— David Hogg (@davidhogg111) April 17, 2018
BlackRock and Vanguard are the largest investment management companies in America. Hogg singled them out because they hold giant stakes in gun companies like Sturm Ruger and American Outdoor Brands, the latter of which made the AR-15 weapon used by the Parkland shooter. BlackRock is the largest external shareholder of both companies, owning 18% and 15% respectively. Vanguard owns 10% and 11%. Most of these holdings come from funds that BlackRock and Vanguard build and make available to every day investors – like you. Unfortunately, these asset managers, and the fund system as a whole, makes it impossible for people to divest from individual companies, implicating all of us in the problem.
Understanding the shift in public opinion, BlackRock and Vanguard promised to engage with the gun sellers they empower. In the wake of the Parkland shooting, BlackRock threatened to take a more activist role as a shareholder in gun companies to encourage more proactive behavior. They also introduced more gun-free investment options. Vanguard also said it would engage with gun-sellers, in addition to its few gun-free investment options.
However, the only shareholder proposals BlackRock suggested they would vote on were nominations to the board of directors, which at best could create slow change and at worst no movement whatsoever. Likewise, Vanguard has said it will only engage with gun-selling companies in private. And historically, BlackRock and Vanguard (among other fund managers) have actually voted against gun safety measures like the Sandy Hook Principles. Secret discussions between financial companies and gun manufacturers don’t really ensure that public interest will be the top priority. Holding these companies accountable seems almost impossible.
So what’s left to do?
Can you boycott BlackRock and Vanguard? The two companies are major of proponents of passive investing, a popular strategy for every day investors that discourages trying to “beat the market”. The most common way to passively invest is to invest in those inflexible funds that these companies create, and those funds are ubiquitous. How can you divest and boycott when they seem to hold all the options?
The good news is that we’re moving past funds. OpenInvest offers flexible investment options where you can individually exclude companies you don’t want to support (or include those you do). Investing in individual stocks used to mean active investing, but now there is a way to passively invest in individual stocks without the high fees or volatility usually associated with active investing. Plus, we offer a handful of screens to ensure your investments support the causes you care about – including divesting from guns.