Divestment as a Moral Imperative

This article is highlighted as part of the 100th issue special, celebrating twenty-five years of quarterly newsletters. 

Just one year after this story was published, the crisis at the Mexico border has intensified. The federal government is detaining thousands of people—including large numbers of unaccompanied children—in migrant detention camps under conditions that visiting doctors have described as torture. Natural Investments advisers continue to educate investors and encourage divestment from private prison corporations contracted by the federal government to detain people.

Few stories dominated headlines this summer like the unfolding of the family separation debacle happening at the U.S.-Mexico border. As civil and political unrest worsened in some Latin American countries, the border saw a dramatic increase of families seeking asylum. Over the spring and early summer, Immigration and Customs Enforcement (ICE) forcibly separated more than 3,000 children from their parents, per the Trump administration’s “zero tolerance” policy on immigration, and imprisoned them in detention centers across the country; in combination with the surge in unaccompanied children crossing the border, the number of children in U.S. detention centers has now ballooned to more than 13,000.

News reports revealed images of solitary children, huddled under thin aluminum blankets and wailing in the cages of detention centers run by two private companies: GEO Group and Corrections Corporation of America (referred to as “CoreCivic”); both manage private prisons as well as ICE detention centers. Immigrant children held in facilities run by these two companies have complained about the denial of medical care, inadequate nutrition, and racist abuse. Medical professionals have come together to publicly criticize the policy, citing the likelihood of irreparable mental and physical damage to children who undergo the trauma of extended separation from their parents.

In response, activists have renewed longstanding calls for divestment from these companies and others that operate, participate in, and fund private prisons. The call for divestment gained traction over the summer and is now being considered by various schools, state and local governments, and businesses.

These latest calls for divestment build upon a long history of resistance to private prisons in the United States. While the earliest examples of U.S. private companies profiting from the labor of incarcerated people can be found in the late 18th and early 19th centuries, it was the latter half of the 20th century that saw the private prison industry expand exponentially. In the 1980s, the “war on drugs” spurred skyrocketing incarceration rates that stressed already overcrowded federal and state facilities. In 1984, Corrections Corporation of America (now CoreCivic) was awarded a contract to assume management of a facility in Shelby, TN – the first time in U.S. history that the operation of a prison facility had been completely given over to a private entity.

As the private prison industry grew, opposition efforts did as well. Notably, Critical Resistance, a national grassroots organization founded in 1997 by activist and author Angela Davis, among others, has launched actions and campaigns across the country to protest the entire prison industrial complex – a phrase it brought to national attention. Enlace, an international racial and economic justice group, has made prison divestment a focal point of its organizing efforts since 2011 (Natural Investments has endorsed Enlace’s campaigns). The establishment of the Black Lives Matter movement in 2013 and the Movement for Black Lives in 2016 brought renewed media attention to issues such as police brutality, racial profiling, mass incarceration, and the many ills of the prison system. The Movement for Black Lives specifically includes “divestment from exploitative forces including prisons” in its platform.

The prison divestment movement gained momentum during the Obama era, when the Justice Department announced in 2016 that it was phasing out contracts with private prisons due to safety and security concerns, as well as falling prison populations (the Departments of Health and Human Services and Homeland Security, which oversee the detention of immigrant children and parents, respectively, were not affected by this order). Despite Attorney General Jeff Sessions’ reversal of this decision in February 2017, divestment efforts moved forward in various cities and states. The boards of all five of New York City’s pension funds passed resolutions in May 2017 requiring divestment from the private prison industry, and the state of New York followed suit in July. Other city governments, including Philadelphia and Cincinnati, have stated their intentions to fully divest their pension plans. Institutions of higher learning have also played a key role in the divestment movement as politically engaged students have pushed their schools to rid endowments and retirement plans of private prison investments. Columbia University divested in 2015 after pressure from a student activist campaign, as did the University of California system.

The socially responsible investment (SRI) community has also played an important role in advancing the prison divestment movement. The Investor Alliance for Human Rights (IAHR) coordinates and amplifies global investors’ voices on human rights issues and has created a guide to corporate due diligence related to family separation. Organizations that specifically target endowments, such as the Responsible Endowments Coalition, are working with educational institutions on prison divestment campaigns. As public interest grows, various mutual fund and asset management companies are now advertising their divestment from private prison operators.

What is next for the private prison divestment movement? The immigration and family separation crisis that brought it to the forefront again this summer continues to evolve. Five hundred children—including nearly two dozen under the age of 5—remain in U.S. custody without their parents, and those working to reunite them are finding that many parents have already been deported or are too fearful to come forward. Hundreds of undocumented children have been quietly moved from foster care and shelters to a sprawling tent city in a Texas desert. Meanwhile, a nationwide prison strike that lasted from August 21 to September 9 engaged incarcerated people in 17 states to protest unfair labor practices and racial disparities in the criminal justice system. Activists are now targeting large institutions; the California State Teachers’ Retirement System, CalSTRS, is currently the target of a campaign demanding the divestment of $13 million from CoreCivic and GEO Group. As the divestment movement gains momentum, investors and the SRI community have an incredible opportunity to effect meaningful change through divestment, shareholder advocacy, reinvestment in communities, and other strategies that make our voices heard through our financial choices.

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