CalSTRS Statement on Initiating Engagement Process with Private Prison Companies
On Friday, July 20, 2018, CalSTRS Chief Investment Officer Christopher J. Ailman informed the Teachers’ Retirement Board that he had initiated the CalSTRS Divestment Policy as it applies to investments in private prison companies. The policy requires a comprehensive review of affected companies to determine potential risks they pose to the CalSTRS portfolio. The process includes further engagement with the leadership at the companies to ensure they are adhering to the law, CalSTRS policies, and best practice corporate governance principles.
During the engagement process, CalSTRS staff will communicate with management, review policies and procedures, and visit facilities to see firsthand how they comply with policies, laws and standards. This engagement will help staff determine how the companies’ practices and policies align with the CalSTRS Environmental, Social and Governance (ESG) Risk Factors. The principle purpose of the review is to determine whether the companies pose a long-term material risk to the Teachers’ Retirement fund.
CalSTRS staff will be providing their findings and recommendations from the review process to the Teachers’ Retirement Board to inform their decision about whether to divest.
NOTE: According to CalSTRS’ latest engagements with two of the private prison companies in question, CoreCivic and Geo Group, CalSTRS staff have validated and confirmed with both organizations that their facilities are NOT separating children from their parents/families or housing unaccompanied minors.