Yale Students for Prison Divestment prides itself on the accuracy and rigor of its research.  Yale remains invested in the for-profit prison industry overseas and has made no formal commitment to avoid future investment in domestic for-profit prisons. As such, we would like to contest recent arguments made by Chief Investment Officer David Swensen.

We should note that Swensen is correct in saying that Vanguard’s FTSE Emerging Markets Exchange-Traded Fund (VWO) does not contain holdings in either GEO Group Inc. or CoreCivic, the two largest operators of for-profit prison facilities in the U.S. according to an article published by Boston’s NPR news station. We apologize for this mistake and do not take it lightly.

Yet Swensen himself isn’t giving readers the full picture when he argues that Yale’s endowment has no exposure to private prison companies. As of Sept. 30, 2017, Yale’s Form 13F on the U.S. Securities and Exchange Commission website reported $66 million holdings in BlackRock’s iShares MSCI EAFE Exchange-Traded Fund (EFA). He argues that, because the fund focuses on markets outside the U.S. and Canada, it has no exposure to the for-profit prison industry. This is incorrect. The holdings of Blackrock’s EFA, as made available for the public on Blackrock’s website, include firms like Sodexo and G4S, both of which operate for-profit prisons around the world. In particular, G4S is an international private security firm that has operated a number of private youth detention centers and provides security services along the U.S.-Mexico border as cited by Bloomberg government. Sodexo operates 122 prisons worldwide as of 2017 according to Anthea Hucklesby and Stuart Lister’s “The Private Sector and Criminal Justice.” As growth rates of U.S. incarceration have slowed, for-profit private prison companies have diversified their assets and have expanded their presence in international markets. Although the industry began in the U.S., today private prisons are run by multinational corporations with international and domestic holdings. Thus, simple exposure to international markets does not reduce exposure to the for-profit prison industry.

This exchange between Yale student advocates and Swensen highlights the need for improved channels of communication with the Yale administration. Yale’s annual reports on the endowment detail broad categories of investment, but not specific firms. We would not presume that Yale’s fund managers release the specifics of a highly watched endowment portfolio. However, we would welcome the opportunity for open dialogue with Swensen. For two years, YSPD has worked hard to engage with the official channels provided by the Advisory Committee on Investor Responsibility. These channels explicitly prevent direct engagement with the Yale Corporation and, in practice, make it nearly impossible to communicate with the Yale Investments Office decision-makers.

For the first time Swensen has claimed on the record that Yale isn’t invested in private prisons. This is welcome news, but inadequate. YSPD maintains that a commitment to divestment is more than an individual statement about current holdings — instead, divestment is a broad moral gesture that disavows for-profit incarceration as an exploitative industry that disproportionately affects poor communities of color.

A statement condemning the for-profit prison industry would explicitly refuse future investments. Yale should follow the precedent of a number of peer institutions including Columbia University and UC Davis in affirmatively and unequivocally rejecting future investment in the for-profit prison industry. Moreover, Yale’s history of divestment from companies in Apartheid South Africa provides grounds for divestment from the for-profit prison industry given that currently the U.S. imprisons black citizens at a higher rate than the South African government did at the height of Apartheid, according to Michelle Alexander’s “The New Jim Crow.”

Swensen has suggested that for-profit prisons might not warrant divestment. Yet we argue that exchanging human liberty for profit is, perhaps, the gravest social injury. For-profit prisons have heavily lobbied to criminalize immigration, promote harsher sentencing laws and develop contracts free from government oversight. For-profit prison contracts reduce quality of service to cut costs and sustain a profit-driven model of human detention and incarceration. This trend was demonstrated powerfully in an academic paper by Oliver Hart and Bengt Holmström, which received the 2016 Nobel Prize in economics. Other journalists, academics and non-profits have documented numerous abuses in for-profit prisons including medical negligence, sexual assault and preventable death.

But, in a way, even questions about comparative differences between public and private prisons are both immaterial and distracting. Yale, as a private investor, cannot invest in the public management of prisons. However, Yale can, and does, invest in for-profit management . Therefore, we have a unique responsibility to challenge investments in for-profit prisons. That for-profit prisons wield outsized political power to extend the legacy of slavery and restrict immigrants’ access to basic human rights, means we have a unique responsibility to set the tone for what is considered ethical investment, just as we have a responsibility to stand against xenophobic immigration policies. That Yale has an endowment greater than the GDP of many countries means that our positions, models and leadership matter. Nothing about our critique is personal, rather it is an attempt to hold Yale, its leaders, students, faculty and investments to the highest ethical standard.

Seyade Tadele is a first year in Timothy Dwight College. Contact her at seyade.tadele@yale.edu . Joseph Gaylin is a junior in Branford College. Contact him at joseph.gaylin@yale.edu . Charlie Urban-Mead is a junior in Ezra Stiles College. Contact him at charles.urban-mead@yale.edu .

Editor’s note, March 7: A footnote in David Swensen’s March 1 column, “The endowment & the activists,” which addresses this issue but was originally omitted because the News does not publish footnotes, is printed here:

“Even if the activists made factually correct arguments about shares held through index funds (VWO and EFA are index funds used by Yale for daily rebalancing activities), there is a vast difference between purposeful direct investment in an individual company’s shares and passive indirect exposure to shares in a broad-based index fund. The former deserves ethical scrutiny. The latter does not.”