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When Dick’s Sporting Good’s announced after the Parkland shooting that it would stop selling assault-style rifles, it seemed to come almost from out of nowhere, a powerful CEO in the gun business – Edward Stack – standing against the segment of the gun community that advocates for unfettered gun rights, and standing up for limits on the types of guns that can be sold and to whom.
“Our hearts went out to those kids,” said Stack in an interview with CNN.
Dick’s new policies and those of other major companies reflect a sea change in American business. Some people are interpreting this as a win for gun control – and it is, but seeing the shift in the business community that way is also a dangerous oversimplification.
What’s more true is that, for businesses, the risk calculus has changed. It’s worthwhile to ask, then: why and how?
Insiders credit, at least partly, the actions of one tiny nonprofit, Guns Down America, that’s been able to nudge the political gun spectrum to the left by focusing on weakening the gun industry. Igor Volsky, a former vice president at the Center for American Progress, formed the nonprofit after the Pulse nightclub shooting, in which 49 people died and 53 were wounded, including
He’d been frustrated and engaged on the issue since the San Bernadino shooting, when he authored a viral Tweet storm.
“After Pulse, I thought: We’re going to talk about the issue in the same failed way,” said Volsky. He wanted to change that. “There really wasn’t a left flank of the gun control movement … corporate campaigns weren’t something the other groups were doing.”
In 2016, Guns Down launched a campaign against FedEx for the discounts it gave to NRA members. The campaign included protests during the holiday season. Two years later, it re-launched the effort.
“Following the shooting in Parkland, Florida Guns Down America and its partners re-launched the campaign at DropTheNRA.org with a petition that attracted almost 500,000 signatures and urged thousands of people to email FedEx CEO Fred Smith to cut ties with the gun lobby,” said Guns Down in a release.
Guns Down also launched a campaign, https://stopmurderinsurance.org/, that featured Trayvon Martin’s mother, Sybrina Fulton, and told people to boycott Chubb and Lockton Affinity. The two insurance companies, Lockton working as the administrator and Chubb as the underwriter, worked with the NRA on Carry Guard, an insurance product to help people who used their gun in what they said was self-defense gun to pay their legal fees. Both companies reached settlements with New York State financial regulators, including a $7 million fine for Lockton and a $1.3 million fine for Chubb earlier this year. Regulators said the insurance was illegal because it provided liability insurance for acts of intentional wrongdoing, and that the NRA had operated as an unlicensed insurance broker in marketing the insurance. (It’s worth noting here that though 680 people bought the insurance, no claim was ever filed).
But both companies had decided to cut ties with the NRA before the lawsuits, after Guns Down launched its stopmurderinsurance campaign in 2017. (Everytown later got much of the credit or blame for sinking the insurance programs.)
In its campaign, Guns Down borrowed a page from the hard-core tactics the NRA has used for years. (Take a look at the backdrop of the “stopmurder” page, which features images that seem likely to provoke anger in people who lean liberal).
I asked Volsky if he was concerned that in weakening the gun industry, he’s also going after companies that supply arms to the military. One of the features of the U.S. gun business is that many of the companies that make guns for the civilian market have a bigger share of their revenue from the military market.
“The point here is to change behavior in the civilian gun market,” he said.
For years, the business community, especially businesses that sold or dealt in guns, steered clear of angering vocal and politicized gun owners. (In the early 1990s, Smith and Wesson suffered a boycott when it tried to reach a compromise on gun laws.). Guns Down gave companies something to worry about on the left side of the spectrum, too — and a certain amount of cover if they wanted to step out of line.
Other Companies Followed Suit
After Dick’s high profile move – and as it reported first quarter results that seemed to indicate no effect from the decision — other companies joined Dick’s putting their hands gingerly on what’s been a third rail of American politics. Stack, it should be noted, had more control than most public company CEOs: The son of the founder, he owns 59% of the stock, according to the company’s latest prospectus. MetLife and Hertz ended relationships with the NRA. Delta stopped offering discounts to NRA members traveling to the annual convention, lost a lucrative tax break in conservative Georgia. Then, after all its pro-Second Amendment bluster, the state legislature quietly reinstated it. Others, like Levi’s and the founder of Tom’s, became more active on the gun control side of the debate.
Dick’s eventually took a hit, it said, which showed up in the third-quarter results, when same-store sales declined by almost 4% (though given the first-quarter results, it seems likely that the much larger factors were related to the core business – like Dick’s difficulty positioning itself in the changing outdoor category).
So did companies inspired by the Parkland students suddenly decide to stand with this group of terribly wounded young people? Did Guns Down change the picture? Is Stack a hero? Is Volsky?
I’ve been writing about businesses of all sizes for a long time. Executives and business owners are driven by emotion as much as most people are – but their decisions are usually and legally ought to be made based on questions of what’s best for the company, in the short term and long term. Though we like to see entrepreneurs and CEOs as risk-takers; their success –based on hundreds of interviews with them over the years and working with a handful as an editor or writer — is mostly driven by taking very calculated risks that they’ve minimized in every way possible before they take them.
Putting my thinking-like-a-CEO hat on, here are some factors that could go into the decision about whether to act politically on the question of guns in America?
- The Parkland students, or other particular shootings, or the emotion around the issue. You’d have to be inhuman not to be affected by the murderous rampages in our headlines, and not to be moved by the courage and will of students standing up for what they believe is right. On the flip side of that emotional spectrum is the question of loyalty and devotion to gun rights as part of the American identity and as a possible solution to gun violence. But right now, the gun control movement has the statistics on its side: gun homicides and suicides are up, and so are mass shootings.
- Whether the gun rights movement, especially the NRA, has enough clout to damage the company. The number of gun owners, especially as a percentage of the population is declining. In addition, Russian Maria Butina recently pled guilty to conspiracy to act as a foreign agent; she reportedly attended NRA events. Stories about her were beginning to emerge last year. Maria Butina is enough to give a brand-conscious CEO hives.
- Whether the left-wing has enough clout to damage the company. This is where Guns Down and the consumer campaigns come in. They were a new element in the past two years – and have turned out to be a powerful one.
- Both of those questions are affected by the group effect – you’re less likely to be attacked if you’re one of a crowd.
- And finally, and most worryingly, the risk of inaction. Mass shootings are still extraordinarily rare in our nation of 300 million people. But they have an outside effect on the ambient fear in our country, they are increasing, and they are increasingly what America is known for around the world. When I was at the Maala conference for impact investing in Israel recently, sitting at a table with journalists from Ireland, Spain and Denmark, among others, I glanced down at my phone to see stories about E.J. Bradford, who was shot in Hoover, Ala. “Oh, no,” I said. “Another one.”
“Another mass shooting?” said the Irishman next to me.
Hardly a day goes by without one.
The Bottom Line
This is why I felt a sense of dismay as I saw company after company wade into the politics of guns this year. CEOs generally avoid politics precisely because they are risky. When they start acting politically, it could be a sign that their emotions are getting the better of their judgment. It’s far more likely that the risk of inaction outweighs the risk of political action. What’s the risk of inaction? That gun violence will cause long-term damage to America’s reputation and its social fabric.
Indeed, this is what Stack wrote about in the company’s annual report: “While we knew this announcement would upset a number of our customers, and we respect their opinion, we felt compelled to put these guidelines in place and make this statement in order to help protect our communities and engage in the conversation around gun reform,” he wrote “We heard from both sides of this debate and were encouraged by the outpouring of support from the majority of our customers, shareholders, vendors and associates for this decision. We were also pleased that many peers joined us in announcing similar measures, and hope that the private sector will work to keep this important conversation going to drive policy change. With that said, the hunting business is a sizable part of our business. While we believe our new policy is right for our customers and our communities, we expect a sales decline in this business due to our announcement.”
The short-term risk was outweighed by the long-term risk. Above all things, entrepreneurs, CEOs and boards of directors want safe spaces in which to conduct their businesses. If there’s a question about that in America, that’s a problem.
December 20, 2018 at 06:17AM
Forbes – Entrepreneurs