Private Prisons and Investment Risks, Part Two: How Private Prison Companies Fuel Mass Incarceration—and How Public Pension Funds Are at Risk

Source: American Federation of Teachers, 2019

From the press release:
The American Federation of Teachers is urging public pension funds with more than $3 trillion of deferred wages under management to review their holdings in the wake of a new report exposing how retirement funds are at risk through investments in private prisons that profit from mass incarceration.

“Private Prisons and Investment Risks, Part Two: How Private Prison Companies Fuel Mass Incarceration—and How Public Pension Funds Are at Risk” was released Tuesday by the AFT with the support of 35 other organizations including the Journey for Justice Alliance. The report reveals the direct and indirect investments public pension funds have in CoreCivic and GEO Group, which reap billions each year by jailing minority populations and exploiting the school-to-prison pipeline. The state pension funds named in the report currently hold over $75 million in private prison stock.

The report features a “watch list” of the private equity firms that own for-profit companies that provide services to detention facilities. And it reveals how pension funds may be backing companies that put public employees out of a job by funding firms that benefit from privatization. Private equity firms have significant investments in for-profit corrections companies, and many retirees are exposed through these funds or via direct shareholdings.

The report urges pension trustees to examine their portfolios for exposure to CoreCivic and GEO Group, and to consult the watch list when making future asset allocation decisions. Both firms’ bottom lines stand to be affected by the bipartisan passage in December of the criminal justice bill, which added to the political, legal and financial pressure on the prison industrial complex.

Related:
Part One: Private prisons, immigrant detention and investment risks
Source: American Federation of Teachers, 2018

From the summary:
….”Private Prisons, Immigrant Detention and Investment Risks” is part 1 of two special edition reports that the AFT will be issuing to highlight the investment risks to pension funds and other investors whose portfolios contain exposure to the private prison industry or contractors who provide services to immigration detention centers. Since May 2018, when Attorney General Jeff Sessions conveyed plans to prosecute immigrants crossing trhe U.S. Mexican border, making it official U.S. policy to routinely separate children from their parents, AFT pension trustees and members have been inquiring about public pension funds that may be invested in companies that profit from detention facilities that house separated immigrant families and the risks those investments pose to members’ retirement security.

In response the AFT is issuing this two-part report to inform trustees about the top publicly traded companies that are profiting from the detainment of separated families or the incarceration of mass numbers of people—disproportionately people of color—in private prisons. Public pension funds invested in companies identified in this report may hold direct shares, or may have investments through index funds, private equity funds or hedge funds.

Part 1 of this report identifies investment managers, namely hedge fund managers, who invest millions of dollars in companies that profit from private prisons and detention facilities.

Part 2 of this report will identify an expanded list of investment managers who invest in private prison companies that profit more broadly from mass incarceration of communities of color.