The recent shooting incident at a high school in Florida, the latest in a rash of mass killings in the U.S. by a person with a readily available military assault rifle, reinforces my commitments as a financial advisor who specializes in SRI. One of the most important characteristics of socially responsible impact portfolios over the decades has been the avoidance of weapons, that is, of companies that manufacture and distribute weapons - this due in large part to SRI’s historical roots in the progressive religious community, particularly in the sensitivities and values expressed by the Quaker and Mennonite traditions (often referred to as the “peace” churches).
As a recent Reuters article* points out, investors not familiar with SRI are finding that avoiding gun-oriented investments can be quite challenging. Indeed many, if not most, U.S. mutual fund companies and public pension plans are not inclined to avoid many of the popular index funds that carry securities related to the weapons industry.
As the article points out, mutual funds that track passive indexes hold more than $11.7 trillion in assets, with the result that gun stocks are a basic staple in many U.S. investors’ retirement funds. Morningstar estimates that $2 of every $3 in funds that focus on small companies have exposure to gun-related investments.
SRI investors are not so exposed. Yet some do choose to be at least minimally exposed in order to engage in shareowner advocacy. Under current regulatory rules, investors who own a minimum of $2,000 in the value of the stock of a particular company for a period of at least one year are eligible to participate as a sponsor of a shareowner resolution. Such a resolution (voted on at the annual shareowner meetings of companies) might target a company, such as Walmart**, urging it to forego the sale of all weapons, or at least certain types of weapons. Thus, SRI investors can express their anti-gun sentiments by avoiding gun stocks, or by holding some to actively engage companies.
If our government officials and representatives haven’t the will to stand up to the NRA and do the compassionate, just, and right thing about curbing the use of weapons in the U.S., investors can. They can engage in SRI investing, and take their place on the right side of history.
**Mention of particular investments should not be construed as a recommendation to buy or sell such investments. Consult with your professional financial advisor before making specific investment decisions.