CalSTRS’ Report on For-Profit Prison Companies Could Mean Divestment

Sacramento, CA – On Thursday, CalSTRS released a corporate governance report on for-profit prison companies that opens the door for CalSTRS’ board to vote in favor of divesting from CoreCivic and GEO Group, the two largest for-profit prison companies in the country. The report, which reached a critical conclusion that divesting from CoreCivic and GEO Group would have a negligible impact on CalSTRS’ portfolio performance, is the product of months-long research into both companies’ human rights abuses. CalSTRS’ Chief Investment Officer, Christopher Ailman, initiated the review in July after hundreds of CalSTRS members signed petitions, called and emailed CalSTRS, and spoke out at board meetings, calling for divestment from these “migrant abuse companies.”

While the report was meant to analyze the environmental, social, and governance (ESG) risks that CoreCivic and GEO Group pose to CalSTRS’ portfolio, it ultimately failed to provide any meaningful analysis of ESG risks or reach evidence-based conclusions on ESG policy compliance. CalSTRS’ corporate governance team asserted that they were unable to obtain evidence of either companies’ human rights abuses and could not conclude whether the companies have violated ESG risk factors on civil liberties, workers’ rights, or human health.

In speculating that CoreCivic and GEO Group’s family detention facilities in Texas “would not violate the CalSTRS respect for human rights,” the report explains that “in both facilities[,] detainees are open to roam the grounds, the living units were not locked, and there was no razor wire or weapons carried by staff.” “It’s hard to imagine how CalSTRS could set the bar any lower,” said Emily Claire Goldman, the Founder and Director of Educators for Migrant Justice. “This is a disturbing misrepresentation of the legal standards for international human rights law,” Goldman, a human rights lawyer, added.

According to the report, “staff understands that work in most facilities is voluntary.” Yet this implies that work in some facilities qualifies as forced labor, which directly contradicts CalSTRS’ conclusion that these companies have not violated the ESG risk factor on workers’ rights. Moreover, GEO Group itself has not disputed immigration detainees’ forced labor claims brought in an ongoing lawsuit in Colorado. On the issue of human health, the report acknowledges that the two companies have some influence over the quality of health care provided to inmates or detainees, but goes on to say that the “healthcare provided is far too often more and better than inmates or detainees would have access to if not detained.” Not only has deliberate medical neglect consistently been cited in class-action lawsuits, as well as reports from the Office of the Inspector General, but CalSTRS’ appalling statement closely mirrors an argument historically used to justify slavery.

Despite CalSTRS’ recognition that analyzing ESG compliance “is better suited to a legal analysis,” colleagues at Human Rights Watch and the ACLU –  two organizations with the relevant expertise in human or civil rights law – confirmed that CalSTRS did not reach out to them; this directly contradicts the statement CalSTRS’s CIO, Ailman, made to stakeholders during the September board meetings, in which he spoke of plans to contact both organizations. “CalSTRS’ report makes a mockery of its ESG policies, and exemplifies bad-faith engagement with CalSTRS members,” Goldman stressed. While pension funds across the country have long since divested from CoreCivic and GEO Group, CalSTRS, a recognized leader in socially responsible investing, has yet to do so. CalSTRS’ Board is expected to take up the issue of divesting from CoreCivic and GEO Group at the board meeting on November 7th in Sacramento.

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Educators for Migrant Justice is a grassroots advocacy campaign to end pension fund complicity in the migrant abuse crisis. Contact Emily Claire Goldman for more information.

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