ESG Watch: #familiesbelongtogether and Private Prisons

The #familiesbelongtogether rallies that took place across the country yesterday are inextricably linked to the for-profit prison industry and may even be connected to your investment portfolio.

Private prisons operated by for-profit companies have been controversial for quite some time, due to subpar safety records, higher costs (which is theoretically their primary benefit), and perverse incentives. Despite consistent criticisms and litigation against them for the aforementioned issues, they may begin to attract even more scrutiny, since the majority of immigrant detainees are held in private prisons.

The recent policy of separating children from their parents at the border was deeply unpopular (and quickly reversed) and I am guessing this will put an even greater focus on these for-profit prison companies.¬†Although the publicly-traded operators Geo Group and Core Civic are included in the major benchmark indices, many responsible indices and investment managers already exclude them. While the stocks are up quite a bit since Trump’s election, negative press and litigation could escalate and convert a social values issue into shareholder value issue.

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