Opinion: This peace-loving, faith-based fund management company is fighting gun violence in its own way


A mass shooting at an elementary school this week left 19 students and two teachers dead, reigniting a debate over gun control.

The Uvalde, Texas massacre was the 27th school shooting this year, according to Gun Violence Archivesan independent data collection agency.

Faith-based investment funds have long attempted to reduce gun violence through advocacy, with some success.

One family of funds, Praxis Mutual Funds, has been working on this issue in collaboration with other faith groups for at least 20 years. The fund manager follows pacifist values, so it has no weapon investments in its $2 billion asset pool.

Because company funds do not own gun stocks, company management does not engage directly with gun companies, unlike other denominations, such as the Adrian Dominican Sisters.

See: Here’s how you can help the community of Uvalde, Texas, after the elementary school shooting

Instead, the fund, which is linked to the Mennonite Church in the United States, approaches gun violence from a cultural perspective, advocating with retailers and banks to limit their activities with the gun industry. fire.

According to the company, one of the first successes was a campaign from 2004 to 2008 with other investors concerned about improving the implementation of video game rating systems, which was relatively new at the time. .

Mark Regier, vice president of responsible investing and chief sales officer for Praxis Mutual Funds in Goshen, Indiana, spoke to MarketWatch about the firm’s work, some of the limitations of investor advocacy, and a solution that ‘He wishes.

This is an edited transcript.

MarketWatch: Faith-based investment funds have been trying to reduce gun violence for many years. What are some of Praxis’ efforts?

govern: Starting in 2018-2019, we started looking at how credit card businesses and banks are involved. Group C,
-1.27%
imposed new restrictions on lending to retail customers involved in the firearms trade. Car rental companies like Hertz HTZ,
+0.78%
and Alamo, national hotels like Wyndham WH,
-2.55%
and Best Western, airlines like Delta DAL,
+0.81%
and United UAL,
+3.60%
ceased offering promotions related to the National Rifle Association.

We participated in conversations that led to Dick’s Sporting Goods DKS,
-2.27%
and Walmart WMT,
-0.50%
end the sale of some of their weapons. Kroger KR,
+0.19%
chose to exit the gun business.

MarketWatch: Investing in firearms is a complicated matter, isn’t it? When Russia invaded Ukraine, there was talk about whether ESG funds should own defense companies, and now we’re talking about another school shooting.

govern: [Ukraine] just gets to the complexity of this issue. In this case, weapons support democracy and defend the weak against the strong. Weapons are not so much about “what’s good and what’s bad”, but it’s the idea of ​​how to orient your point of view on it?

We have screens that deal with military weapons, weapons of mass destruction, chemical weapons and landmines. When you get to personal use, it’s a bit more difficult; we have a lot of hunters in our lore, but the companies that make shotguns also make handguns. And many of them have also moved on to other forms of long guns which, unfortunately, are a regular part of these horrible situations like Texas, and [last week’s mass killing of 10 people] to Buffalo. And so, we found it best to avoid all of these manufacturers.

Like alcohol, there are mild uses for some of these things. People like to have a glass of wine with dinner. This is not the end of the world. Where this affects the investment process, how do you want to participate in it? Sophisticated value-based investors try to get behind the complexity. We have screens for distribution, we have production, screens for retail. We want to separate the restaurant chain like Chili’s [owned by Brinker International
EAT,
-2.83%
] and Applebee’s (Dine Brands Global DIN,
-4.88%
) that sell beer and wine with food. Giant alcohol conglomerates have a very strong interest in mass sales and advertising in low-income communities targeting people of color. We don’t want to be involved in that.

MarketWatch: From a pure investment perspective, gun stocks have done quite well, so there has been an argument that if you don’t own them, you’re losing returns. This is one area where you say there is a difference between ESG investing and values-based investing.

govern: ESG is an argument based on materiality, which is based on risk, based on opportunity. It’s a bit different from a value space structure, which asks questions about “Is this really what we want to do?” Is this the right kind of thing I want to be involved in? For us, the issue of weapons is clear.

Due to our military weapon screens, we are often punished on ESG scores, as many of these companies are considered very good ESG companies because they may have progressive policies for women and people of color for the contracts.

Market watch: Many gun manufacturers are small- and mid-cap stocks, so the direct financial effect is limited. But it’s the cultural aspect that looms large and makes it a harder fight – that’s what it sounds like.

govern: The amount of impact [guns] really in the overall market is relatively small. … On the cultural issue, there may be lessons learned with tobacco reduction advocacy, such as the media that doesn’t make it sexy. There’s a lot to explore there (to apply to reduce gun violence). But the hill to climb on this issue is much harder because of our cultural attachment to the renegade, lone shooter seeking justice. Its role is embedded in the American psyche. … We also have easy access to guns and violence desensitization as a solution. I mean, we’re a country that just had an uprising in the capital.

Market surveillance: How can investors think about this question?

govern: This is an opportunity to reflect on your own values ​​to understand how far they go. There will be plenty of opportunity for organizations trying to address issues in specific communities, as well as issues on a national scale. If you want to incorporate those values ​​into an investment approach and engage the world with your values ​​at the forefront, then I think you start looking at families of funds that exist that don’t just carry an ESG label, but are actually working beyond that, doing shareholder advocacy.

MarketWatch: If you could wave a magic wand to create a solution, what would it be?

govern: It is true that the solutions lie with our government leaders. We certainly pray that they will find the wisdom to come together. Culturally…we start to see people, that if they’re upset about something politically, they think violence might be the solution. I think there are things we can do both personally and as organizations and even as investors to say, “How can we help bring the temperatures down? How do we help remind people of the values ​​this country is truly built on? Respect, commitment to one another, moderation and collaboration are not bad words.

Learn more about MarketWatch:

‘These kids are innocent’: Here’s what you can do to help after the school shooting in Uvalde, Texas

“Climate” is the new buzzword in a series of new ESG funds that have just launched

Russia’s invasion of Ukraine changes ESG investing

Previous Fundraising happens when you don't fundraise - Fund Management / REIT
Next Fundraising Under Companies Act 2013 - Securities