Investors have joined grassroots activists to mitigate the toll that mass incarceration takes on the US: human suffering and 6% of GDP. The direct cost of incarceration in the US is $80 billion, but when it includes the costs to the 2.3 million individuals jailed in the US and their families and communities, the total cost to society is approximately $1.2 trillion or 6% of GDP, according to Carrie Pettus-Davis of Washington University.
Sustainable investor solutions to mass incarceration range from focusing solely on private prison operators to considering the entire prison-industrial complex and from divesting to engaging.
Defining the Scope of Prison Exposure
Defining the scope of portfolio exposure to prisons can range from only private prison operators—such as Core Civic (NYSE: CXW), Geo Group (NYSE: GEO), and G4S (OTCMKTS: GFSZY), listed from largest to smallest—to the entire prison-industrial complex. At one end of the spectrum, Columbia University’s endowment defines prison exposure narrowly. Specifically, Columbia made the decision to divest from companies engaged in the operation of private prisons and to refrain from making new investments in such companies.
At the other end of the spectrum, the Harvard Prison Divestment Campaign, a student group at Harvard, is advocating for divesting from the entire prison-industrial complex, which Rachel Herzig defines as the overlapping interests of government and industry that use surveillance, policing, and imprisonment as solutions to what are, in actuality, economic, social, and political “problems.”
Divesting from the whole prison-industrial complex would entail divesting from the roughly 4,000 companies that profit from incarceration, including a diverse set of blue-chip companies. Criminal justice advocacy group Worth Rises compiled the list of 3,905 companies, which includes multinational insurers with high market share in the bail bond industry. By way of background, the lucrative bail bond industry often charges as much as 10% of the bail amount upfront and may charge additional fees, although some US states have been cracking down on the industry. The list of 3,905 also includes one of the largest companies in the world that provides facial recognition technology to U.S. Department of Homeland Security Immigration and Customs Enforcement (ICE), and Fortune 500 companies that reputedly use prison labor. Notably, the list no longer includes the large global banks that stopped lending to the private prison and immigrant detention industry under grassroots activist pressure this past fall. This should encourage both sustainable investors and grassroots activists alike.