Trustees decline shareholder engagement on companies’ private prison associations

Oct. 10, 2017, 11:38 p.m.

The Stanford Board of Trustees announced Tuesday that the University will not engage with various companies  it invests in about their associations with the private prison industry, as a student group sought in a request for review submitted last September.

In a letter explaining its decision, the Board noted that Stanford does not invest directly in the private prison operators that SU Prison Divest expressed concern about in its request for review. However, to SU Prison Divest leaders’ disappointment, the Board declined to seek discussions on the issue with — and threaten to divestment from — companies that the prison divestment movement has criticized, including those that invest in private prisons, use inmate workers or provide services to prisoners such as food, healthcare and phone usage.

On Tuesday, the Board also announced plans to review Stanford’s Statement on Investment Responsibility, which guides University policy in the area. The Board expects to have new investment policies ready by next fall.

The University will not accept any new requests to review investments while the overall process is evaluated this school year.

In some areas, the Board followed the recommendations of Stanford’s faculty, student, staff and alumni Advisory Panel on Investment Responsibility and Licensing (APIRL), which concluded that corporations that invest in private prisons or use prisoners’ work do not directly harm them and therefore do not meet criteria set out in the school’s current divestment guidelines.

However, the Board broke with a majority of APIRL members on the issue of service-providing companies, which SU Prison Divest argues harm prisoners by, for example, price-gouging inmates who place telephone calls. The Board contends that these groups also do not directly cause social harm.

SU Prison Divest stated in its submission to the University that private prisons take advantage of a correctional system that relies too heavily on imprisonment and disproportionately affects marginalized groups such as ethnic minorities.

“Prison should not be profitable,” the group’s formal letter from last year states. “This request aims to highlight the consequences of what [legal scholar] Michelle Alexander calls “The New Jim Crow,” a system of mass incarceration implicitly supported by Stanford’s ongoing investment.”

The student organization called on Stanford to ask flagged companies to cut their ties with the private prison industry or else face Stanford’s divestment.

Signed by Gail Harris ’74 J.D. ’77, chair of the Board’s committee on responsible investment, the trustees’ decision letter acknowledges that SU Prison Divest’s concerns are “important and [deserve] broad discussion.” The announcement cites research by Stanford law students that “indeed portrays a troublesome picture of parts of the criminal justice system, extending well beyond private prisons.”

However, the Board disagreed with the student group that all of the companies flagged for review cause “social injury,” which by Stanford’s investment guidelines must come directly from the action or inaction of a company.

A majority of APIRL found that the four telephone companies and one food company under review for their role in providing inmates services caused social harm. With some members dissenting from the majority view, APIRL ultimately recommended collecting more information on these five groups.

SU Prison Divest, for its part, argues that such companies act against inmates’ interests.

“Cutting expenses on necessary functions including medical services, rehabilitation programs, legal services and prison staffing is fiscally profitable,” the group’s letter reads. “This is consistently demonstrated by these industries through lobbying for harsher criminal sentencing and support of lawmakers offering limited rehabilitation program.”

Concerns about the food company were based on breaches of contract that have led prisons and officials to take legal action or in some cases drop the corporation’s services, according to the Board’s response. Discussing inmates’ phone prices, the Board argued that the high costs “should be addressed” but that the biggest share of prisoners’ phone bills comes from state and local fees, which would require legislation to change. A New York Times piece on the issue cited hundreds of millions in “concession fees” that companies pay to government for contracts.

Dan Brown ’18, a SU Prison Divest leader, criticized the Board’s decision in an email to various email chat lists Tuesday afternoon.

“The board of trustees made their decision about divesting from/engaging private prison companies, banks which finance the construction of those prisons, companies that exploit prisoner labor, and companies that provide (historically substandard) services to prison facilities,” he wrote. “Their decision was essentially to do nothing.”

Brown and another group leader did not respond immediately to a request for comment Tuesday evening.

In spring of 2016, the Board reviewed and ultimately refused a similar request from student group Fossil Free Stanford (FFS) to divest from fossil fuels. The decision followed an extended campaign by FFS that included a week-long sit-in protest in the Main Quad.

The planned review of Stanford’s responsible investment rules stemmed from concerns voiced by APIRL members and groups that have submitted divestment requests, according to the Board.

“These questions and concerns have centered on ambiguities in the current statement that make its requirements for divestment difficult to apply; the efficiency of the process for acting on a divestment request; and other elements of the process in general,” the Board wrote in a statement. “We take these concerns seriously.”

A web page asking for community feedback will be up by Nov. 15.


Contact Hannah Knowles at hknowles ‘at’


An earlier version of this article stated that the Board of Trustees declined to divest in various companies associated with private prisons. In fact, the student group SU Prison Divest requested that Stanford engage with these companies as shareholders, which the Board decided against. The Daily regrets this error.

Hannah Knowles is senior staff writer from San Jose who served as Volume 253 Editor-in-Chief. Prior to that, she managed The Daily's news section.

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