weapons are supporting democracy and defending the weaker against the stronger. Weapons aren’t so much, “what’s all good and what’s all bad,” but it’s the idea of how do you orient your perspective on this?
We have screens that deal with military weapons, weapons of mass destruction, chemical weapons and landmines. When you get down to the personal use, it’s a little harder; we have a lot of hunters in our traditions, but the companies that make the hunting rifles also make handguns. And many of them have also moved into other forms of long guns that, sadly, become a regular part of these horrible situations like Texas, and [last week’s mass killing of 10 people] in Buffalo. And so, we’ve found it best to avoid all of those manufacturers.
Like alcohol, there are benign uses of some of those things. People like to have a glass of wine at dinner. It’s not the end of the world. Where it affects the investment process is, how do you want to be involved with it? Sophisticated values-based investors try to get behind the complexity. We have screens for distribution, we have production, screens for retail. We want to separate out the restaurant chain like Chili’s [owned by Brinker International
] and Applebee’s (Dine Brands Global
) that sell beer and wine along with food. Giant liquor conglomerates have a very strong interest in the mass sales and advertising in low-income communities targeting people of color. We don’t want to be involved in that.
MarketWatch: From a pure investment standpoint, gun stocks have done quite well, so there’s been an argument that if you don’t own them, you’re losing out on returns. This is one area where you say there’s a difference between ESG investing and values investing.
Regier: ESG is a materiality based argument, which is risk-based, opportunity-based. It is a little different than a values-space structure, which asks some questions about “Is this really what we want to do? Is this the right type of thing I want to be involved in?” For us, the issue of weapons is clear.
Because of our military-weapons screens, we often get punished on the ESG scores, because a lot of those companies are considered really good ESG companies because they may have progressive policies for women and people of color for contracting.
Marketwatch: Many gun manufacturers are small-cap and mid-cap stocks, so the direct financial effect is limited. But it’s the cultural aspect that looms large and makes it a tougher fight — that’s what it sounds like.
Regier: The amount of impact [guns] really have on the overall market is relatively small. … On the cultural issue, there may be lessons learned with the advocacy of reducing tobacco use, like media not making it sexy. There’s a lot to be explored there (to apply to lowering gun violence). But the hill to climb on this issue is a lot tougher because our cultural attachment to the renegade, lone-justice-seeking gunman. His role is embedded in in the American psyche. … We also have easy access to guns and a desensitization to violence as a solution. I mean, we’re a country that’s just had an insurrection at the capital.
MarketWatch: How can investors think about this issue?
Regier: It’s an opportunity to reflect on one’s own values to understand how deeply do they go. There’s going to be a lot of opportunities to give to organizations that are trying to address problems in specific communities, as well as the problems nationally. If you want to embed these values in an investment approach, and engage the world with your values at the front, I think then you begin to look at fund families that are out there that are not just carrying some ESG label, but that are actually working beyond that, that are doing shareholder advocacy.
MarketWatch: If you could wave a magic wand to create a solution, what would it be?
Regier: It’s true that solutions lie in our governmental leaders. We certainly pray that they find the wisdom to come together. Culturally … we’re starting to see folks, that if they’re upset with something politically, they think violence might be the solution. I do think there are things we can do both personally, as well as organizations and even as investors to say, “How do we help bring temperatures down? How do we help remind people of the values that this country really is founded upon?” Respect, engagement with one another, moderation and collaboration are not evil words.
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