The same activist shareholders who last year forced both publicly traded gun manufacturers to take into account the risk gun violence poses to their business are back with a new shareholder resolution to require American Outdoor Brands (SWBI 2.52%) to adopt processes to "identify, assess, prevent and mitigate actual and potential adverse human rights impacts."

However, because the resolution is vague in what it seeks, the coalition of investors that supported last year's resolution may not back it.

Changing the focus

The religious activists of the Sisters of the Holy Names of Jesus and Mary, the nuns who were part of last year's coalition, are preparing to introduce at American Outdoor's annual shareholder meeting next month a resolution that frames their gun control advocacy as a human rights issue and cites the United Nations Guiding Principles on Business and Human Rights.

By casting their cause as a human rights issue, American Outdoor says, they are attempting to supplant U.S. constitutional law with international human rights law. "Our primary business is the sale of firearms, and the greatest risk to that business is anything that would invalidate or supersede the U.S. Constitution and laws of the United States that protect our business," wrote the company.

The proposal contends that "companies exposed to human rights risks may incur significant legal, reputational and financial costs that are material to investors. A public-facing human rights policy that includes a human rights due diligence process is essential to managing these risks." American Outdoor argues in its rebuttal that the activists do not define any of the terms they use, such as "human rights," pointing instead to the U.N.'s guiding principles, and it notes the global body also calls for strict limitations on the right to own and manufacture firearms.

American Outdoor says the proposal calls on the company to accept unlimited liability for whatever negative impact guns may have on society, even if the gunmaker did not perpetrate to them. Such a policy could easily open it up to substantial legal risks and bankrupt the company, which American Outdoor contends is the real goal of the activists.

The language the activists use regarding the risks to American Outdoor's reputation and finances is similar to that in the prior shareholder resolution, and though there was a tenuous business-related case to be made for monitoring gun violence involving the gunmaker's Smith & Wesson firearms, which is undoubtedly why 70% of shareholders ended up supporting the measure, that doesn’t seem to be the case here.

It's easy to see why the company urges shareholders to oppose the resolution, but will other investors support the measure as they did the last one?

Institutional investors hold the key

It's possible some institutional investors, like BlackRock (NYSE: BLK), the world's biggest asset manager, might support it because they have become more active in the gun control debate. BlackRock not only supported the shareholder resolution last year against the wishes of American Outdoor and Sturm, Ruger but also began allowing its clients to exclude gun stocks from their portfolios, even though the asset management firm is a large shareholder of such stocks.

BlackRock owns some 4.4 million shares in American Outdoor, or over 8% of the stock, which makes it the third-largest institutional investor in the gunmaker. It also owns over 17% of Ruger, making it the biggest investor in the company.

Institutional investors own approximately three-quarters of the stock of both gunmakers, giving them sizable power, but this year's proposal is much broader and less defined than last year's, and it looks like it would open American Outdoor up to greater financial risk.

It's possible the shareholders who sought to hold the gunmaker accountable last time will see they may severely damage the company and their investment this time. Even BlackRock has said it doesn't see its place as telling the gunmakers what to do, though it did assert it may vote against the company in shareholder resolutions or vote against directors serving on the board.

Because of the nebulous nature of the current effort, the activist nuns' push for gun control through a human rights lens may be wide of the mark.