Credit card companies ‘receptive’ to discussions on ghost guns, says CalSTRS

Fellow US investors welcome policymaker's efforts to curb the proliferation of the unserialised and untraceable weapons.

Credit card services providers have been receptive to discussing concerns about ghost guns, CalSTRS’s public engagement manager of sustainable investment and stewardship strategies, Michael Weston, told Responsible Investor. 

The pension giant has been investigating the unserialised and untraceable weapons that can be bought online and assembled at home since 2019, as part of their wider work around the firearms industry. 

Last year around 20,000 suspected ghost guns were reported to the Bureau of Alcohol, Tobacco, Firearms and Explosives as having been recovered by law enforcement in criminal investigations – a ten-fold increase from 2016. 

And the Baltimore Police Department reported that in 2020, 29 of the 126 ghost guns seized were from people who were too young – under 21 – to legally possess a firearm.

Through research and engagement with companies regarding the sale of ghost guns, CalSTRS identified legal, reputational and financial risks that contribute to financial loss and violence in communities across the country.   

Weston told RI that higher levels of gun violence are associated with lost wages, lower home values, credit scores and homeownership rates. “All of these have a negative impact on business in a community,” he said. “Indirect costs include a reduced quality of life for victims, who tend to live in disadvantaged communities, and negative impacts on surrounding schools and community resources.

“In addition, gun violence associated with a particular business creates risk through negative reputations, reduced productivity, lost revenue and exposure to litigation.” 

CalSTRS conducted an assessment of all entities involved in the value chain of firearms and identified its investments in unnamed credit card services providers as a critical touch point in the sale of ghost guns.  

“To protect the financial interests of California’s public educators, we began writing to the companies explaining our concerns with ghost guns, in particular the lack of regulations with ghost-gun sales and the access that children and individuals prohibited from possessing firearms have to these weapons,” said Weston. “We asked to meet with the companies to discuss our concerns and those conversations are continuing. All of the credit card services providers we have engaged with have been receptive to discussing this issue.”

CalSTRS is not the only investor trying to push the credit card industry to take action on ghost guns.  

There is a growing epidemic of gun violence and prohibiting ghost guns and assault weapons is a common-sense action we can take to help prevent mass shootings and firearm-related deaths”
Seth Magaziner
Employees’ Retirement System of Rhode Island

In February, the public pension fund for the US state of Rhode Island filed a shareholder proposal at Mastercard, calling on the firm to report on risks associated with its provision of payment services for the sale and purchase of untraceable firearms, including ghost guns. 

Tragic consequences

Seth Magaziner, a former equities analyst at Trillium Asset Management who oversees the Employees’ Retirement System of Rhode Island, told RI: Sellers of ‘ghost gun’ kits advertise that their products are meant to be built into operable firearms with no serial number, records or background check. The ability for criminals to obtain untraceable firearms over the internet contributes to the tragedy of gun violence.” 

Action is also being pursued at the state and federal level to tackle the proliferation of ghost guns. 

On April 11, Joe Biden will announce that the US Department of Justice has issued a rule to rein in their proliferation. 

The rule bans the business of manufacturing the most accessible ghost guns, such as unserialised “buy build shoot” kits. It will also clarify that these kits qualify as firearms under the Gun Control Act, and that commercial manufacturers of such kits must become licenced and include serial numbers on the kits’ frame or receiver. Commercial sellers of kits must also become federally licenced and run background cheques prior to a sale, as with other commercially-made firearms. 

Finally, the Justice Department will require federally licenced dealers and gunsmiths taking any unserialised firearm into inventory to serialise the weapon.  

Biden’s announcement follows a call he made earlier this month for Congress to ban ghost guns. 

In California, which has the most gun laws of any state, the Senate Judiciary Committee on April 5 passed SB 1327, which will allow private citizens to bring civil actions against any person who manufactures, distributes, transports, imports into the state or sells assault weapons, .50 BMG rifles, ghost guns or ghost gun kits.   

The moves by policymakers have been welcomed by investors. “There is a growing epidemic of gun violence and prohibiting ghost guns and assault weapons is a common-sense action we can take to help prevent mass shootings and firearm-related deaths,” said Magaziner. 

Comptroller Brad Lander, who oversees New York City’s five public pension funds, agrees. “As a member of the New York City Council, I voted in favour of legislation aimed at stopping the circulation of ghost guns in New York City,” he told RI. “It is great to see that California is taking innovative steps aimed at curbing the spread of these lethal weapons.” 

Both spoke to RI before Biden’s announcement.