New York City has become the first major public pension system in the US to fully divest from private prison companies.
City Comptroller Scott Stringer and the trustees of the New York City Pension Funds said they made the decision in light of reported incidents of alleged human rights abuses across the private prison industry. According to the New York City Comptroller’s Office, a 2016 audit found that private prisons have far higher rates of security and safety incidents per capita than comparable public institutions.
The NYC pension funds’ trustees voted to divest from private prisons last month, and since then have sold off approximately $48 million of stock and bonds from three private prison companies, GEO Group, CoreCivic, and G4S. The impetus for the move stems from a decision by the trustees in September 2016 to study divesting from private prison companies due to concerns about rampant health and safety violations, as well as alleged human rights abuses.
“With Donald Trump in the White House, we’re seeing more and more industries try to profit from backwards policies at the expense of immigrants and communities of color,” said Stringer in a statement. “As President Trump ratchets up hateful rhetoric and steps up deportations, private prison companies are going to see enormous reputational harm—and that means they’ll become even riskier investments,” he said, adding that “divesting is simply the right thing to do—financially and morally.”
According to Stringer’s office, federal authorities have found that some private prisons have attempted to reduce overcrowding by improperly confining inmates in segregated units that are similar to solitary confinement. Limited and poor-quality medical care is also common in the industry, said Stringer, and court documents indicate that individuals housed within private prisons are often denied medical care. One facility allegedly had no full-time doctor for more than six months, and a corrections officer was killed in 2012 after a riot over low-quality food and medical care.
Private prison companies also operate private immigration detention centers, where as many as 65% of Immigration and Customs Enforcement (ICE) detainees are held, according to Stringer’s office. In just the first half of 2017, at least eight immigrant detainees have died while in private facilities. At least two companies the comptroller has divested from, GEO Group and Corrections Corporation of America, operate immigrant detention centers.
Because Stringer and the other trustees are fiduciaries, they can only consider divestment when an analysis finds that it would add minimal or no risk to the pension funds. The 2016 study issued by the comptroller’s office found that divesting would add minimal or no risk to the city’s pension funds’ portfolios, and counsel to the pension funds agreed that divestment would not violate the trustees’ fiduciary duty.
An analysis conducted by the comptroller’s office and outside consultants also found inherent investment risks in for-profit prison companies. The issues surrounding private prisons, said Stringer, can lead to reputational, legal, and regulatory risks, which could “seriously harm” investors.