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Apr
2, 2020 ipe.com
Danish pension funds draw back from US for-profit prisons
Danish
pension funds PKA, Lærernes Pension and Velliv have all taken action
recently on their holdings in US companies involved in the running of
for-profit prisons, with the first two divesting and the third engaging with
firms to improve practices. The three pension funds had been highlighted in a
Danish investigative report has having had investments – albeit relatively
small – in a pair of companies targeted by campaigners in the US and which
have now been sold off by some major North American pension funds.
Particularly in the US, pension funds came under pressure last year to divest
shares in companies running detention facilities in which children were
separated from parents at the US/Mexico border. The American Federation of
Teachers (AFT), the second-largest teachers’ trade union in the US, has
campaigned for pension fund divestment from the two US listed companies
operating private prisons – CoreCivic and GEO
Group. Karsten
Kjeldsen, chief executive officer of the Danish teachers’ pension fund, Lærernes Pension, told IPE the DKK101bn (€13.3bn) fund
had decided at its board meeting on Friday to sell off its holding of around
$1m in CoreCivic. “The company has been on our
yellow list [watch list] since January because of our ESG concerns, and at
the meeting we decided, we now want to exclude them, because we feel the
investment is moving in the wrong direction,” he said. Kjeldsen said Lærernes Pension had excluded 500 companies altogether
from its investment universe because of environmental, social and governance
(ESG) concerns, but had a policy of being fair to firms by giving them time
and space to make changes themselves before blacklisting them. “In general,
we want to see specific evidence of misconduct, for example, a court
injunction, before divesting,” he said. “In general, we want to see specific
evidence of misconduct, for example, a court injunction, before divesting”
The three Danish pension funds were cited in a report by Danish investigative
media group Danwatch published in February focusing
on ethical concerns about such investments, regarding concerns about
conditions in some of the jail facilities run by GEO Group and CoreCivic. However, Kjeldsen said his pension fund had
begun to scrutinise its investment in CoreCivic before this report was published. Meanwhile, a
spokesman for PKA, which runs four pension funds in the social and healthcare
sectors, told IPE it had now sold all investments in the two US firms. “It is
true that we were invested in the companies, but we have sold all investments
in them and excluded the companies both because of the information brought
forward by Danwatch and our own investigation into
the companies,” he said. According to Danwatch, PKA
had invested DKK54m in the two companies. Velliv
said it was correct that it had invested DKK1m in CoreCivic
and GEO Group, and was now in dialogue with both
companies to bring about an “improvement of the companies’ practices”. This
dialogue, which was being conducted through corporate governance firm ISS,
had been going on before the investigation from Danwatch,
a spokesman for Velliv said. On the other side of
the Atlantic, the California State Teachers’ Retirement System (CalSTERS) was directed by its board in November 2018 to
divest from CoreCivic and GEO Group, following due
diligence action including visits to various detention facilities run by the
companies. In Canada, the Canada Pension Plan Investment Board (CPPIB) sold
its shares in GEO Group, which was the company managing the detention centres that were reported for their poor treatment of
detainees in the US/Mexico border controversy, as well as its shares in CoreCivic. CalSTERS divested
from CoreCivic and GEO Group, following due
diligence action including visits to various detention facilities run by CoreCivic and GEO Group. Fellow Canadian fund, the
Ontario Teachers’ Pension Plan (OTPP), has said it will not invest in GEO
Group, citing human rights concerns and its commitment to investing
responsibly. Asked for comment on the moves by the Danish pension funds, a
spokesman for CoreCivic said: “Unfortunately, much
of the information about our company being shared by special interest groups
is wrong and politically motivated, resulting in some reaching misguided
conclusions about what we do.” Among other comments, he said CoreCivic helped keep communities safe, enrolled thousands
of inmates in reentry programs that prepared them for life after prison and
saved taxpayers millions. Meanwhile, a GEO Group spokesperson said: “The
divestment efforts against our company are based on a false narrative and a
deliberate mischaracterisation of our role as a
long-standing government services provider.” The Florida-based firm had been
a trusted service provider to the federal government for over three decades,
the spokesperson said, adding that in this time it had have never played a
role in setting policy, nor ever advocated for or against immigration
enforcement policies.
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