KLP Excludes American Refugee Reception Companies

    Stockholm (NordSIP) – Although exclusions tends to be seen as the most basic approach to sustainable investment, some industries and companies can reveal themselves to simply be impossible to align with the goals of sustainable investors. This was the conclusion of Norwegian municipal investor KLP when it decided to divest from CoreCivic and GEO Group due to documented human rights and labour rights violations at refugee reception centres in the USA.

    “The two companies operate refugee receptions centres in several US states and are among the largest providers of security services. Refugees at some of the reception centres are detained against their will and without legal cause. Such arbitrary detention is a violation of international law,” says Kiran Aziz (Pictured), Head of Responsible Investment at KLP Kapitalforvaltning.

    CoreCivic describes CoreCivic Safety as “the nation’s leading provider of high-quality corrections and detention management” while the GEO Group describes itself as a “global leader in evidence-based rehabilitation”.

    Aziz adds that the United Nations High Commissioner for Refugees (UNHCR) has criticised the companies’ practice of detaining refugees without legal cause or due process. According to KLP, the UN Working Group on Arbitrary Detention (WGAD) studied the USA’s practices with respect to refugees over many years and found that described the conditions as “degrading”.

    KLP has engaged the companies in dialogue with the aim of influencing them, but to no avail. KLP considers that the companies have shown little understanding of the allegations levelled against them. In their response to KLP, they have, moreover, denied that censurable conditions exist in their operations. CoreCivic rejects claims that the reports coming out are false and that it is complying with the US Immigration and Customs Enforcement (ICE) agency. GEO Group says that it has worked for the authorities and therefore should have immunity on those grounds.

    “The fact that the companies have violated several of the most important human rights over a long period of time has been documented by multiple human rights groups. The abuses have also been followed up by state-level authorities such as the Attorney General for the State of Washington. The abuses include poor living conditions, inadequate healthcare for residents suffering from life-threatening illnesses, slave-like working conditions and sexual assaults,” Aziz adds.

    “The companies’ operations represent an unacceptable risk that KLP’s guidelines for responsible investment may be contravened. In our assessment, there is a considerable risk that the human rights abuses will continue. For this reason, we are excluding these companies,” Aziz concludes.

    KLP and the KLP Funds owned shares worth around NOK4 million in the companies concerned. These shares have now been sold.

    When asked whether it was considering divesting from other similar companies across the world, KLP replied “we do not share which companies we are assessing for exclusions as this is confidential information.”

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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