PNC Financial Services stops financing private prisons
This spring, we learned that one of the companies in Trillium’s strategies, PNC Financial Services, is one of ten leading financing partners of private prison companies CoreCivic and Geo Group. While we are invested in PNC in part because of its commitments to sustainable business practices and efforts to serve its communities, we were greatly concerned about this news; private prisons are rife with alleged human rights abuses. As noted in recent reports and lawsuits, allegations include inmate deaths, poor medical care, allegations of physical and sexual abuse of detainees and violence.[1] Some of these risks are heightened due to the nature of the business model and practices of the private prison companies including crowded conditions, less programming for inmates and detainees than public facilities, low staff salaries, poor staff retention, lack of training on human rights, and inadequate staffing. For Trillium, as a sustainable and responsible investor, we saw that profiting from these companies and generally being associated with them, created numerous financial and reputational risks for PNC.
So as members in the Interfaith Center on Corporate Responsibility, we joined their efforts to engage PNC and many other banks about these concerns. These engagements sought information regarding steps the banks were taking to review their relationships with private prison and immigrant detention companies, and expressed human rights and financial concerns. As a result of these engagements, SunTrust Bank, Fifth Third Bank, and BNP Paribas joined JPMorgan Chase, Bank of America, and Wells Fargo, announced over the summer that they would stop financing private prisons and immigration detention centers operators.
In response to this flood of statements from some of the largest banks in the United States, we sent a letter to PNC CEO Bill Demchak in July expressing our concern, calling for action, and asking for a meeting with company representatives. At that meeting in early August, PNC executives told us that the firm will not extend any additional credit to companies operating private prisons. In doing so, PNC added to the isolation of CoreCivic and Geo Group by the banking and investing industries. As these private prison companies face credit downgrades, political approbation, and divestment efforts over human rights concerns, PNC’s public rebuke of the companies can have an important impact.
While in agreement that this step is positive and important, we are cognizant that PNC is not ceasing its relationship entirely. PNC will remain a lender, under existing agreements, to CoreCivic and GeoGroup for years. For that reason, we are urging them to focus time and attention on these two companies’ human rights practices. As lenders, PNC has the ability to press them to take concrete steps to improve conditions in their facilities – and should do so immediately.
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Disclosure: This is not a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. The specific securities were selected on an objective basis and do not represent all of the securities purchased, sold or recommended for advisory clients. The views expressed are subject to change at any time based on market or other conditions. These views are not intended to be a forecast of future events or a guarantee of future results. These views may not be relied upon as investment advice. The information contained herein has been prepared from sources believed reliable but is not guaranteed by us as to its timeliness or accuracy, and is not a complete summary or statement of all available data. This piece is for informational purposes and should not be construed as a research report.
[1] A number of reports have highlighted the human rights abuses at these facilities, including: HRW: https://www.hrw.org/news/2016/07/07/us-deaths-immigration-detention
Huffington Post: http://www.huffingtonpost.com/christina-fialho/geo-group-whistleblower-e_b_7309916.html
ACLU: https://www.aclu.org/blog/speak-freely/aclu-un-tomorrow-testify-horrific-human-rights-record-us-private-prison-companies
