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Financial Exploitation Of Black People

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Financial Exploitation Of Black People Goes Far Beyond Investments In Private Prisons

The tumultuous events of last summer brought centuries of racial justice reckoning and awareness to the forefront of conversation across America. Suddenly, the polarity of the Americans’ understanding of and commitment to racial justice was on full display. We were left in a space where everyone was focused on solutions, for better or worse. People offered up a multitude of answers, including ending qualified immunity for police and tearing down confederate statues. Others continued to question if racism existed at all. (Spoiler alert: it does.)

I’ve long said that any meaningful conversation about racial equality must address mass incarceration and the far reach of the prison industrial complex, a system that disproportionately impacts and targets Black people. So it wasn’t surprising earlier this year when President Joe Biden issued an executive order to phase out private prison contracts. It’s a noteworthy move and certainly a step in the right direction, but history tells us that we, collectively, must be the catalyst for lasting change.

In 2019, I founded FreeCap Financial with the intent to provide clarity on where we actually spend and invest our money. Why does that matter? Quite simply, our financial decisions have the ability to dismantle the prison industrial complex. Investors have a personal responsibility to live their values financially — and most people want to. FreeCap Financial is one of the only ESG (Environmental, Social and Governance investing) data providers with a social justice lens, which allows investors to put their money where their values are. By supporting companies who are not only against the prison industrial complex but also implement fair chance hiring practices after incarceration, your average investor can work to shift the narrative surrounding racial inequity.

The prison industrial complex expands far beyond the business of private prisons. More than 4,000 companies have financial ties to prison labor programs, food suppliers, commissary and phone providers, bail bonds and other prison contractors. It’s quite literally a multi-billion dollar industry made on the backs of incarcerated people, disproportionately exploiting Black and brown communities. In order to make it not profitable to profit off of people, we have to mobilize the investment community behind it.

If you think your own portfolio is off the hook, I urge you to dig deeper. Popular firms, including The Vanguard Group, BlackRock and Fidelity Investments, have stakes in several companies that have practices and investments supporting mass incarceration. But the financial exploitation of Black people goes far beyond investments in private prisons and for-profit prison labor. For example, most portfolios, including public energy monopoly stocks, benefit companies that continually ignore calls for environmental justice while building pipelines and fossil fuel infrastructure in predominantly Black communities. There are a growing number of socially responsible investing (SRI), Environmental Social Governance (ESG) and impact investing funds that have the potential to reduce racial injustice.

It is important, though, when speaking to your financial advisor or in your own research, to determine what your financial institution means when they use these terms, so that you can find investment funds that truly align with your values. Utilization of ESG strategies and green investing has made significant progress over the past decade, but they still have a long way to go to fully adopt a racial justice lens into their approaches.

Socially responsible investing that aligns with our values can motivate companies to do better when compared to traditional investing models. Consider a company’s workforce. Our scorecard shows that formerly incarcerated people make better employees, though almost 75% of those individuals remain unemployed a year after their release. It’s not uncommon for companies to use prison labor in their supply chain and refuse to employ those people upon release.

Hiring formerly incarcerated people not only makes good business sense but also reduces the biggest factor driving recidivism: unemployment. This, paired with proper diversity and inclusion training, can lead to a more diverse, better-equipped workforce. In a world where we only invested in companies who were leaders in diversity, equity and inclusion, companies would have to compete to be the best in this area to get our money as investors. That’s a win-win for our communities and our pocketbooks.

There are companies leading the way on DEI to hire formerly incarcerated people. The Second Chance Business Coalition is a growing group of businesses that have committed to expanding employment opportunities at their companies for people with criminal records. Tech companies and trades have a unique opportunity to develop workers’ skills as part of their training in prison. Slack Technologies, for example, collaborated with The Last Mile to create The Next Chapter — an initiative that teaches coding in prisons with the goal of transitioning students to full-time employment opportunities when returning home. More initiatives that create a pipeline to living-wage jobs are needed.

Investors should also care about how companies manage their supply chains. Supply chains are not static; they shift with market fluctuations, weather conditions and the “occasional” freak accident. It can be difficult to track where products are being made, let alone where they will be made in six months. There’s a significant reputational risk for companies that fail to monitor their supply chains.

People were outraged when they learned last year that hundreds of thousands of cloth facial masks were sewn by incarcerated people for pennies on the dollar in states like CaliforniaNew York, Arizona and Florida, despite not having access to their own PPE. It’s only logical for investors to be concerned with PR nightmares caused by poor supply chain risk management. Again, ignoring supply chain risk when making investment decisions is bad for our communities and our investments.

Socially responsible investing is one of the best ways investors can live out their values while seeing a positive return on investment. Investors genuinely committed to dismantling the prison industrial complex can tap into this opportunity. It’s up to us to lay the groundwork to dismantle the prison industrial complex through conscious, intentional and values-based investing.