SECTION 1.
The Legislature finds and declares the following:(a) On February 14, 2018, 17 people were killed and 17 injured in a mass shooting in Parkland, Florida; on November 5, 2017, 27 people were killed and 20 injured in a mass shooting in Sutherland Springs, Texas; on October 1, 2017, 59 people were killed and 422 injured by gunfire in a mass shooting in Las Vegas, Nevada; on June 12, 2016, 50 people were killed and 53 injured in a mass shooting in Orlando, Florida; on December 2, 2015, 16 people were killed and 24 injured in a mass shooting in San
Bernardino, California; on December 14, 2012, 28 people were killed and two injured in a mass shooting in Sandy Hook, Connecticut; and on April 20, 1999, 15 people were killed and 21 injured by gunfire in a mass shooting in Columbine, Colorado.
(b) In 2017, there were 346 mass shootings in the United States. As of April 2, 2018, there were 57 mass shootings in the United States for the calendar year, and counting. According to FBI Federal Bureau of Investigation data from 2013, seven 7 out of ten
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mass shootings occur at schools and businesses. In many mass shootings, the weapon of choice is a military-style assault rifle, such as the AR-15. California citizens and elected representatives have already banned the sale or possession of these unlawful firearms and deemed them a public health threat.
(c) Yet, California’s two largest pension funds, CalPERS and CalSTRS, continue CalPERS, the agency that manages the largest public pension fund in California, continues to invest taxpayer and member dollars into these unlawful products that, if any Californian was caught possessing, would earn them jail time.
(d) The CalSTRS Investment Policy and Management Plan allows the fund to divest when such an investment violates a stated risk factor over a sustained period of time so that it is an economic risk, where a potential for material loss of revenue exists, or where it weakens the trust of a significant portion of its members. One such risk factor is when a company makes a product that is detrimental to human health so that it draws product liability lawsuits, government regulations, United Nations sanctions, and avoidance by other institutional investors. The CalPERS Investment Policy allows the fund to divest from a targeted company or refrain from investing in a targeted company when it is imprudent and inconsistent with its fiduciary duties and recognizes that the prudence
of an investment may depend on its purpose.
(e) A pension fund’s fiduciary duty allows it to take into account harmful external factors when determining the overall return of an investment in a divestment analysis. External factors could include such things as reputational injury that could cause the stock value of a company to fall, costly litigation, as well as increased regulation and new laws that could restrict sales.
(f) In 2013, the CalPERS and CalSTRS boards
board divested of manufacturers of guns illegal in the State of California in response to the Sandy Hook shooting. As a result, CalPERS sold approximately $5 million of Smith and Wesson Holding Group Corporation and Sturm, Ruger and Co. stock and CalSTRS sold approximately $3 million of the same stocks. In 2015, CalSTRS announced an agreement with Cerberus to monetize its investment in Remington Outdoor, finalizing the divestment of banned gun manufacturer holdings in a private
equity fund. stock.
(g) Investing in the gun industry is a losing proposition, both morally and financially. Three iconic American gun manufacturers are battling slumping sales and are bordering on insolvency. American Outdoor Brands, parent company of Smith and Wesson, Wesson Holding Corporation, cut about 25 percent of its manufacturing workforce in 2017 and year-over-year sales were down 33 percent in its fiscal third quarter, while Sturm, Ruger and Co. saw its sales decrease by
22 percent and its net income decrease by 40 percent in 2017. Remington Arms Company declared bankruptcy on March 25, 2018.
(h) Several of the nation’s largest institutional investors and banks, including Citigroup, Bank of America, and BlackRock, have already announced new gun policies, including a moratorium on lending or investing that promotes the proliferation of assault weapons for civilian use.
(i) Major American companies, from Dick’s Sporting Goods and Walmart to United Airlines and L.L. Bean, are severing their ties with the NRA National Rifle Association and changing their gun sales
policies.
(j) Successful engagement by the state’s pension funds with retail or wholesale firms that sell weapons currently banned in California relies on the real and imminent threat of impactful consequences for not responding to the request to no longer sell such weapons.