Opponents of mass incarceration have notched several small but significant victories by successfully pressuring backers of the private prison industry to divest almost $60 million from Corrections Corporation of America (CCA) and the GEO Group, the two largest private prison companies in the United States. Both firms trade on the New York Stock Exchange.
Online civil rights organization Color of Change announced in April 2014 that a year-long campaign to push 150 companies to divest from private prisons had persuaded Scopia Capital Management, DSM North America and Amica Mutual Insurance to sell off their private prison stock in the final quarter of 2013.
“Companies that continue to stay with their investments in CCA and GEO Group are making a real decision about where they want their money and the ethical obligations they have to the greater society,” said Rashad Robinson, Color of Change’s executive director.
Scopia Capital, an asset management giant, dropped 1.5 million GEO Group shares, effectively decreasing its private prison stock by more than 25%. Scopia has shed 59% of its private prison holdings since December 2012 and, according to Color of Change, has committed to full divestment.
DSM, a Dutch chemical company, sold off all 73,000 of its pension fund’s shares in CCA and GEO, joining Amica in finalizing their full divestment from the private prison industry.
“The DSM Netherlands pension fund is committed to a strict socially responsible and sustainable investment policy,” DSM North America president Hugh Welsh said in a written statement, adding the decision to divest was partly made to comply with the UN Global Compact in support of human rights.
“Investment in private prisons and support for the industry is financially unsound,” Welsh added, “and divestment was the right thing to do for our clients, shareholders and the country as a whole.”
In spite of Color of Change’s campaign, Tennessee-based CCA and Florida-based GEO Group, which generate over $3.3 billion in combined annual revenue, still have plenty of investors.
Over 90% of CCA and GEO’s stock is owned by institutional investors such as banks, mutual funds and private equity firms – which often invest without their clients knowing where their money is being invested. [See: PLN, Aug. 2015, p.46]. Targeting institutional shareholders for divestment has, therefore, become a growing trend.
“The fact that Color of Change has affected companies and gotten them to divest their private prison holdings is significant. It shows that they have the clout and the ability to take their message to these companies and have them actually take action,” said PLN managing editor Alex Friedmann, who owns a small amount of CCA and GEO stock as an activist shareholder, which allows him to file shareholder resolutions.
“And it’s good,” Friedmann continued, “that [their efforts are] painting private prison stock as a toxic stock, as an undesirable, socially detrimental stock like tobacco companies or arms manufacturers.”
In recent years, the United Methodist Church, the Presbyterian Church USA and Pershing Square Capital Management, among others, have also divested from the private prison industry.
In 2013, National People’s Action and the Public Accountability Initiative – working to expose the mistreatment of prisoners held in privately-run immigrant detention centers – shamed Wells Fargo, which marketed itself as “immigrant-friendly,” into divesting a sizable portion of its stock in GEO Group, though the bank later increased its holdings in CCA and continues to invest in private prison companies. Wells Fargo has also been targeted by Enlace, a national organization that advocates for immigrant and workers’ rights.
Allianz Asset Management, an investment firm with more than $75 billion in assets and a sponsor of National Public Radio, divested 684,966 shares of CCA stock and 460,000 shares in GEO during the second quarter of 2013. Shortly thereafter, Systematic Financial Management fully divested from the private prison industry by selling its 74,550 shares of GEO stock and 2,754,722 shares in CCA.
PLN has been reporting on private prison divestment since 2001, when Sodexho Alliance, a multi-national corporation, gave into pressure from student activists involved in the Not with Our Money campaign and pledged to divest its 8% stake in CCA. [See: PLN, Jan. 2001, p.20].
Five years later, Alex Friedmann and PLN editor Paul Wright addressed student demonstrators in New Haven, Connecticut protesting the $1.5 million in CCA stock held by Yale University’s endowment, handled at the time by Farallon Capital Management, LLC. [See: PLN, April 2007, p.28]. Farallon ultimately dumped $90 million worth of CCA stock, including Yale’s investments.
As of February 2016, three U.S. universities have divested from the private prison industry as a result of student protests. Columbia University spearheaded the divestment by selling all of its prison stock in July 2015, followed by the University of California system, which sold almost $30 million worth of stock in December 2015. Earlier this year, the Black Student Union successfully convinced California State University, Los Angeles to redirect its private prison investments into services for black students. Similar student-led advocacy campaigns are underway at other universities, including Brown and Cornell.
However, there are practical limits to divestment as an anti-private prison strategy. “I don’t see divestment campaigns making a big dent,” Friedmann – a former CCA prisoner himself – told CNN. “As long as prison companies have the bed space the government needs and wants, they will most likely stay in business.” He noted that selling private prison stock means someone else is buying it, which is a lateral transfer that has little impact on the company.
Color of Change, meanwhile, said its ongoing campaign for private prison divestment will “encourage corporations, board members and politicians to cut their ties with prison profiteering, and to hold them accountable when they continue working with the private prison industry.”
“Private prisons are one of the pre-eminent civil rights concerns of our time,” said Color of Change president Robinson. “The despicable profit motive of these companies leads to some of the most abusive and inhumane conditions in the country.”
To stop prison profiteering, “[w]e must sever the financial ties that allow shareholders to cash in on the incarceration of immigrants and people of color,” wrote Pete Brook, with prisonphotography.org. And those financial ties continue to be cut.
On July 19, 2016, the City Council in Berkeley, California adopted a resolution to divest public funds from the private prison industry. City officials will contact institutions with which they do business to urge them to divest, too. Berkeley was the second U.S. city to adopt a private prison divestment policy, after Portland, Oregon. And according to September 2016 news reports, trustees of the New York City Employees’ Retirement System have voted to study divesting stock held in private prison companies.
“As trustees, we have a fiduciary responsibility to ensure that we are acting in the best interests of our members while investing in ways that are consistent with our values as New Yorkers,” said Comptroller Scott Stringer. “We believe the time has come to study whether our holdings in private prisons meet both our fiduciary standard as well as our standard to invest responsibly.”
Sources: www.colorofchange.org, Yale Daily News, Hartford Courant, Yale Herald, New Haven Register, www.nationinside.org, www.enlaceintl.org, www.aclu.org, www.truth-out.org, www.motherjones.com, http://money.cnn.com, https://prisonphotography.org, www.cnn.com, https://prisondivest.com
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