The city of Chicago's $5 billion pension fund is also divesting all publicly-traded firearms manufacturers. But the mayor there has gone further and is now "asking" the big banks that are providing lines of credit to the weapon makers to consider stopping such a practice. Philadelphia and Minneapolis, meantime, are preparing to cut off those gun makers unwilling to compromise.
Cities, in the aggregate, are spending tens of millions each year arming their police officers -- revenues that flow directly into the hands of the gun industry. Such purchasing power, in fact, is now being leveraged by the National Conference of Mayors to effect social change.
"Doing business with gun manufacturers might benefit the banks' bottom line, but they put our police officers, our children and our communities at risk," says Chicago Mayor Rahm Emanuel in a letter to TD Bank and Bank of America. TD, for example, provides a $60 million line of credit to Smith & Wesson that produces the AR-15 used in the Aurora, Colo., movie theater massacre. Bank of America supplies a $25 million line of credit to Sturm, Ruger & Co.
Unlike many elected officials, large institutional investors cannot be bullied. And some, including those in California and New York, have instituted provisions that actively encourage "socially responsible investing" and "corporate social responsibility." California was among the first, for example, to withdraw funds in the 1980s from companies doing business with then-racist South Africa. New York has done the same with regard to tobacco companies.
To be sure, investment managers must act in the best interest of their plan participants. And the issues to which such shareholder activism applies are not always clear. But the notion of funding gun makers that cower behind their paid lobbyists and who buck every sensible request is a cause worth taking up. By severing their lifeline, the gun merchants will be forced to negotiate, enabling elected officials to quit fearing for their political lives.
Indeed, the gun industry has obligations to communities where they do business. Capitalism, by extension, should extend beyond shareholder returns and include those values beholden to cities. Likewise, political leaders must live by the same code, considering the views of all constituencies but ultimately siding with broader societal concerns.
Silverstein, of Charleston, is a national business writer for Forbes and EnergyBiz.