CalPERS: Stop Investing in Migrant Abuse Companies

CalPERS Executive Officers and Board Members

The family separation and detention crisis is not over; the administration is still separating migrant children from their families as they cross the border, and the total number of separated children remains unknown.  At least four companies in CalPERS' portfolio – CoreCivic, GEO Group, General Dynamics, and United Rentals - are providing the very resources the administration depends on to carry out these crimes against humanity.

Tell CalPERS: Complicity in crimes against humanity is not an option!

With more than $425 million worth of shares in CoreCivic, GEO Group, General Dynamics, and United Rentals, CalPERS is investing in companies that are profiting off of policies designed to inflict grave harm and lasting trauma on children and families fleeing horrific violence and persecution. The separation, detention, and deportation of refugees and asylum seekers - to countries where they face serious threats to their life and freedom - violates fundamental human rights enshrined in international law. Thanks to fierce opposition from stakeholders, CalSTRS announced plans to divest from for-profit prison companies; it's imperative that CalPERS follows their lead. CalPERS is widely recognized as a leader in socially responsible investing; it’s time they lived up to that reputation.

Demand that CalPERS immediately divest from GEO Group and CoreCivic, and pressure General Dynamics and United Rentals to urgently end their material support for the detention of migrant children.

Petition by
Emily Goldman
SAINT LOUIS, Missouri

To: CalPERS Executive Officers and Board Members
From: [Your Name]

Dear CalPERS Executive Officers and Board Members,

We, the undersigned CalPERS members, vehemently and wholeheartedly object to CalPERS’ $425 million worth of investments in companies - CoreCivic, GEO Group, General Dynamics, and United Rentals - aiding and abetting the Trump administration’s egregious abuses of migrant families, children, and asylum seekers. We urgently demand immediate and complete divestment of our retirement funds from GEO Group and CoreCivic, and good faith engagement with General Dynamics and United Rentals to pressure them to immediately end their material support for the detention of children and provide access to redress for affected families.

CoreCivic and GEO Group operate the largest family detention centers in the US, where the vast majority of detainees are seeking asylum. Plaintiffs in six federal lawsuits [1] have alleged forced labor and other human rights abuses in CoreCivic and GEO Group facilities. According to independent medical experts, [2] CoreCivic and GEO Group’s practices have contributed to the deaths [3] of numerous detainees, and advocacy groups continue to voice concerns over medical neglect [4] and sexual assault [5] at the companies’ migrant detention centers. A recent report [6] by the Department of Homeland Security’s internal watchdog concluded that ICE’s detention facilities, including those operated by CoreCivic and GEO Group, are not subject to rigorous oversight and therefore are not held accountable [7] for substandard conditions; this conclusion is all the more alarming given that the Trump administration has sought to terminate standards [8] that prevent children from being held in CoreCivic and GEO Group family detention facilities for prolonged periods of time. Nearly a year after the zero-tolerance immigration policy was first announced, the administration is still separating [9] migrant children from their families as they cross the border, and the total number of separated children remains unknown. [10] According to a recent NGO complaint filed with the Department of Homeland Security’s Office of the Inspector General, at least nine infants under one year of age remain detained in CoreCivic’s Dilley family detention center, one of whom has been detained for more than 20 days, [11] and in 2019 alone, at least 13 babies – some as young as one year old – have been detained in GEO Group’s Karnes family detention facility. [12] The increased detention capacity provided by CoreCivic and GEO Group facilities has proved crucial[ 13] for the Trump administration’s crackdown on refugees and asylum seekers, as the Department of Homeland Security (DHS) previously indicated [14] in June, and confirmed [15] again in October.

This is part of a wider pattern of racism and xenophobia that has a left a record number of migrant children detained in U.S. government facilities, despite UN human rights experts concluding [16] that placing immigrant children in detention facilities may, in and of itself, amount to torture. Of the 14,000 [17] migrant children currently in detention, 1,300 are being held at the Homestead Temporary Shelter for Unaccompanied Children [18] in Florida, which relies on companies including General Dynamics and United Rentals for resources and operational support. Staff at the Homestead facility have reportedly [19] not undergone FBI fingerprint checks or child welfare screenings, and the facility’s location on federal lands exempts [20] it from state child welfare inspections. General Dynamics, a US defense contractor specializing in missile defense systems and combat vehicles, is currently under contract [21] with the Department of Health and Human Services (HHS) for “cadre and infrastructure services for shelter care for unaccompanied children” at the Florida Homestead [22] facility. United Rentals, one of the world’s largest rental companies, is also providing rental equipment and infrastructure [23] to this facility.

By providing the very resources the Trump administration depends on to commit such egregious human rights abuses against migrants, CoreCivic, GEO Group, General Dynamics, and United Rentals have played a crucial role in this nightmare. To put that in legal terms, these four companies are aiding and abetting [24] human rights abuses that qualify as crimes against humanity [25] under international law. By continuing to invest in these companies with knowledge of their role in migrant abuse, CalPERS is complicit.

CalPERS has historically resisted stakeholder demands for divestment, arguing [26] that having a voice at the table is the best way to change corporate conduct. This argument doesn’t hold for companies like CoreCivic and GEO Group, whose for-profit prison business model – where the company has a financial incentive to incarcerate as many people as possible – is inherently incompatible with the concept of corporate social responsibility. No amount of pressure from investors can persuade companies to abandon their business model. CalPERS did, in fact, recognize this irreconcilable conflict of trying to engage with gun manufacturers when they opted to divest [27] from Smith & Wesson Holding Corp. and Sturm, Ruger & Co. in the wake of the Sandy Hook Elementary School shooting in 2013.

Divesting from CoreCivic and GEO Group in response to the companies’ conduct is consistent with CalPERS’ fiduciary duty given the level of risk such investments pose to CalPERS’ rate of return. According to a 2015 report [28] from the UN Principles for Responsible Investment, to which CalPERS is a signatory, “failing to consider long-term investment value drivers – which include environmental, social and governance [ESG] issues – in investment practice is a failure of fiduciary duty.” Researchers have found that companies with strong ESG performance make better investments, [29] with a report [30] from Norway’s Government Pension Fund finding that conduct-based divestment produces higher returns for investors.

In June 2017, NYC pension funds divested from CoreCivic and GEO Group after the “Comptroller’s office found inherent legal, regulatory, and reputational risks in for-profit prison companies” [31] that could lower demand for such investments and damage valuation as a result. Concerns over the financial impact of ESG issues concentrated in for-profit prison companies “have been warranted”; not only have CoreCivic and GEO Group’s stock prices dramatically underperformed the market for the last four years, [32] but the dramatically higher risk both companies pose - as compared to US junk bonds - has led to a sharp decline in the value of their bonds. [33] Now, as a direct result of the administration’s migrant abuse policy, CoreCivic and GEO Group’s share prices have skyrocketed and this makes it the ideal time to cash out and invest those earnings in companies whose long-term profitability is not threatened by unsustainable corporate conduct.

Institutional investors across the country, including the California State Teachers’ Retirement System (CalSTRS) and the New York State Common Retirement Fund, as well as pension systems in New York City, Chicago, Cincinnati, and Philadelphia, have already divested from CoreCivic and GEO Group over both companies’ human rights abuses, with JP Morgan, the largest bank in the US, recently announcing plans to stop financing for-profit prison companies. [34] This level of divestment makes it more difficult for these migrant abuse companies to underwrite debt, access capital, and lobby for contracts and pro-incarceration, anti-immigrant policies. As the country’s largest pension fund, CalPERS has significant leverage that can and must be used to help end these atrocities.

We, the undersigned CalPERS members, demand that CalPERS:
A. Immediately and completely divest from for-profit prison companies CoreCivic and GEO Group;
B. Leverage good faith engagement to pressure General Dynamics and United Rentals - and their subsidiaries - to cut any and all contracts and bids with HHS or any other local or federal government agency through which they provide infrastructure, equipment, case management support or IT services to process migrant detainees, or any such support at detention facilities where migrant children or their families are held;
C. Conduct a human rights impact assessment of its first and second tier investment chain exposure to corporate activities involved in or otherwise enabling family separation; indefinite detention; or the detention of children, refugees, or asylum seekers; and
D. Facilitate access to redress for those affected by General Dynamics’ involvement in the zero- tolerance policy by urging General Dynamics and its subsidiaries to create a non-judicial grievance mechanism, consistent with international law and best practice standards.

[1] The Human Trafficking Legal Center, Alexandra Levy, “Fact Sheet: Human Trafficking & Forced Labor in For-Profit Detention Facilities,” (2018), available at: https://www.business-humanrights.org/sites/default/ files/documents/Human-Trafficking-Forced-Labor-in-For-Profit-Detention-Facilities.pdf.
[2] American Civil Liberties Union, “Report Links Poor Medical Care to Deaths in ICE Detention,” (June 20, 2018), available at: https://www.aclu.org/news/report-links-poor-medical-care-deaths-ice-detention.
[3] The San Diego Union Tribune, Kate Morrissey, “Report links deaths in immigration detention to sub-par medical care,” (June 20, 2018), available at: https://www.sandiegouniontribune.com/news/immigration/sd-me-immigration- deaths-20180620-story.html.
[4] Physicians for Human Rights, Dr. Altaf Saadi, “Detention Facilities Display Dangerous Trend of Delayed and Inadequate Care,” (June 20, 2018), available at: https://phr.org/resources/detention-facilities-display-dangerous- trend-of-delayed-and-inadequate-care/#top.
[5] American Civil Liberties Union, Victoria López and Madhuri Grewal, “The Department of Homeland Security’s Own Watchdog Says ICE Detention Inspections are Meaningless,” (July 3, 2018), available at: https://www.aclu.org/blog/immigrants-rights/immigrants-rights-and-detention/department-homeland-securitys-own-watchdog.
[6] US Department of Homeland Security, Office of Inspector General, “ICE’s Inspections and Monitoring of Detention Facilities Do Not Lead to Sustained Compliance or Systematic Improvements,” (June 26, 2018), available at: https://www.oig.dhs.gov/sites/default/files/assets/2018-06/OIG-18-67-Jun18.pdf.
[7] ACLU, supra fn. 5.
[8] American Civil Liberties Union, Stephen Kang, “Trump’s New Attack on Immigrant Children,” (September 14, 2018), available at: https://www.aclu.org/blog/immigrants-rights/immigrants-rights-and-detention/trumps-new- attack-immigrant-children.
[9] Texas Civil Rights Project, Laura Peña and Efrén C. Olivares, “The Real National Emergency: Zero Tolerance and the Continuing Horrors of Family Separation at the Border,” (February 2019), available at: https://texascivilrightsproject.org/wp-content/uploads/2019/02/FamilySeparations-Report-Final.pdf
[10] US Department of Health and Human Services, Office of the Inspector General, “Issue Brief: Separated Children Placed in Office of Refugee Resettlement Care,” (January 2019), available at: https://oig.hhs.gov/oei/reports/oei-BL-18-00511.pdf.
[11] American Immigration Lawyers Association, “Complaint Urges Immediate Release of Infants from Detention,” (February 28, 2019), available at: https://www.aila.org/infonet/complaint-urges-immediate-release-of-infants.
[12] RAICES (@RAICESTEXAS). “Our data shows that in 2019 we've seen 13 babies under 2 (youngest 1 y/o) at the Karnes detention center. This is the youngest that we have documented, but staff have actually seen younger in their visits.” February 28, 2019, 7:52pm. Tweet available at: https://twitter.com/RAICESTEXAS/status/1101284103326916608.
[13] Padilla, Angel, “Update on Family Separation,” available at: https://docs.google.com/document/d/1QmgBiO_ xpXtd4uWJ00yIZxYMjtcpKsc8Du-XtQdyC50/mobilebasic
[14] Politico, Ted Hesson and Andrew Hanna, “White House Reasserts Zero Tolerance Policy As Border Patrol Suspends It,” (June 25, 2018), available at: https://www.politico.com/story/2018/06/25/white-house-resources- detain-migrant-families-670363.
[15] Prison Divest, “With Detention Center at Capacity, ICE Begins Releasing Immigrant Families,” (October 10, 2018), available at: https://prisondivest.com/2018/10/10/with-detention-centers-at-capacity-ice-begins-releasing- immigrant-families/?fbclid=IwAR22TzvGqiZpw8HcgGoy7PzEu1c6SZL2ZzsDj9IGim8QkNnXIzyvtd3Okcw.
[16] United Nations Office of the High Commissioner for Human Rights, “UN experts to US: ‘Release migrant children from detention and stop using them to deter irregular migration,’” (June 22, 2018), available at: https://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=23245&LangID=E.
[17] Mother Jones, Kanyakrit Vongkiatkajorn, “There Are Now More Than 14,000 Immigrant Kids in Federal Custody - A New Record,” (November 17, 2018), available at: https://www.motherjones.com/politics/2018/11/ there-are-now- more-than-14000-immigrant-kids-in-federal-custody-a-new-record/.
[18] Bloomberg News, Jennifer Epstein and Laura Litvan, “Migrant Children Being Held in Camps in 17 States,” (June 19, 2018), available at: https://www.mercurynews.com/2018/06/19/migrant-children-being-held-in-camps-in-17- states/.
[19] The Daily Beast, “Report: FBI Background Screenings Waived for Florida Migrant Camp Staff,” (December 8, 2018), available at: https://www.thedailybeast.com/report-fbi-background-screenings-waived-for-florida-migrant- camp-staff.
[20] CBS News, Graham Kates, “Some detention centers for migrant children are not subject to state inspections,” (July 5, 2018), available at: https://www.cbsnews.com/news/some-detention-centers-for-immigrant-children-wont- be-subject-to-traditional-inspections/.
[21] USASpending.Gov, “Contract award for General Dynamics Information Technology, INC.,” available at: https://www.usaspending.gov/#/award/66259391.
[22] Bloomberg News, supra fn. 18.
[23] People Magazine, Jamie Spain, “The Most Haunting Images from the Migrant Crisis at the U.S. - Mexico Border - And How You Can Help,” (June 20, 2018), available at: https://people.com/human-interest/migrant-children-us- mexico-border-photos/#migrant-childrens-detention-center-in-homestead-florida-where-congress-have-been-denied-entry-to-check-on-kids-safety.
[24] U.N. General Assembly, “Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, John Ruggie,” ¶17, U.N. Doc. A/HRC/17/31 (2011), available at: https://www.ohchr.org/Documents/Issues/Business/A-HRC-17-31_AEV.pdf.
[25] Slate, Ben Mathis-Lilley, “Everything We Know About the Separated Migrant Families and What Happens Next,” (June 25, 2018), available at: https://slate.com/news-and-politics/2018/06/trump-family-separation-reunification- policy-crime-against-humanity.html.
[26] CalPERS, “The Importance of Corporate Engagement on Climate Change,” available at: https://www.calpers.ca. gov/docs/corporate-engagement-climate-change.pdf.
[27] The LA Times, Marc Lifsher, “CalPERS to sell all of its stock in two gun manufacturers,” (February 19, 2013), available at: http://articles.latimes.com/2013/feb/19/business/la-fi-mo-calpers-to-sell-firearms-makers- stocks-20130219.
[28] U.N. Principles for Responsible Investment, “Fiduciary Duty in the 21st Century,” (2015), available at: https://www.unpri.org/fiduciary-duty/fiduciary-duty-in-the-21st-century/244.article.
[29] From the Stockholder to the Stakeholder: How Sustainability Can Drive Financial Performance, Oxford University and Arabesque Asset Management (2015); Companies With Strong ESG Performance Make Better Investments, Financial Times (October 26, 2017); Corporate Sustainability: First Evidence on Materiality, The Accounting Review, Vol. 91, No. 6, pp. 1697-1724 (November 9, 2016).
[30] Pensions & Investments, Sophie Baker, “Ethics council identifies 11 companies in 2017 for Norway’s sovereign wealth fund to exclude,” (March 8, 2018), available at: https://www.pionline.com/article/20180308/ONLINE/ 180309828/ethics-council-identifies-11-companies-in-2017-for-norways-sovereign-wealth-fund-to-exclude.
[31] Sustainalytics, Kasey Vosburg, “Migrant Detention at US Borders: What investors need to know,” (June 26, 2018), available at: https://www.sustainalytics.com/esg-blog/family-separation-migrant-detention-what-investors-need-to- know/.
[32] “Quarterly Research report: CoreCivic,” BuySellSignals (December 31, 2018); “Quarterly Research report: GEO Group,” BuySellSignals (December 31, 2018).
[33] U.N. Principles for Responsible Investment, Shifting Perceptions: ESG, Credit Risk and Ratings Part 2 (2018).
[34] US News, “JP Morgan Backs Away From Private Prison Finance,” (March 5, 2019), available at: https://money.usnews.com/investing/news/articles/2019-03-05/jpmorgan-backs-away-from-private-prison-finance.