As of March 24, the US counted 1.4 school shootings a week so far this year, including the February Parkland massacre where 17 students and teachers were killed.
For a while president Donald Trump looked like he might show his disregard for the norm by altering gun laws in its wake, but he soon forgot all about it. On March 25, 1.2 million people across the US marched to remind him.
Beyond marching, frustrated individuals are also turning on the banks that finance gun manufacturers. That spells bad news once again for Wells Fargo, the lead arranger of financing for gun companies, according to Bloomberg, since the 2012 shooting at Sandy Hook, where 20 children and 6 adults died. Some small protests outside its branches have already occurred.
But does it have to be bad news for Wells? This is precisely where the bank could reverse its awful reputation by doing something bold – like Citi.
In March, Citi’s chief executive Mike Corbat announced the bank was introducing a policy to require new retail sector clients or partners not to sell firearms to someone who hasn’t passed a background check; to restrict the sale of firearms for individuals under 21 years of age; and to stop selling bump stocks or high-capacity magazines.
Citi’s CEO Mike Corbat
What was particularly impressive was that Citi put its actions into words.
“We know our clients also care about these issues and we have begun to engage with them in the hope that they will adopt these best practices over the coming months. If they opt not to, we will respect their decision and work with them to transition their business away from Citi,” it announced.
In other words: we’re prepared to lose you as clients.
Citi does not have many gun manufacturing clients – it doesn’t make the top 10 of gun financing since Sandy Hook – so perhaps it has less to lose than its peers. And its measures are tempered – the bank isn’t claiming that the Second Amendment needs to be scratched, for example. Still, such a statement indicates the bank is in touch with its demographic; a Gallup poll this year showed 60% of Americans are dissatisfied with current gun laws.
It also says something about leadership – chiefly that Citi has some. Instead, Wells Fargo mumbled about it being a “complicated” issue and then said it would engage with clients about gun safety.
TD Bank, the third largest funder behind Wells and Morgan Stanley, also provided a weak response. Bank of America made a slightly more rousing statement. And Morgan Stanley and JPMorgan had said nothing publicly of what they intend to do or not do before Euromoney went to press. Jamie Dimon, it seems, has more to say on bitcoin than he does on gun control. And James Gorman? Who knows what he is thinking, we so rarely hear him speak out on anything controversial.
Take a stand
We need stronger leadership from the largest banks. If they are going to tout the notion that finance can complement government in solving things like climate change, urban and youth unemployment, and education and healthcare gaps – topics all the banks will happily talk about in their CSR and sustainability reports – then, by the same token, they have to start taking a stand on topics such as gun control, water contamination and Arctic drilling.
It is not enough to make sweeping statements about doing good and working on the UN sustainable development goals if banks won’t be part of the debate on specifics, let alone take action.
So I take my hat off to Corbat. He took the PR disaster of financing the Dakota Access Pipeline and instead of sitting in defence mode, has used it to propel the bank to become a champion of environmental and societal issues.
Citi was also the first US bank to publicly agree to disclose its pay gap for minorities and women, for example. When I mention this to Citi’s peers, I am told that they are doing just as much but just don’t talk about it. I hope they are. But banks need to take a stand publicly because that way they are accountable. Such public declarations also help other bank leaders convince their shareholders of policy changes.
We need some cooperation between bank leaders on these topics.
As Citi’s announcement on gun policy says: “We recognize that we don’t have all the answers and that existing technology in our industry doesn’t allow for a more targeted approach at points of sale. For that reason, we would like to convene those in the financial services industry and other stakeholders to tackle these challenges together and see what we can do.
"This approach has worked well in areas such as sustainability, where the Equator Principles ushered in a new era of environmentally and socially responsible financing practices. We hope to leverage collective action to encourage responsible practices by all who sell firearms.”