Activist nuns see momentum building for their fight against gun makers after Florida school shooting

Key Points
  • Shareholder proposals at big gun makers Sturm Ruger and American Outdoor Brands ask the companies to report on the financial and reputation risk of gun violence on their businesses.
  • Past activist efforts with gun makers haven't paid off, but this year with major Wall Street fund managers also asking questions, things might be different.
  • Dick's Sporting Goods says it will stop selling assault rifles in its stores and restrict firearm sales to those 21 and older.
A young school child holds a sign 'Protect Children NOT Guns' at Stoneman Douglas High School.
Giles Clarke | Getty Images

Two years ago, even before the shocking mass shootings that killed dozens of people in a high school in Florida and at an outdoor concert in Las Vegas, a group of nuns quietly put together a plan to pressure gun makers about the safety of their products.

They bought shares in Sturm Ruger & Co. and American Outdoor Brands, both makers of high-powered rifles, and recently filed shareholder proposals asking the companies whether they are researching ways to produce safer guns. They want the gun makers to report on the financial and reputation risks of gun violence to their operations.

"We wanted to engage them," said Sister Judy Byron, the director of the Northwest Coalition for Responsible Investment in Seattle. Last summer, the nuns wrote to both companies asking to open a dialogue, but they didn't respond, she said.

Americans' interest in gun control isn't going away

The nuns are familiar with shareholder activism, for years using their platform to push companies on everything from executive pay to climate change and the rights of indigenous people. The work has not always been rewarded. A previous effort with Sturm Ruger in 2002 went nowhere, Byron acknowledged.

But this time might be different. Since 17 people were killed in the Florida high school earlier this month, a public outcry about gun violence made it all the way to the wood-paneled halls of Wall Street, where some of the world's biggest money managers say they are asking gun makers similar questions.

The nuns hope the pressure from Wall Street will help, said Tim Smith, the director of shareholder engagement at Walden Asset Management, a Boston money management firm that works with the Interfaith Center on Corporate Responsibility, the umbrella group for religion-affiliated shareholder activists.

On Monday, the giant asset manager State Street said it will be engaging with weapons makers and sellers to find out how the companies "will support the safe and responsible use of their products." Last week BlackRock, the largest shareholder in Sturm Ruger and Smith & Wesson parent American Outdoor, said it would also be engaging the companies to "understand their response to recent events."

Bank of America, a lender to gun makers, said it would talk to them as well.

Cajoling from shareholders has long been one way to sway corporate boards, though it isn't always taken seriously. Rarely do proposals garner more than 10 percent support from shareholders, said Patrick McGurn, head of strategic research at proxy advisory firm ISS.

But the momentum appears to be building. "The door is open with these firms to look quite seriously at shareholder resolutions and not dismiss it," Walden's Smith told CNBC.

"Our hope is now with the large investors asking questions that they would support our efforts," Byron said.

Buffett: I've not given a directive on gun-maker stocks

A spokesman for BlackRock said the company doesn't discuss its voting plans prior to a shareholder meeting.

In another shareholder proposal this year, nuns asked Dick's Sporting Goods, a major gun seller in the U.S., to re-evaluate its sales of military-style assault weapons to civilians, among other requests.

On Wednesday, Dicks' CEO Edward Stack, announced the company will stop selling assault rifles and restrict sales of other firearms to those 21 and older. He said he had been impressed by the student protests in Florida.

Dicks had legally sold a shotgun to the 19-year-old who has confessed to the shooting in the Florida high school, though that particular gun was not used. "Clearly this indicates on so many levels that the systems in place are not effective to protect our kids and our citizens," Stack said in a statement. "We believe it's time to do something about it."

On Wednesday, Mercy Investments confirmed to CNBC it had withdrawn the proposal with the retailer earlier this month after talking with executives about their concerns.

Last year a climate change proposal on the ballot at Exxon led by Sister Nora Nash, director of corporate responsibility for the Sisters of St. Francis in Philadelphia, garnered 62 percent support. It was a stunning reversal from prior efforts by the religious group that failed to win a majority vote.

The support of fund giant Vanguard as well as BlackRock pushed the proposal over the goal line.

Normally, religious groups have strict rules that forbid them from owning shares of companies that make tobacco and guns or engage in activities that aren't in keeping with their values. But this time, the nuns bought gun maker shares so they could take their case directly to the companies, Byron said.

The gun makers haven't filed their proxy materials for shareholders yet, so it is unknown whether they will ask the Securities and Exchange Commission for permission to keep the proposals off their ballots. Walmart successfully excluded a proposal by Trinity Church of Wall Street in 2015 but ultimately did stop selling certain types of rifles and high-capacity weapons in its stores.

Calls to Sturm Ruger and American Outdoor weren't returned.

Sturm Ruger seems likely to tell shareholders to vote against her proposal, Byron said. In 2002, the gun maker also recommended a "no" vote.

"Like many companies, we receive proposals from well-meaning stockholders. Many are commendable, and their objectives are often aligned with our values," Sturm Ruger said in its 2002 proxy. "We share the goal of firearms safety raised by this proposal, but we believe that there are appropriate safety practices and procedures in place."

Less than 5 percent of Sturm Ruger shareholders voted in favor of the proposal.

WATCH: Dick's Sporting Goods halts assault-style weapons sales

Dick's Sporting Goods halts sales of assault-style weapons