Investments in companies that manufacture assault-style weaponry and for-profit private prisons are soon to be a thing of the past for the Rhode Island State Investment Commission (SIC), State Treasurer Seth Magaziner announced.
Magaziner and the SIC cited perverse corporate incentives caused by for-profit prisons and escalating domestic violence in part caused by assault weapons.
“Assault weapons and for-profit prisons have caused too much pain for countless Americans, including many Rhode Islanders,” Magaziner said. “The State Investment Commission is taking this action after careful consideration. With today’s decision, we can do the right thing without impacting the health of Rhode Island’s pension system.”
In his statement, Magaziner also cited the use of assault weapons in the five deadliest mass shootings of the past decade.
The state’s withdrawal and future prohibition of investments in assault weapon companies follows that of other states. Recently, the Connecticut State Treasury adopted a “first-of-its-kind” gun divestment policy, pledging to withdraw $30 million of stock holdings in five companies that are directly associated with the manufacturing of civilian weaponry and ammunition, and preventing future investments in such companies.
Additionally, Connecticut requested any banks and financial institutional conducting business with the state’s treasury to disclose their relationships with such companies and reveal their policies on the topic.
Mayor Bill Peduto of Pittsburg, Pennsylvania, asked the city’s pension to divest from guns, fossil fuels, and private prisons. The endowment of Yale University announced its pledge to divest from several gun-associated companies as well.
Some chief investment officers disagree with such divestment policies and assert that staying as an activist investor has a more profound impact on the direction of a company than simply selling its shares.
Chris Ailman, CIO of the $225 billion California State Teachers’ Retirement System (CalSTRS), admitted that the recent string of divestments from oil and gun companies “hasn’t made the world a better place.”
“The business model of the for-profit prison industry creates corporate incentives for increasing the number of people who are incarcerated and cutting costs at the expense of the health and safety incarcerated individuals and prison employees,” Magaziner said. “Private prison companies have a monetary motivation to lobby for public policies that increase already high incarceration levels in the United States.”
Rhode Island’s state pension system has less than $250,000 invested in affected investments, representing 0.003% of assets across the $8.7 billion pension fund.
Milken: CIOs Say Divestment Isn’t the Way