Pension System Sells off Stake in Manufacturer of Semi-Automatic Rifles

Legislators argue that complete ban on investments in all gun and ammunition makers must be written into law

Amid a growing groundswell of negative opinion about profiting from companies that make firearms, New Jersey’s public-employee pension system has decided to sell off a $1.9 million stake in a manufacturer of semi-automatic rifles for civilian use.

Pension officials suggested the decision was made based on investment risk, and concerns about how the manufacturer, Vista Outdoor, might fare in what seems to be a changing landscape when it comes to firearms. At this point, the retirement fund is completely divested of holdings in companies that make semi-automatic weapons.

And while some lawmakers are praising Gov. Phil Murphy’s administration for taking a solid “first step,” the sponsors of a firearms-divestment bill are adamant that a complete ban must be written into law. New Jersey is one of about a dozen states where public-worker retirement funds have links to the gun industry.

“New Jersey public tax dollars must not be used to support gun manufacturers,” said Sen. Vin Gopal (D-Monmouth).

Despite that sentiment, it’s not clear what will happen to holdings worth about $30 million that the state retirement fund has in companies that make other types of firearms and ammunition. Discussions about those investments remain ongoing, state pension officials said at a recent meeting of the New Jersey State Investment Council.

Renewed concern about gun control

Nationwide, the issue of gun violence has come front and center again in the wake of the shooting deaths of 17 people at Marjory Stoneman Douglas High School in Florida earlier this year. The massacre sparked thousands of Garden State students to join a national movement to walk out of class last month, and it also triggered a youth-led March for Our Lives, which involved protests across the country, including in cities and towns around New Jersey.

Although New Jersey has some of the nation’s strongest restrictions on the books, lawmakers last month moved legislation out of the Assembly that calls for tightening gun laws further. Those bills, which include efforts to ban armor-piercing ammunition and more strictly regulate private gun sales, also sparked a major gun-rights protest at the State House, and they have yet to advance in the Senate.

For his part, Murphy, a Democrat who took office in January, has included $2 million in his budget proposal for the 2019 fiscal year, which begins in July, to support a gun-violence center at Rutgers University. Murphy has also joined with the governors of four other states to share data and work together to reduce the traffic in illegal guns in the region.

Selling off semi-automatics

During last week’s meeting of the investment council, which sets policy for the state pension system, officials said they had identified holdings worth $35 million in companies that manufacture firearms and ammunition for civilian use. They also announced that a $1.9 million stake in Vista Outdoor, which manufactures semi-automatic rifles for civilian use had already been shed, for investment-performance reasons.

“After the tragedy in Parkland, we examined our holdings to identify companies which might be adversely financially impacted by a changing landscape as it relates to certain types of firearms,” said Chris McDonough, director of the state Division of Investment. “Vista Outdoor was the only holding we identified that manufactures semi-automatic or automatic weapons for civilian use.”

“We had already been reducing the position over time and, consistent with our fiduciary responsibility, we recently sold our remaining position based on the merits of the investment,” McDonough said.

What happens to the other pension-system investments in companies with ties to the firearms industry remains under discussion as the investment council recently created a so-called ESG subcommittee that is now looking at investments through the lens of ethics and good governance (ESG stands for environmental, social, and governance.). Holding direct discussions about business practices with the firearms and ammunitions companies the pension system remains invested in is one option under consideration, officials said.

In all, New Jersey’s $77.85 billion public-worker pension system is made up of seven different funds, covering the retirements of 770,000 current and retired employees, ranging from teachers to police officers to judges. In the wake of the Parkland shooting, Bloomberg News reported that New Jersey and Florida were among a dozen states where public-employee retirement funds, including those for teachers, were invested in companies with ties to the firearms industry.

Under the legislation proposed by Gopal within weeks of the Parkland school shooting, no New Jersey pension-system funds would be allowed to be invested at all in companies that manufacture any firearms or ammunition. The Division of Investment would also be given a two-year deadline to wind down any existing investments that have ties to the firearms industry. The bill would also compel the state to produce an annual report outlining efforts to comply with the ban.

There are already a series of pension-system investment bans in place in New Jersey, but they all relate to foreign-policy issues. For example, in 2005 New Jersey cut ties with companies doing business with Sudan’s Khartoum regime in response to its brutal treatment of villagers in the Darfur region. A few years later, state lawmakers also prohibited the investment of pension-system assets in foreign companies that do business with Iran. More recently, the state started banning pension-system investments in companies that have decided to boycott Israel to protest its treatment of Palestinians.

“We, as a state, have an obligation to invest responsibly,” said Assemblywoman Joann Downey (D-Monmouth), a primary sponsor in the Assembly. “If we are putting public tax dollars into companies that produce firearms and semi-automatic weapons, what type of message does that send?”