The incarceration rate of women in the United States is at an all-time high, and most incarcerated women have experienced some form of gender-based violence whether before they were detained, while in prison, or both. As the prison industry divestment movement gains momentum in the United States, is it doing enough to create safer communities and address the needs of incarcerated women?  

The gender dynamics of the US Criminal Justice System

While women only represent about 7% of all incarcerated people, according to the U.S. Federal Bureau of Prisons, the rate at which women are entering the criminal justice system is significantly higher than that of men. Despite current prison reform efforts and a subsequent reduction in the total number of incarcerated people, almost all the decrease has been among incarcerated men. This is especially true among state prison populations. In fact, between 1978 and 2015, the population of women in state prisons has grown over 834%. This is more than double the rate of growth for men. Even more startling is the number of incarcerated women being held in local jails without a conviction. The Prison Policy Initiative reports that 60% of the 114,000 women being held in local jails have not been convicted of a crime and are awaiting trial. And because these are government-run prisons, they are more isolated from the divestment movement than those controlled by private operators like CoreCivic and GEO Group.  There is growing concern around the rate at which women and girls are incarcerated as a result of physical and sexual violence. Outside of the overcriminalization of drug use and drug-related offenses, states have also augmented women’s involvement in the criminal justice system by criminalizing their responses to gender-based violence and discrimination. The implementation of mandatory dual arrests under the Violence Against Women Act following incidents of domestic violence is one such example of how women are being furthered victimized as a result of violence. The increased criminalization of running away and girls’ misbehavior, even as a means of survival, is another. Across the country policy change is demonstrating that women are not safe, even when responding to abuse.  Once detained, women face a number of egregious offenses inside correctional facilities. While in prison, women are more likely to face disciplinary action and more severe sanctions than men. This directly impacts women’s ability to earn time off their sentences and eligibility for parole. They are also especially vulnerable to sexual abuse and assault. According to the U.S. Department of Justice, a total of 24,661 allegations of sexual assault and harassment were made by inmates in 2015. While women represent just 13% of the total inmate population of state and federal prisons, they make up 22% of total inmates that have experienced sexual victimization at the hands of another inmate and 33% of those that have experienced sexual victimization at the hands of staff.  victims. Women are also more likely to have experienced abuse, trauma, and mental health problems when they enter prison. A report issued by the Vera Institute of Justice states that 86% of women in jails reported experiencing sexual violence at some point in their life. Thus, the trauma women experience while incarcerated is compounded.

The risks of investing in private prisons

By the end of 2019, it was estimated that CoreCivic and GEO Group, the largest companies fueling what is known as the prison industrial complex, were facing an 87% financing gap, largely as a result of the prison industry divestment movement. The divestment strategy has called attention to the injustices within the private prisons industry, and helped investors examine the complex ways in which their money is supporting the prison industrial complex. This includes investments in stocks of private equity firms that own a percentage of a private service provider, or investments in publicly traded banks that have underwritten bonds or syndicated loans private prisons operators. It has also illuminated the risks associated with these investments.  One of the key investment risks associated with companies like GEO Group and Core Civic is their being subject to what Scott M. Stringer and Javier H. Valdés, writing in The New York Times, refer to as a “seesawing political climate.” The Michigan Journal of Environmental and Administrative Law  explains that four states have now limited the presence of private prisons and the U.S. Department of Justice under the Obama presidency issued a statement on their intention to phase out their use entirely. This decision was reversed by the Trump Administration in 2017.  Core Civic and GEO Group have both been given “junk” credit ratings by Moody’s and S&P because  “their revenues are at risk to changes in government policy and public scrutiny of companies profiting from detention.” A 2019 report by the American Federation of Teachers points to risks related to poor conditions, high rates of assault, violations of laws, and the overall lack of transparency surrounding these issues. (Private prisons are not required to respond to Freedom of Information requests, leaving investors largely in the dark about potential legal violations.)  When these matters do come to light, it can cause reputational risk to investors, compounded by an increased risk of lawsuits.  And the truth does surface. Detention centers run by GEO Group and Core Civic have come under heavy scrutiny lately with hunger strikes, allegations of deficient healthcare and labor exploitation, and scores of deaths. A recent New Yorker article details conditions for trans women in a Core Civic-operated detention center along the US-Mexico border. In 2019, a former transport officer for Prisoner Transportation Services of America LLC., which contracts with the federal government to transport prisoners across states, pled guilty to sexually assaulting a woman in his custody. A Marshall Project report found a myriad of violations on PTS-run private extradition vans, including sexual assault, abuse, and neglect, as well as the deaths of four individuals between the years 2012 and 2019. All of this in turn leads to increased regulatory risks, as states may decide to end their contracts, or pass legislation limiting the ability of companies to operate, ultimately impacting the profitability of private prison companies and their contractors.

Thinking beyond divestment

Divestment is not a complete answer for how investors can disrupt injustice within the US criminal justice system – particularly the rate of growth within public prisons – or prevent the violence that so highly correlates to women entering the criminal justice system.  So what more can investors do?  

• Invest in safety. There is mounting evidence that prisons do not make our communities safer, and that experiencing violence – including rape, sexual assault, and/or child abuse – is highly correlated to entering the criminal justice system.  Investors who want to disrupt the pipeline to prisons can do more to invest in safety. Are the companies in your portfolio doing everything they can do support employees who are experiencing violence, whether it happens at home or in the workplace? If you make direct investments, have you considered how to finance companies that are preventing gender-based violence, supporting survivors, or addressing the root causes of violence and inequity? If you are investing in Opportunity Zones, have you spoken with those communities to ask what would make them feel safe?  
• Analyze the power dynamics in your investments. The success of investments made to create social change cannot be measured solely in terms of the dollar amount moved. Measurements of success must also examine how injustice, including that ingrained in the financial system, is being disrupted. It does no good, for instance, to divest from one bank and put it into another large bank whose practices are fueling racism or gender inequality. It may also be the case that you are perpetuating those same injustices within your own investment practices. Have you consulted incarcerated or formerly incarcerated individuals, or organizations – like The National Council for Incarcerated and Formerly Incarcerated Women and Girls – about your investment strategy? If so, did you pay them for their expertise? What have you done to address potential biases among your own staff that may impact the diversity of your pipeline and where your capital is flowing?
• Change the terms and structures you normally attach to investment capital. What would it take for you to invest in a community-led restorative justice program, a model being piloted in various parts of the United States as an alternative to incarceration? Would you need to wait longer than usual before you see a return on your investment? Would it require you to shift how you normally structure deals? How often do you talk to potential investees about the type of capital that would help them thrive, rather than limit your deals only to investees that can take in the type of capital you’re used to investing? Shifting capital allocation to a needs-driven approach can have far more transformative results than a business-as-usual approach to deal scoping and due diligence.
• Appropriately price the risk of instability in the industry – and the broader economy – as a result of injustice. Beyond the investment risks noted above, the US prison industry is said to cost our society $1.2 trillion, or six percent of GDP. Each year, domestic violence costs the US economy $5.8 billion. The heads of Federal Reserve Banks around the nation, from Dallas to Atlanta to Minneapolis, have called out systemic racism as a structural risk to the US economy, one that will further inhibit growth as the economy is struggling to recover from the COVID-19 crisis. With this in mind, how might you invest differently? As you’re considering investing in COVID-19 response and recovery initiatives, what opportunities will you value differently?

Shante Little contributed research and reporting to this article.