The Canada Pension Plan Investment Board Pulls the Plug on U.S. Prison Firms

The CPPIB drama over CoreCivic and Geo Group comes to a close
The Canada Pension Plan Investment Board (CPPIB) is selling stakes in two American prison companies. ESG expectations and concerns about reputational risk fueled the divestitures.
Canada’s largest pension fund had sold stakes in CoreCivic and Geo Group. Even though it had kept both prison firms in their passive portfolio, the $304 billion fund elected to sell them after a review of their holdings and strategy.
Bloomberg interviewed Deborah Orida, global head of active equities for CPPIB, earlier this week.
“We recognize that when it comes to reputation risk, it doesn’t matter how big or small the investment is,” Orida said. “For a long time, we’ve tried to incorporate reputational risk assessments into our due diligence process for investments, and after that controversy, we did take advantage of new tools and ways to broaden our processes.”
Reputational Risk for the Canada Pension Plan Investment Board
The Canada Pension Plan Investment Board has taken hits from the media after it invested in the two prisons. Last year, Canadian activists expressed outrage that the CPPIB had invested $5.9 million into the two largest private prison firms in the U.S. Those firms had detained migrants attempting to enter the United States illegally.
Activists argued that the pension board had made roughly 20 million retirees complicit in the detention centers’ practices.
The CPPIB responded that its investment in the two companies represented just 0.001% of its holdings. That said, criticism against the pension plan accelerated from public leaders.
Canada Pension Plan and ESG Standards
While public pressure centered on the ethics of the prison industry, performance has come into focus.
Orida told Bloomberg this week that the CPPIB is seeking strong returns. Sustainable investments – with a focus on ESG standards – have beaten their non-ESG equivalents this year. Furthermore, Morningstar data cites an outperformance for 73% of its ESG indexes.
“We are not looking to sacrifice returns, but rather to make the best decisions about risk-adjusted returns,” Orida said. “Investing in ESG strategies and doing climate-change risk opportunity assessments is not a trade-off with the return; it’s part of what we need to do to make good long-term investments.”
Related: Vermont’s Green Mountain Power Divests from Fossil Fuels

Latest Alternative Investment News

Digital Assets: Ledger, Maker Of Crypto Security Hardware, Raises Nearly All Of $100M Series C Round
Paris-based startup Ledger, which makes hardware wallets for cryptocurrency investors, has raised €100m ($109m) in funding, valuing the company at €1.3bn. The round was led by investors including Digital Finance…

FinTech: Cogo And Eliq Partner To Help Banking Customers Enhance The Energy Efficiency Of Their Homes
Cogo, a fintech which collaborates with banks to assist customers in decreasing their carbon footprint as a carbon footprint management firm, is partnering with Eliq, a company that specializes in…

Venture Capital: The LSP Dementia Fund Closes €260M (US$283M) To Address Dementia, One Of The Most Significant Health Crises Of Our Era
The LSP Dementia Fund has reached a final close at €260 million (US$ 283 million), surpassing its initial target of €100 million. The fund, which is managed by EQT Life…

Artificial Intelligence: The DAGGER AI Model Gives Advance Warning Of Dangerous Solar Storms
Researchers have developed an AI-based model that combines satellite data and machine learning to predict where an impending solar storm will strike on Earth, offering 30 minutes of advance warning….