California State Teachers’ Retirement System (CalSTRS) is divesting its stock holdings in private prison companies CoreCivic and GEO Group, reported Randy Diamond the Chief Investment Officer (CIO). CalSTRS’s $230 billion of assets makes it the second-largest pension system in the US.
This decision makes it the nation’s third major public pension fund to divest from for-profit private prison companies.
CalSTRS’s investment committee voted for a divestment review in July, after the Trump administration’s “zero tolerance” border crossing policy resulted in children being separated from their parents. The two private prison companies ran facilities that housed detainees.
The review of the divestment looked at whether CalSTRS’s investments in the for-profit prison companies violated its environmental, social and governance (ESG) policy, which requires respect for human rights.
“Based on all the information and advice we were provided, the CalSTRS board decided to divest according to the policy criteria,” said Investment Committee Chair Harry Keiley in a press release.
The divestment is scheduled to be completed within six months.
While reviewing the investment, CalSTRS staff were told by the companies that they did not detain minors or directly take part in the separation of families. Still, CalSTRS concluded that providing detention facilities for the parents warranted divestment, Diamond reported.
A GEO Group spokesman defended the company in a comment to CIO: “We believe [CalSTRS] decision was based on a deliberate and politically motivated mischaracterization of our role as a long-standing service provider to the government.”
Officials of CoreCivic could not be reached for comment.