Cerberus’ Exit From the Gun Industry Shows How Public Pressure Can Shame Companies To Do Right

How to Make Government Work
Dec. 18 2012 1:54 PM

Cerberus’ Exit From the Gun Industry Shows How Public Pressure Can Shame Companies To Do Right

157896418
A hand gun and an AR-15 rifle

Photo by Brendan Smialowski/AFP/Getty Images.

Perhaps it is not a surprise that Cerberus quickly decided to sell the Freedom Group, its collection of gun companies, including Bushmaster, the firm that made one of the weapons used in the Newtown, Conn., massacre. Cerberus has been notoriously secretive about its finances, and the adverse press it has attracted in the aftermath of Newtown forced a hasty retreat. This should be very encouraging to those of us who wish to shift the debate about guns: A few critical articles, some whispers from major investors questioning their investment in Cerberus, and decisions were instantly made that could cost the company hundreds of millions of dollars.

Advertisement

So there is a significant message here: Ownership matters. Ownership can be more powerful than regulation. The capacity of pension funds and endowments to act collectively and use their rightful interest in having their funds invested in a way that reflects their core values is something we have largely forgotten. It is too easy when things go fundamentally awry to call for more legislation or blame failed regulators. And surely we shouldn’t diminish the pressure we apply to Congress now to enact real gun control. But at the end of the day, it is those who own the shares and invest the dollars who can and must be held to account. And if those investors awoke to this responsibility and possibility, they could make enormous improvements in American life.

Imagine if investors in Wal-Mart really cared about bribery at that company’s overseas operations or safety standards at its overseas manufacturing plants. If investors pulled their capital, corporate leaders would have to respond.

Imagine if the pension funds and endowments that own much of the equity in our financial services companies demanded that those companies revisit the way mortgages were marketed to those without adequate skills to understand the products they were being sold. Management would have to change the way things were done.

And to return to guns, imagine if the shareholders pressured large retailers to cease the sale of certain semi-automatic weapons or risk having their shares sold? You can bet that those retailers would reconsider their gun sales.

Shareholders have the right and obligation to set the parameters of corporate behavior within which management pursues profit. The speed with which Cerberus said it was getting out of the gun business shows how easy it could be to change corporate behavior, if only shareholders set their minds to it.

TODAY IN SLATE

Sports Nut

Grandmaster Clash

One of the most amazing feats in chess history just happened, and no one noticed.

The Extraordinary Amicus Brief That Attempts to Explain the Wu-Tang Clan to the Supreme Court Justices

Amazon Is Officially a Gadget Company. Here Are Its Six New Devices.

Uh-Oh. The World’s Oceans Have Broken Their All-Time Heat Record.

The NFL Explains How It Sees “the Role of the Female”

Future Tense

Amazon Is Now a Gadget Company

Food

How to Order Chinese Food

First, stop thinking of it as “Chinese food.”

The NFL Should Lose Its Tax-Exempt Status, Which It Never Should Have Had Anyway

The Country Where Women Aren’t Allowed to Work Once They’re 36 Weeks’ Pregnant

The XX Factor
Sept. 18 2014 11:40 AM The Country Where Women Aren’t Allowed to Work Once They’re 36 Weeks’ Pregnant
  News & Politics
Weigel
Sept. 18 2014 8:20 PM A Clever Attempt at Explaining Away a Vote Against the Farm Bill
  Business
Moneybox
Sept. 18 2014 6:02 PM A Chinese Company Just Announced the Biggest IPO in U.S. History
  Life
Outward
Sept. 18 2014 4:15 PM Reactions to a Sketch of Chelsea Manning Reveal Transmisogyny
  Double X
Doublex
Sept. 18 2014 8:07 PM Crying Rape False rape accusations exist, and they are a serious problem.
  Slate Plus
Behind the Scenes
Sept. 18 2014 1:23 PM “It’s Not Every Day That You Can Beat the World Champion” An exclusive interview with chess grandmaster Fabiano Caruana.
  Arts
Brow Beat
Sept. 18 2014 4:33 PM The Top 5 Dadsplaining Moments From The Cosby Show
  Technology
Future Tense
Sept. 18 2014 6:48 PM By 2100 the World's Population Could Be 11 Billion
  Health & Science
Science
Sept. 18 2014 3:35 PM Do People Still Die of Rabies? And how do you know if an animal is rabid?
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.