BlackRock Exerts Pressure on Gun Makers, Weighs Fund Changes

(Bloomberg) -- BlackRock Inc., the world's largest asset manager, said it's exploring ideas for new funds, including index-based portfolios, that exclude gun makers and retailers.

The firm, which manages more than $6 trillion in assets, is also working with clients that want to change or eliminate exposure to firearms, according to a document posted Friday on the company's website.

Read more: Gun-free ETFs are everywhere but no one seems interested

The response by BlackRock comes in the wake of a tragedy where 17 people were shot dead at a Florida high school. The shooting has reignited the debate around gun control and background checks to prevent future tragedies. It has also emboldened consumers to demand that companies end their relationship with the firearms industry and the National Rifle Association.

New York-based BlackRock said on Friday that it opened discussions with gun makers and retailers to engage them on questions including the steps they take to support safe and responsible use of such products.

Among the questions the firm said it's asking gun companies:

• What strategies do you employ to monitor how your products are being sold?
• Are you investing in research for gun safety, such as effective trigger locking technology?

BlackRock said retailers are being asked:

• What are your policies and practices for determining to whom you will sell firearms? Do you set age limits? Do you require background checks?
• What other strategies do you employ to prevent the potential misuse of firearms you sell?

Under Larry Fink, BlackRock's chief executive, the firm has taken steps to try to engage more on other social issues, including pushing for companies to add more women to their boards. Last year it backed a shareholder proposal at Hudson Pacific Properties Inc., siding against management on a measure to add women and minorities to its all-male board.

BlackRock said on Friday it doesn't hold three gun makers -- American Outdoor Brands Corp., Vista Outdoor Inc. and Sturm Ruger & Co. -- in its active equity portfolios. The company said the three companies make up 0.01 percent of its index equity products.  

Client Talks

Since companies in an index are determined by third-party index providers “we are unable to sell those shares regardless of our view on the company,” BlackRock said. To address that it has begun offering clients products that exclude firearms makers, such as its socially-responsible exchange-traded fund.

“Over the past two weeks, we have reached out to our clients to help them understand their exposure to civilian firearms companies,” BlackRock said.

Dick's Sporting Goods Inc., the biggest sporting-goods retailer in the U.S., said it was immediately ending sales of assault-style rifles. Wal-Mart Inc. followed with a pledge to require buyers of firearms and ammunition to be 21 years old. Delta Air Lines Inc. said it's studying whether to end discounts for “politically divisive” organizations.

Among asset managers, State Street Corp., which is among the largest providers of ETFs, said it also plans to engage with weapons manufacturers.

To contact the reporter on this story: Sabrina Willmer in Boston at swillmer2@bloomberg.net.

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Alan Mirabella, Vincent Bielski

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