As gun control advocates are reeling over the Senate defeat on Monday of four bills aimed at restricting firearms access, anti-gun groups also face failure in the movement to divest public pension funds from weapons manufacturers.
According to CityLab.com, the efforts by Campaign to Unload and other organizations to convince large pension funds to drop their investments in gun and ammunition companies has largely been a dud.
And the reason is especially heartbreaking for those who view gun violence as a national crisis: Pension officials may be sympathetic to the cause, but they just can’t pass up the money.
Gun sales in the U.S. are on track to reach a record high in 2016 and after each new mass shooting comes a nauseating surge in share prices for gun manufacturers. Managers of mutual funds, hedge funds, and public pensions have invested heavily in companies that make weapons and ammo, City Lab reports, because soaring gun sales since President Obama took office in 2009 make weapons companies a sound investment.
The divestment advocates see this is as a moral issue, particularly with mass shootings occurring in the U.S. every two months. But those who control massive funds are heading in the other direction. Mutual fund investments in the top two publicly traded gun companies have grown from $30 million to more than $500 million. More than 150 mutual funds own shares in Smith & Wesson Holding Corp., according to Reuters, up three-fold since the end of 2008.
Even in two of the Bluest States in America, California and New York, attempts to divest tens of millions of dollars from gun companies have yielded mixed results.
When New York Mayor Bill de Blasio called for the city’s five public pension funds to pull their investments from gun manufacturers, some officials said they would study the matter. Police officers tend to rank among the strongest supporters of gun control, but the NYPD pension fund declined to conduct a study or take any other action.
The nation’s largest public pension fund, the California Public Employees Retirement System, known as CalPERS, also finds it hard to turn its back on high-yield investments, no matter the cause. For example, divestment in tobacco companies has cost the system a staggering $3 billion since 2001, and CalPERS is now considering a reversal on its ban on tobacco investments.
In the wake of the Orlando massacre, Kriston Capps of City Lab wrote this about pension fund managers who say they’re placing their fiduciary duty above their sympathies with anti-gun groups:
Calls for divestment in weapons manufacturers are bound to get louder, no matter if The Financial Times says that divestment isn’t working. But in California and New York, calls for divestment were not enough.
The direct investments in question are small in the scheme of things, and few are the publicly traded companies that manufacture weapons and ammo. But as long as there’s more money to be made in vice than virtue, divestment will be a long shot, even for public pension funds. The mass shootings that make the case for divestment make divestment that much more difficult.
“Fund managers are drawn to the stocks by surging sales,” reads a February analysis from Reuters on rising gun share values since President Barack Obama’s inauguration. “Buyers are arming themselves, analysts said, in response to mass shootings and calls for tougher gun laws.”
