May 18, 2021, 20:41

Capital Calls: ESG handcuffs

Capital Calls: ESG handcuffs

Concise insights on global finance in the Covid-19 era.


INCARCERATION ARBITRAGE. Running prisons for profit raises moral questions. That makes companies like CoreCivic (CXW.N) and GEO (GEO.N) and their financiers fair game for environmental, social and governance activists . Barclays (BARC.L) has discovered that the opprobrium isn’t easily avoided, even when there are a couple of degrees of separation between the bank and the activity in question.

Along with other big lenders, the UK bank said two years ago it wouldn’t finance private prisons. Yet it just pulled out of underwriting a municipal-style debt deal for two facilities in Alabama, according to Bloomberg. In this case, while the owner would be CoreCivic, it’s the state that would have operated them. The move followed the embarrassing termination by the American Sustainable Business Council and Social Venture Circle of the bank’s membership.

Critics targeted not only CoreCivic’s role but also Alabama’s deficiencies running correctional services – failures that brought a lawsuit from President Donald Trump’s Department of Justice. They took further issue with the bonds being issued via the Wisconsin-based Public Finance Authority, a governmental entity that has now also dropped out, according to the Wisconsin Examiner. It’s becoming harder to hide from the ESG police. (By Richard Beales)


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