CalPERS has sold its stock in two private prison companies that operate detention facilities at the southern U.S. border for the federal government.
While the sale pleased advocates who have called for the California Public Employees’ Retirement System to divest from the companies, the $380 pension billion fund isn’t calling it divestment.
“It was an investment decision based on what is best for the fund,” CalPERS spokesman Wayne Davis said.
The fund got rid of its $8.8 million worth of holdings in GEO Group and CoreCivic, the nation’s two largest private prison companies, over the last two months as part of broader changes to one of its index funds, Davis said.
The two companies were among 217 in an 11,000-company index that CalPERS has been adjusting since Chief Financial Officer Ben Meng was hired in January, Davis said.
“He’s sharpening the focus of all our portfolios and making sure the indexes are constructed in such a way that we mitigate risks and we capture the opportunities that are there,” Davis said.
The California Faculty Association, the union that represents faculty in the California State University system, has been among the most visible proponent of divesting from companies involved in immigrant detention, lining up to speak at CalPERS board meetings since April.
“We commend CalPERS for taking an unequivocal stand against the heinous practices of CoreCivic and GEO Group,” Margarita Berta-Ávila, the group’s associate vice president and a professor at CSU Sacramento, said in a news release. “Our union was not going to stand by and watch our pension dollars support these terrible corporations, and we’re pleased to see that CalPERS’ investment analysts have come to the same conclusion.”
A year ago, teachers pressed the California State Teachers’ Retirement System to divest from the two private prison companies.
California state Assemblyman Rob Bonta, D-Oakland, introduced and then withdrew a bill this year that would have forced CalPERS to divest from the funds. CalPERS typically opposes legislation restraining its investment flexibility.
Several board members said they sympathized with California Faculty Association members’ divestment calls when the group spoke at the board’s September meeting, but board members didn’t discuss any specific response.
CalPERS, nonetheless, has divested from the tobacco industry, Sudan, Iran, manufacturers of guns that are illegal in California, thermal coal and certain companies that don’t meet its environment, social and governance standards. The Legislature recently passed a bill prohibiting investments in Turkey under certain conditions.
Since 2001, the divestments have cost the fund about $2.5 billion, primarily driven by tobacco, although some divestments have saved the fund money, an analyst told the board in March.