Liberal activist shareholders set to sue Smith & Wesson as part of ESG push to cripple gun manufacturers

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FIRST ON FOX: Liberal activists are preparing to file a lawsuit against the board of one of the largest gun manufacturers in the United States, alleging that the company exposed shareholders to unnecessary liability by selling and promoting AR-15 rifles and thus violating their fiduciary duty.

In a draft of a lawsuit viewed by Fox News Digital expected to be filed this week, liberal activist shareholder plantiffs alleged that the board of Smith & Wesson "knowingly allowed the Company to become exposed to significant liability for intentionally violating federal, state, and local laws through its manufacturing, marketing, and sales of AR-15 style rifles and similar semiautomatic firearms."

The draft explains that the company’s board has expressed "unwillingness to exercise any oversight whatsoever" when it comes to manufacturing and marketing AR-15s, which the shareholders say has exposed the company to unnecessary liability. 

The lawsuit is the latest in a series of moves made by liberal activists across the country using the legal system to go after gun manufacturers as a part of a larger movement known as environmental, social, and governance (ESG), which puts pressure on investors to be more "socially conscious."

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Critics say ESG investments allocate money based on political agendas, such as a drive against climate change, rather than on earning the best returns for savers.

The ESG industry, meanwhile, says it helps highlight companies that may be riskier than traditional investing guidelines alone might suggest. That could lead to more stable, safer returns for savers. It also says using an ESG lens could help investors find better, more profitable opportunities.

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Firearms are displayed at a gun shop in Salem, Oregon. (AP Photo/Andrew Selsky, File)

Two of the plaintiffs in the case are led by Sister Judy Byron, an anti-gun activist who recently participated in drafting a statement from the Interfaith Center on Corporate Responsibility, where "investors representing $634 billion in assets" called for pressure on gun manufacturers and companies associated with them "to review their operations, supply chains and policies and take meaningful action on this public safety concern."

"While we believe that sensible gun control legislation and enforcement is needed to help halt the wave of senseless gun tragedies, progress has been stalled at the federal level in large part due to an aggressive NRA lobby," the statement said. 

"Corporations, therefore, have an important role to play both to ensure that they are not indirectly complicit in these lethal events, and in advancing the solutions that may help prevent them. While the business case for companies to reduce their exposure to this issue is clear, the moral case for action grows more urgent each day. We therefore ask companies to carefully reflect on how their operations, business relationships, supply chain policies, marketing practices and public voices might be used to counter gun violence and foster safer communities."

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A customer views a Smith & Wesson M&P40 handgun for sale at a gun store. (Kyle Grillot/Bloomberg via Getty Images)

Byron and her small but vocal group of shareholders, emboldened by the 2018 mass shooting in Parkland, Florida, have already pressured two gun manufacturers into providing information on how they are trying to develop safer guns, NBC News reported.

"When I say that I’ve always been interested in social justice, it isn’t just to know about it and be aware of it, but to bring about change and bring about justice," Byron said in 2018. "We’re looking to change the system."

In each of the last three years, a majority of Smith & Wesson stockholders have rejected proposals from activist stockholders. The most recent proposal in September 2023 was rejected by 73% of stockholders.

The complaint acknowledges that Smith & Wesson has analyzed its potential legal liabilities for years but still argued that the company be held "liable for breaching their fiduciary duties by knowingly allowing Smith & Wesson to violate various federal, state, and local laws through its manufacturing, marketing, and sales of AR-15 Rifles."

Fox News Digital reached out to the Adrian Dominican Sisters, a plaintiff in the case led by Byron, for comment but did not immediately receive a response.

The Associated Press contributed to this report.