Some Sturm Ruger shareholders are calling for a “human rights review” of the arms manufacturer. Does your ETF own the stock?

Sturm, Ruger & Co., a weapons manufacturer whose institutional shareholders include BlackRock and the Vanguard Group, will hold its annual meeting next week, where it faces a shareholder proposal to demand a “human rights impact assessment.”

That Suggestion, which asks Sturm Ruger to conduct and publish a third-party review of the company’s policies, practices and products, was submitted last month by a group including nonprofit Catholic health care system CommonSpirit Health, the Episcopal Church and the School Sisters of Notre Dame Cooperative include investment fund. According to the filing, the assessment would also produce recommendations “to improve the human rights impacts of its policies, practices and products.”

This week, some Sturm Ruger shareholders reiterated their call for other investors to support the proposal “as our nation once again tries to process the unimaginable — an elementary school massacre” involving 19 children, many under the age of 10, and two Adults participated gunned down by an 18-year-old man, the Interfaith Center on Corporate Responsibility announced May 25. That was the day after the mass shooting at the elementary school in Uvalde, Texas.

The ICCR is an association of around 300 shareholder groups, including CommonSpirit Health.

Asset management giants BlackRock and Vanguard are the two largest institutional shareholders in Sturm Ruger, according to FactSet, and both firms have exchange-traded funds that hold shares in the gunmaker.

Neither BlackRock nor Vanguard would say whether they support the shareholder proposal for a human rights impact assessment.

“As a general rule, we do not preview our voting rights decisions,” a BlackRock spokesman said in an email on Friday. A spokesman for Vanguard Group said in an email on Friday, “Due to company policy, Vanguard does not comment on the portfolio companies in which our funds invest, nor do we announce our votes before a stockholders’ meeting.”

The iShares Core S&P Small Cap ETF IJR,
the iShares Russell 2000 ETF IWM,
and iShares US Aerospace & Defense ETF ITA,
still held shares in Sturm Ruger as of May 26, BlackRock’s website shows. Fund data on Vanguard’s website shows the Vanguard Total Stock Market ETF VTI,
and the Vanguard Small-Cap Value ETF VBR,
each owned the arms manufacturer’s shares at the end of April.

The human rights impact assessment proposal is supported by proxy advisories ISS and Glass Lewis, the ICCR said in its announcement. Sturm Ruger’s board has recommended voting against the proposal Power of Attorney Form.

Sturm Ruger has “led the industry on gun safety initiatives and demonstrated a deep respect for human rights, making the proposal unnecessary,” the gunmaker says in the document. “The outcome that proponents advocate, and in fact seek, will harm the company, destroy shareholder value and undermine the Second Amendment rights of the company’s customers.”

Sturm Ruger chief executive officer Christopher Killoy was unavailable by phone and did not respond to an email Friday asking for further comment on the gunmaker’s position on the proposal.

The US has seen more than 200 mass shootings this year, according to the ICCR’s announcement, which the Gun Violence Archive quotes as saying. “Today, gun violence is the leading cause of death for children and young people in our country,” the ICCR said.

Earlier this month, a gunman with a rifle opened a mass shooting at a convenience store in a predominantly black neighborhood in Buffalo, New York, which police described as racially motivated, according to the Associated Press. In April, a mass gunman opened fire on a Brooklyn subway train.

The annual general meeting of Sturm Ruger will take place virtually on June 1st. shares of the company RGR,
FactSet data shows the price was down a little over 0.1% on Friday and was up around 5.1% for the week.

Vanguard and BlackRock are also leading institutional shareholders in gunmaker Smith & Wesson Brands Inc., according to FactSet.

iShares Russell 2000 ETF and iShares US Aerospace & Defense ETF held shares of the company on May 26, fund data showed on BlackRock’s website. Holdings in the Vanguard Total Stock Market ETF and the Vanguard Small-Cap Value ETF included Smith & Wesson stock at the end of April, according to data on Vanguard’s website.

Smith & Wesson SWBI shares,
rose 0.5% on Friday, taking its weekly gain to 8.6%, FactSet data showed.

Both Sturm Ruger and Smith & Wesson are included in the Russell 2000 Index FURROWmade up of US small-cap companies, according to a membership list from a FTSE Russell report dated June 28, 2021.

Read: Sturm Ruger, Smith & Wesson, three other gunsmiths are the subject of house investigations

BlackRock also has ETFs that focus on environmental, social, and governance criteria that exclude civilian firearms companies.

As part of their index screening, the iShares ESG Aware MSCI USA ETF ESGU,
and iShares ESG Aware MSCI USA Small-Cap ETF ESML,
According to their prospectuses, both exclude companies that deal with “controversial weapons” and “manufacturers and dealers of civilian firearms”.

Shares in the iShares ESG Aware MSCI USA Small-Cap ETF are down 13% this year through Friday, outperforming the iShares Russell 2000 ETF’s nearly 16% drop. Some Sturm Ruger shareholders are calling for a “human rights review” of the arms manufacturer. Does your ETF own the stock?

Brian Lowry

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