Corporations Divest Nearly $60 Million From Private Prison Complex
Friday, 25 April 2014 10:14 By Candice Bernd, Truthout | Report
(Image: Lance Page / t r u t h o u t; Adapted: Vince / Flickr)
In what could be the first time a series of large corporations have publicly denounced investment in the private prison industry, three major corporations have announced they will be divesting a combined total of nearly $60 million of their shares from Corrections Corporation of America (CCA) and GEO Group, two of the largest private prison companies in the nation.
The announcement comes after civil rights activists, led by the group ColorOfChange, pressured more than 150 companies, including dozens of corporate executives, for months, pushing a moral imperative for divestment.
Asset management firm Scopia Capital was one of the largest institutional investors in the prison companies before executives recently decided to shed more than $1.5 million GEO Group shares. The company has since committed to full divestment of their total shares.
According to a press release from ColorOfChange, the president of DSM North America, Hugh Welsh, spoke to the corporation's decision, explaining that the move was made, in part, to comply with the UN Global Compact.
"The DSM Netherlands pension fund is committed to a strict socially responsible and sustainable investment policy. In accordance with the principles of the UN Global Compact, with respect to the protection of internationally proclaimed human rights, the pension fund has divested from the for-profit prison industry. Investment in private prisons and support for the industry is financially unsound, and divestment was the right thing to do for our clients, shareholders, and the country as a whole," he said in a statement released by Color Of Change.
The divestment of shares comes as the Justice Department launches a clemency initiative that will likely mean sentence commutations for hundreds, or even thousands, of people incarcerated for nonviolent drug offenses. On Wednesday, the Justice Department announced the guidelines it will use to consider clemency requests, indicating that many federal prisoners who have served more than 10 years of long sentences for nonviolent crimes may be released. The guideline changes, part of an ongoing effort by the Obama administration to address harsh sentencing standards, could cut into the private prison industry's bottom line.
"It's a fundamentally failed business practice in an industry that profits from suffering, profits from mass incarceration, essentially profits from locking people up for longer, harsher sentences," said Matt Nelson, who is organizing director with ColorOfChange. "The industry is especially focused on profits from locking up black and brown folks and youth."
And Nelson is right on that point. According to a new study by a UC-Berkeley graduate student, private prisons are overwhelmingly crowded with young people of color.
Nelson sees the divestment strategy as a growing movement and is hopeful that more large corporations will follow suit, as the organization is still in conversation with dozens of companies about divestment. He emphasized that private prison companies are responding to increased pressure from activist groups by lobbying harder for things like lockup quotas and other harsh sentencing policies. "Today marks something of a turning point," he said.
Alex Friedmann, managing editor of Prison Legal News, a project of the Human Rights Defense Center, called the victory by civil rights activists significant. Friedmann was incarcerated for six years at CCA's South Central Correctional Facility in Clifton, Tennessee, and since his release in 1999, has worked to reform the criminal justice system and advocate for prisoner's rights. Friedmann is also a shareholder activist, holding shares in both CCA and GEO stock and attending annual shareholding meetings to introduce resolutions that highlight rampant abuse within privatized facilities.
In 2012, Friedmann introduced a resolution at the CCA annual shareholder meeting in which CCA's board would have had to submit biannual reports to shareholders documenting company efforts to curb rape and sexual abuse in CCA facilities - if it had passed. Friedmann explained how difficult the process of getting a resolution both introduced and passed is because resolutions must be filed with the Securities and Exchange Commission, which then has to verify the resolution is relevant before it can be sent for a vote.
This year, he plans to introduce a resolution that focuses on executive compensation, because he believes it could stand more of a chance. He pointed out that the vast majority of shareholders in CCA and GEO Group are not average citizens, but rather, they are large institutional investors, such as other companies, investment firms, private equity firms and endowment funds.
"It's hard to warp their thinking and working to get these very large corporations to divest their holdings," Friedmann told Truthout. "The fact that ColorOfChange 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, and it's good that it is painting private prison stock as a toxic stock, as an undesirable, socially detrimental stock like tobacco companies or arms manufacturers."
Friedmann believes divestment campaigns are beneficial from an educational and organizing perspective, but called the campaign tactic limited because it represents what he called "only a lateral movement of stock," pointing out that when a company divests its stock, it simply sells it to another investor, who then owns the same amount of stock in the private prison industry.
Private prison divestment campaigns have a history stretching back at least to the early 2000s, when the "Not With Our Money" campaign successfully targeted the company formerly called Sodexho Marriott Services, now Sodexo, which outsources food services, housekeeping, groundskeeping and facilities management for corporations. The company was one of the largest holders in private prison companies, and the campaign was heavily driven by students on college campuses to which Sodexho provided food service. More recent actions have been led by the United Methodist Church and Enlace, targeting Wells Fargo holdings, and student divestment campaigns run through the Responsible Endowments Coalition, targeting university endowments invested in private prison stock.
"A lot of organizations and companies take an ethical view that they will not invest in certain companies, because they find their business practices unethical and the main targets of that . . . are tobacco companies or arms manufacturers, companies whose products actually kill people. But the prison industry has a similar model; the product they have, prison privatization, does kill people," Friedmann said.
Friedman has begun conducting preliminary research on deaths within private prison facilities by compiling a list of incidents through news stories and anecdotes. He plans to file extensive open records requests in the states with private prison facilities, but so far, he has compiled more than 200 deaths, three of them infants from incarcerated mothers.
Meanwhile Color Of Change plans to continue to encourage corporations, board members and politicians to cut ties with prison profiteers as part of its ongoing national campaign.
"One of our goals is to point out that black and brown bodies are not for sale," Nelson said.
Candice Bernd is an assistant editor/reporter with Truthout. Follow her on Twitter @CandiceBernd.
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