Impact Blog
Walmart: Now is not the time for strategic dissonance on guns

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Calvert disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Calvert are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Calvert fund. References to individual companies for Engagement or Research purposes are provided for illustrative purposes only and may not be representative of the results of all of Calvert’s engagement efforts. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By John StreurPresident and CEO, Calvert Research and Management

      Washington - As a global leader in Responsible Investing, Calvert keeps a close eye on companies like Walmart, and has noted the substantial progress Walmart has made on critical environmental, social and governance (ESG) matters. Overall, we believe that the company's improved attention to these issues over the last several years has positively affected its brand and financial performance.

      However, we are concerned that Walmart's current policy regarding the sale of firearms may not be consistent with the company's broader strategy. Walmart unfortunately has an additional reason to consider the impacts of firearms sales on its business. This month's shooting at a Walmart in El Paso left 22 dead, while two Walmart co-workers were killed and an officer wounded, reportedly by a disgruntled employee, at a Mississippi store less than a week earlier. 1

      We ask that Walmart carefully consider whether continued sales of firearms is consistent with its business strategy or the long-term interest of shareholders. In addition, we are concerned that continued sale of firearms and ammunition partially undermines efforts to strengthen the company's brand and to become an employer of choice for younger workers, especially in a tight labor market.

      We think retailers like Walmart can find something better to sell - without sacrificing business goals

      Support for gun control overall has risen to approximately 60% of the U.S. population, according to multiple surveys. At the same time, firearms sales have declined consistently for the last few years, while hunting has been in decline for a longer time period. According to the U.S. Fish and Wildlife Service, expenditures on hunting fell from $36.1 billion to $26.2 billion between 2011 and 2016, while the number of hunters in the U.S. declined from 13.7 million to 11.5 million.

      In light of that, we question whether continued sales of firearms and ammunition support the company's strategy to expand its offerings to broaden its consumer base and to improve margins and growth. Many of Walmart's competitors are moving away from sales of guns, in part because they are less profitable than other products.

      We believe that Walmart should carefully examine whether the floor space now devoted to guns and ammunition might be more optimally devoted to products with higher margins and growth potential, especially given the reputational risks accompanying sales of firearms. The results of this examination should be disclosed to shareholders.

      But if Walmart must sell guns, take real action to improve safety

      If the company determines that the continued sales of firearms and ammunition is in the best interests of shareholders, we believe the company should explain how it will contribute to a reduction in the risks associated with these products. While, sadly, the company can do little to prevent individual acts of violence, as one of the largest and most respected institutions in the world it is in a position to influence the business environment to make these tragic acts less common.

      First, the company can use its national prominence to call for laws and regulations that will improve gun safety. Over the last few years, it has become more common for companies to take public stands on issues of concern to their employees and customers. Surveys show overwhelming support for reasonable gun safety policies including background checks, the assault rifle ban and "red flag laws," each of which is consistent with the company's current policy on gun sales. Walmart's public support of such issues could substantially improve the chances that these policies will be enacted.

      Second, the company has had a substantial positive impact on the environment, safety and worker rights globally by requiring its suppliers to have policies on these concerns. The company could adopt a similar stance regarding gun manufacturers who sell through its stores. For example, Walmart could demand companies adopt advanced technology and other safety features; it could encourage its financial industry partners to examine their roles in financing gun sales; and the company could enhance its background check policy and demand that its business partners do the same.

      Bottom line: We applaud Walmart's evolution toward transparency and community engagement over the last several years, and we share the company's anguish over continued gun violence in the United States. We ask that Walmart continue to make concerted efforts to address issues around gun safety, and that the company share its strategy for taking action.