Text size

You can thank John Streur, at least in part, for Walmart’s decision to restrict gun and ammunition sales.

Streur is the sustainable investing titan who runs Calvert Research & Management, a unit of Eaton Vance (ticker: EV). On Aug. 20, two weeks after a gunman killed 22 people in a Walmart in El Paso, Tex., Streur wrote to the retailer’s chairman, Gregory Penner, a former Walmart executive who had married into the Walton family. He said it was high time the retailer addressed its gun sales and safety policies to ensure they were consistent with its ESG strategy. (ESG refers to environmental, social, and governance investing.) “If Walmart did decide to stay in the business, it would be very important to use its power and influence to strengthen gun safety regulations and the environment for gun sales,” Streur told Barron’s. That would bolster ESG investors’ thesis for owning Walmart stock (WMT).

Related Data Market Data Center:Funds & ETFs

On Sept. 3, Walmart announced that it would stop selling ammunition for assault rifles, and would ask customers to stop openly carrying guns into its stores. It also would urge a new assault rifle ban. (A ban had been in effect in the U.S. for about a decade, ending in 2004.) Most important to Streur, Walmart plans to share its technology and techniques with smaller retailers to make it easier to control gun-related sales.

“John has shown great leadership in this field,” says Jon Hale, head of sustainability research at Morningstar, the Chicago fund-rating firm. “He is fluent when he connects sustainability to investing, which really helped people understand this field and its possibilities.”

Says Streur: “ESG investing is about strengthening companies and creating a more inclusive economic system, which can absolutely support higher [stock-price] valuations.”

Streur is no Second Amendment opponent--he and his wife own a cattle ranch in central Washington, and their ranch hands hunt game there during the season. But he does think that firearms should be regulated. In 2018, after 17 people died in Parkland, Fla. at the hands of a 19-year-old shooter, he called retailer Kroger (KR) and urged it to “stop selling guns to children.” The day after he reached company executives , Kroger said it would stop selling guns to people under 21. Later, it decided to stop selling firearms altogether.

The lanky and affable Streur was on the U.S. rowing team, while at the University of Wisconsin. But that was the year the U.S. boycotted the Moscow Olympics, because the Soviet Union had invaded Afghanistan. At the time, the U.S. was backing the Muhjahideen freedom fighters, which included Osama bin Laden. How times have changed.

Attitudes toward responsible investing have similarly flipped in some corners. Sustainable funds attracted $8.9 billion in net cash in the first half of 2019, far surpassing the $5.5 billion for all of 2018, according to Morningstar. Some companies, too, are rethinking their focus. The Business Roundtable recently said that a corporation should serve all stakeholders—meaning employees and customers, as well as shareholders. (In a note, Streur congratulated the organization, but tartly noted that its statement lacked specific goals and a commitment to report on progress.)

Streur joined Calvert in 2014, after a lengthy stint in sustainable and conventional investing. At the time, Calvert was restructuring after being investigated by the Securities and Exchange Commission for incorrectly valuing bonds. In 2016, when it settled with the SEC, Eaton Vance agreed to buy the firm.

After the merger, Streur says, “my best wish was to be left alone,” while Eaton Vance portfolio managers worried “that we’d be telling them not to buy tobacco stocks.” But there were synergies: Calvert tapped Eaton Vance’s fixed-income expertise, while Calvert’s research, including proprietary ESG stock rankings, was integrated in a new companywide data system. Now, Calvert and Eaton Vance analysts meet in working groups to strengthen Calvert’s ability to hone in on financially material ESG issues, and Eaton Vance analysts are invited to challenge Calvert analysts’ models.

“We’re all compensated for producing good investment results and growing the business,” says Streur. “You integrate ESG because you believe it’s going to be additive to investment results and asset growth. I don’t think there’s anybody at Eaton Vance who doesn’t believe in ESG today.”

Newsletter Sign-up This Week's Magazine This weekly email offers a full list of stories and other features in this week's magazine. Saturday mornings ET. PREVIEW

In the first half, net cash inflows into Calvert’s funds totaled $1.5 billion, versus $1.9 billion for all of 2018. “We’re having a real strong year,” says Streur. Performance has improved, too: For the three years ended June, 13 of Calvert’s funds were in the top quarter of their categories, nine were in the second, and four were in the bottom half. In contrast, for the past 10 years, three funds were in the top quartile, nine were in the second, and seven were in the bottom half, according to Morningstar.

As for Walmart, Streur notes that its ESG rating has been steadily rising. It’s committed to improving human rights and its supply chains’ environmental impact. Today, its employee turnover is at its lowest in five years. Many major ESG funds, including Calverts’, don’t own Walmart shares. Streur won’t say, but soon, we suspect, that could change.

Write to Leslie P. Norton at leslie.norton@barrons.com