Why We Need a Criminal Justice Report
After George Floyd's murder in 2020, companies across the United States pledged to donate billions of dollars towards racial justice and publicly committed to changing their hiring methods. One year later, we've seen who has honored those commitments and who has forgotten them. A year on from the collective cry for change that erupted in 2020, racial justice continues to require our effort and investment. As investors, we all have a critical role to play in ensuring companies meet these commitments.
One of the most significant racial injustices of our time is mass incarceration. Too often, investors overlook corporations’ impact on this crisis. This is a mistake. If anything, the past year has shown that poor management of Diversity, Equity, and Inclusion (DEI) risks, both in companies’ supply chains and through their hiring practices, can negatively impact business.
FreeCap Financial is excited to broaden the lens of responsible investing criteria to include criminal justice. When we started our research in 2019, we were on a mission to better understand how companies impact currently and formerly incarcerated individuals. We were happy to discover a handful of companies leading by giving justice-involved individuals a fair chance at employment. Yet, there were many others whose policies inadvertently discriminated against this group. There were also a surprising number of companies beyond private prisons that continue to profit from incarceration. The prison industrial complex — a network of institutions, systems, and structures that benefit from and encourage incarceration as a solution to many issues — is a driving force behind mass incarceration. Some companies, even those in the S&P 100, are complacent contributors to that system (usually through low- wage prison labor in the supply chain and monopolistic vending relationships with corrections departments.)
With FreeCap's first set of corporate ratings presented in this report, we have identified ten key leadership indicators investors can use to assess companies’ impact on incarceration. Half of these metrics will help investors manage prison-risk exposure, while the other half evaluate the quality of companies' fair chance hiring practices. The combined score for these metrics gives investors an overall picture of a company's criminal justice footprint. Our research to date covers over 100 of the largest publicly traded companies in the United States.
For the investment community, this report will make it easier to:
Better manage Environmental, Social, and Governance (ESG) risk in their portfolios. With an improved lens into social issues that have a significant impact on society in the United States.
Negatively screen out companies who have low prison-risk mitigation scores.
Positively screen for companies who are leaders in fair chance hiring.
Better engage in shareholder activism related to criminal justice.
For consumers and justice-involved individuals (meaning people who are formerly or presently incarcerated) this report will make it easier to:
Direct consumer dollars to companies that support fair chance hiring.
Determine which companies in the S&P 100 will give justice-involved individuals a fair chance at employment.
At FreeCap, we are on a mission to make it easier to invest in your values. We believe that directly-impacted people understand the best ways to invest in a world that supports them and are committed to building data aligned with that mission. Thank you for joining us on this journey.
In solidarity,
Tanay Tatum-Edwards
Founder & CEO FreeCap Financial