Shortly after the recent spree shooting at a high school in Parkland, Florida, that left 17 dead, the national conversation turned, once again, to what must be done to minimize similar threats.
On March 3, noted corporate governance gadfly James McRitchie weighed in on Twitter.
“Shareholders should be pushing gun manufacturers and dealers to use their lobbying clout to push for universal background checks. #fiduciaryduty,” he wrote. “Does anyone have a list of gun dealers or manufacturers that support universal background checks? I would like to obtain to put pressure on those that don’t. The only one I know right now is Dicks. #corpgov.”
“You’re confusing corporate governance with your personal political preferences,” was the shot back across the bow by Stephen Bainbridge, professor of law at the UCLA School of Law.
That brief exchange helps illustrate a unique problem striking corporate America. Consumers, we are increasingly told, want more than just quality goods and services; they want to do business with “good” companies that reflect their values. In a scathingly partisan and complex world, however, what truly counts as “good” corporate behavior and governance?
No one wants companies to lie, cheat, or steal. Beyond that, however, is where things get very tricky. It is an especially concerning question in an age where many consumers, frustrated by the seeming incompetence and ineffectiveness of government, are looking to the business world to pick up the slack on societal issues.
On guns, a surprising number of companies reacted to the Florida shootings.
Gun bans and NRA boycotts are really just a reflexive reaction and a starting point for more complex debates to come.
Walmart will raise the age restriction for purchase of firearms and ammunition to 21 years of age. In 2015, It also ended sales of modern sporting rifles, including the AR-15. Additionally, it does not sell bump stocks, high-capacity magazines and similar accessories. The retailing giant is also removing items from its Website, “resembling assault-style rifles, including nonlethal airsoft guns and toys.”
Dick’s, parent company of the sporting goods chain of the same name, implemented a similar age restriction on gun purchases. (Both companies are now being sued in Oregon for alleged age discrimination).
Other companies that also implemented gun control measures in an effort to, essentially, boycott the National Rifle Association: Hertz; Enterprise; National, Avis; and Alamo; Symantec; Chubb; MetLife; Wyndham Hotels; Allied Van Lines and North American Van Lines; and Delta Air Lines and United Airlines.
There is also an effort afoot by Blackrock, the world’s largest asset manager and a firm that has repeatedly used its clout to demand “good governance.”
CEO Larry Fink wrote in a March 2 client alert that the key to long-term success for companies is “understanding the societal impact of your business” and how it will “affect your potential for growth.” For manufacturers and retailers of civilian firearms, he said that responsible policies and practices are critical to their long-term prospects.
Blackrock’s views help illustrate where we are today.
Companies and investors may be turning to gun bans in the immediate aftermath of the Florida shootings, but concerns will likely evolve into a matter of risk management and corporate vision. The stands many are taking, for now, are little more than public relations moves intended to protect brand recognition. The true test of corporate mettle will come as the media furor dies down and financial decisions trump efforts to appease often fickle societal desires.
This isn’t a matter of “good” companies. Dealings with the weaponry business requires strategic, long-term thinking on their part and an approach that balances customer desires. Gun bans and NRA boycotts are really just a reflexive reaction and a starting point for more complex debates to come.