Illustration by Kelsey Hill
Illustration by Kelsey Hill

While University of California students were away for winter break, the Office of the Chief Investment Officer made the decision to sell off $25 million in private prison corporation investments.

The decision came after pressure from students, mainly the Afrikan Black Coalition (ABC), to divest. ABC acts as the mother organization for black student groups from all UC campuses, so the conversations regarding divestment took place across the entire UC system.

The group openly criticized the UC for investing in private prisons, calling it “an ethical embarrassment and a clear disregard for Black and immigrant lives” on its website.

According to a 2013 report from the Bureau of Justice Statistics, a major criticism of the prison system is that blacks make up 13.2 percent of the United States population and Hispanics make up 17.4 percent, but together these groups make up 59 percent of the inmate population. The disproportionate effects are further illustrated by the fact that black females are incarcerated at twice the rate of white females, with 113 per 100,000 incarcerated compared to 52 per 100,000 white females.

“[The divestment movement] sheds light on the issues that stem from mass incarceration and the mistreatment of black people by exposing that private prisons profit from imprisonment and incarceration in a way that damages and destroys black and brown underprivileged and marginalized communities,” said Lina Abdelsalam, the political chair of UC Santa Cruz’s Afrikan/Black Student Alliance (A/BSA) in an email.

The UC’s $100 billion portfolio for investments ranges from private and public equity to direct investments and hedge funds. The recently divested $25 million was split among three corporations — the Geo Group, G4S and Corrections Corporation of America.

The Office of the Chief Investment Officer routinely reviews the UC investments using its own management professionals as well as outsider managers, said Dianne Klein, the director of media engagements and strategy for the UC Office of the President.

“We look at all our investments through what we can all ‘ESG’ policy, which stands for environmental, social and governance,” Klein said regarding the review procedure. In the case of private prison corporations, the UC decided its investments were not financially sound going forward.

The office is open to meeting with students and others regarding any concerns about investments. Jagdeep Singh Bachher, the Chief Investment Officer (CIO), routinely meets with students. Since August, ABC has discussed its concerns about prison investments with Bachher.

“We told [the Office of the Chief Investment Officer] that investing in private prisons was morally abhorrent, ethically bankrupt and financially unstable. We further let them know that we were prepared to do whatever is necessary to see the UC divest from private prisons and Wells Fargo,” said ABC political director Yoel Haile in an email. “The CIO stated he wanted to partner with us and understood our position enough to divest from private prisons promptly.”

Although the $25 million is only a small portion of the UC’s investment opportunity, it’s a big victory for ABC.

“This first victory is definitely not going to be the last and we hope in the future there are many more to come, because there are many different issues and atrocities in the black community. This is just one of them we’re shedding light on,” Lina Abdelsalam said.

No stranger to student pressure, the UC has abandoned other holdings before. In September, the UC pulled direct investments in oil and coal due to ongoing environmental concerns and concerns that the investment would not be financially sound down the road, although the UC continues to have investments in other energy-related companies.

Klein emphasized that the UC is against blanket divestments, which would mean divesting from a specific large entity such as fossil fuels, but rather uses a “sustainable investment policy,” evaluating risk and value of long-term investments.

“The CIO thanked the students for bringing this to our attention so we took a look at these, which we do routinely — we review all of investments — and we decided for fiduciary reasons, it did not make sense to keep these investments,” Klein said.

The UC system isn’t the first school to get rid of shares from private prisons. Columbia University did so in 2015, making UC the second in the country.

Going forward, ABC hopes to meet with the UC about divesting its $425 million from Wells Fargo, an investor of private prison firms. Klein noted the UC has no plans to remove its holdings in the near future, but ABC plans to continue efforts.

“We are also in touch with several activists nationally who are looking to wage similar divestment campaigns on their campuses in 2016,” Yoel Haile said in an email. “We hope 2016 becomes a watershed year in the struggle for our people’s freedom.”