Our Voices

Alabama the frontline of a national movement for investors to take stance and no longer invest in the carceral state

Clear signals from both the markets and U.S. Treasury indicate that Alabama Gov. Kay Ivey is losing a high-stakes game of chicken, and yet, she refuses to blink. Despite a recent Treasury ruling that the construction of new correctional facilities is ineligible for federal COVID relief dollars, Alabama has announced its intention to move forward with its plans to use $400 million to build new prisons and renovate others as part of a massive $1.3 billion boondoggle.

Alabama’s latest push also comes after a group of investors, business leaders and social justice advocates successfully pressured Barclays, KeyBanc and others to pull out of financing a $630 million taxable municipal bond offering by the Alabama Department of Corrections that would have built two new prison facilities with the private prison firm CoreCivic in 2021.

As sixteen other states have since outlined their plans to similarly use American Rescue Plan funds for prison construction or expansion, Alabama has become the frontline of a national movement for investors to take a firm stance that they will no longer invest in the carceral state.

“The nation is looking at this deal to see how it can be done all over again. It will set the tone for everything else,” Pastor Kenneth Glasgow, of The Ordinary People’s Society and a member of the Communities Not Prisons Coalition, said at an investor roundtable regarding the situation last week.

As the markets have been clear, and the treasury too, now is the time to grow the chorus decrying this move, as a stark and necessary reminder not only to other states, but to investors that any action to finance or support prison construction projects goes against pledges made toward racial and economic justice during the racial reckoning of 2020.

The United States spends nearly $300 billion annually to police communities and incarcerate 2.2 million people. What’s more, the American Action Forum has found, the societal costs of incarceration—lost earnings, adverse health effects, and the damage to the families of the incarcerated—are estimated at up to three times the direct costs, bringing the total burden of our criminal justice system to $1.2 trillion.

What is troubling for many activist investors and advocates is that a significant number of institutions continue to fuel the prison ecosystem while making public commitments to ESG.

Of the $65 billion promised by corporations to the Movement for Black Lives in the past couple of years, just 7 percent, roughly $500 million, has actually been contributed, analysts at Natural Investments have found.

Yes, it’s often easier in the short-term to hide behind an archaic definition of fiduciary responsibility or deflect responsibility to the asset manager, company or sub-contractor.

But any investor who cares about racial and economic equity – and its resulting positive societal impacts and equitable economic prosperity- must start doing the hard work of reviewing their exposure to companies and investment firms whose business models profit off of the caging of human beings.

Investors must continue to resist any efforts to exacerbate harm in Black, Brown, Indigenous and systems-impacted communities. By standing with the local Communities Not Prisons coalition to defend the ruling and hold Alabama and any other municipality looking to expand prisons accountable, investors will send a clear message to the financial markets that we will no longer invest in nor standby idly and watch capital market participants expand the carceral state anywhere in the United States.

As a first step, this means signing a public commitment and pledging to not invest in the growth of mass incarceration by Feb 22nd.

If ever there was a time to put our money where our mouths are, it is now. The long-term fabric of our society and economy is dependent on leaders taking a stance against injustices, not simply because it is a terrible financial model on which to build an investment strategy, yes, but also because it is the right thing to do for our neighbors, our communities, and our country.

For too long, a separate and unequal way of life has persisted for Americans of different skin colors and socioeconomic classes, the very frustration that reached a boiling point two summers ago.

After all, as Martin Luther King Jr. said in his famed “Other America” speech in 1967, “Our nation’s summers of riots are caused by our nation’s winters of delay. And as long as America postpones justice, we stand in the position of having these recurrences of violence and riots over and over again. Social justice and progress are the absolute guarantors of riot prevention.”

The winter of 2022 must not be a winter of delay.

Sancia Dalley is a Senior Vice President at Robert F. Kennedy Human Rights, who directs the organization’s Compass Investors Program.

Christina Hollenback is a founding partner of Justice Capital.

This op-ed originally ran in Skytop Strategies.