Barbed wire fence.

Why investors may want to avoid private prisons

Private prisons have come under increasing scrutiny due to concerns about their profit-driven incentives and their impact on the criminal justice system.

Private prisons have been a controversial topic in recent years, with many people arguing that they are unethical and should be avoided by investors. Here are a few reasons why an investor might choose to avoid private prisons for ethical reasons:

  1. Profit motive: Private prisons are businesses that exist to make a profit for their shareholders. This profit motive can create incentives for private prisons to cut corners and prioritize profit over the well-being of inmates. In contrast, publicly-run prisons are not motivated by profit and are instead focused on carrying out the functions of the justice system.
  2. Lack of accountability: Private prisons are often less transparent and accountable than publicly-run prisons. They may be less willing to disclose information about their operations and may not be subject to the same level of oversight as publicly-run prisons. This lack of accountability can make it difficult for the public to hold private prisons accountable for any wrongdoing or mistreatment of inmates.
  3. Inhumane conditions: There have been numerous reports of inhumane conditions in private prisons, including overcrowding, inadequate medical care, and abuse by guards. These conditions can have serious negative impacts on the health and well-being of inmates and may be more likely to occur in private prisons due to the profit motive and lack of accountability.
  4. Social and economic impacts: Private prisons can also have negative impacts on the communities in which they are located. They can lead to the depletion of public resources and can have negative effects on the local economy, as money that could have been spent on public services is instead funneled into the pockets of private prison companies.

Overall, there are strong ethical reasons for an investor to avoid private prisons. While they may offer the potential for financial returns, the costs to society and to the individuals who are incarcerated can be significant. Investors who are concerned about ethical issues may choose to invest in companies that prioritize social and environmental responsibility, rather than those that prioritize profit at the expense of other values.

Working with data provided from As You Sow, the nation’s non-profit leader in shareholder advocacy, Aligned Investing provides our clients with a screen that seeks to filter out private prisons from your portfolio.

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