New York City has become the first “major public pension system” in the United States to fully divest from private prison companies. The city has sold $48 million in stocks and bonds from three companies, including GEO Group, CoreCivic, and G4S.
“Morally, the industry wants (to) turn back the clock on years of progress on criminal justice, and we can’t sit idly by and watch that happen,” said controller Scott Stringer. “Divesting is simply the right thing to do — financially and morally.”
The unanimous vote stems from a decision by the fund’s trustees in September to study divesting from private prisons. The move was prompted by concerns about reported cases of rampant health and safety violations, as well as alleged human rights abuses. Both the fund’s trustees and an outside consultant concluded that investments in the private prison industry involve inherent risk due to the ongoing investigations into the industry.
“It is time we put our money where our morals are,” Public Advocate Letitia James, a NYCERS trustee, said. “For years, I have called on our city to protect the pensions of hardworking New Yorkers by investing in areas that are both financially and ethically sound.”
The New York City pension funds are made up of the New York City Employees’ Retirement System, Teachers’ Retirement System, New York City Police Pension Fund, New York City Fire Department Pension Fund and the Board of Education Retirement System.
In response to the decision, a rep for the GEO Group said in a statement: “We strongly reject the baseless claims that led to this misguided decision. We’re proud of our longstanding record providing high quality services, while treating the men and women in our care with the respect and dignity they deserve.”
The trustee is only able to divest after studying an industry to determine whether liquidating stocks and bonds would add minimal or no risk to the pension funds. Following the decision, the city has pulled their investments from all companies that derive at least 20% of revenue from private prisons. An annual review will be held to determine whether additional companies will be removed from the portfolios.
“Private prison companies prioritize profits over humane treatment of immigrants and inmates, and their stocks’ wild price swings over the past year show the risks inherent in their business model. The Mayor supports divestment from private prisons after thorough analysis from our outside investment consultants, the City Law Department, and the Bureau of Asset Management showed that it was a prudent step for our pension funds to take,” said John Adler, chief pension investment advisor to the mayor.