The American Friends Service Committee (AFSC) has a long history of engagement in divestment campaigns and in responsible investment actions for peace and civil rights issues worldwide, including corporate accountability campaigns in the anti-apartheid movement, farm workers rights campaigns, the movement for nuclear disarmament, peace and anti-militarism campaigns, and struggles against mass incarceration and for the rights of immigrants.
As an investor, the AFSC invests only in companies providing goods and services which people and peacetime industry need for everyday life. It refrains from investment in the military industries, major defense contractors, nuclear power, prisons, fossil fuels, land speculation, and certain products such as alcohol or tobacco.
The Economic Activism Program provides organizers and investors with tools and training for campaigns that face corporate power, expose corporate complicity in state violence and violations of human rights, help corporations move away from such harmful practices, and support the creation of public and transparent standards for corporate behavior.
Divestment is an act of tracing our own financial links to war, oppression, and exploitation, to use them as leverage to expose, isolate, and withdraw from these harmful social structures.
On Investigate, we offer information and recommendations to support divestment from the militarization of borders, from military occupations, and from the incarceration and detention industries. Each of these topics is a priority issue for AFSC’s long standing work where we have detected a lack of available information about the roles and involvement of corporations. We urge all companies listed on our database to divest from these harmful activities, and we hope that their consumers, investors, and business partners will use this information to demand that the mentioned companies make that transition, and help them in this process.
Our Divestment Recommendation and Criteria
The Investigate database is two-tiered - from our general list of companies, some are highlighted as targets for divestment. This recommendation is based on an assessment of each company’s involvement in the specific human rights violation, the significance of the company’s involvement, how continuous it has been, and how responsive the company has been to public and investor concerns on the matter.
Our assessment criteria include:
- Salience relates to the severity of the human rights violation and how harmful it is. Based on the UN Guiding Principles for Business and Human Rights Reporting Framework, it measures the severity of the negative impact of a company’s activities and/or business relationships. Salience does not measure the extent of the company’s stake in the said violation, nor its impact on the company’s revenue, only the degree to which this violation is harmful to people.
- Significance measures the degree of the company’s involvement in the human rights violation. It is assessed on a case by case basis and includes both the significance of the company’s activities to the continued human rights violation and the significance of that relationship to the company itself. For example, unlike the supply of an off-the-shelf product, supplying custom-made crucial equipment or services would constitute a significant involvement.
- Responsiveness measures the company’s responsiveness to multi-stakeholder engagement as well as the continuity of its involvement in the harmful activities. All companies listed on Investigate have a full knowledge of the impact of their actions. Their responsiveness is assessed by monitoring the dialogue efforts with the company on these issues as well as all changes in corporate policies or activities.
We advocate divestment from all forms of state violence. Investigate focuses on three such institutions: border militarization, military occupations, and the prison industry. Different stakeholders in the companies listed on our database may choose to use different strategies to help companies divest and withdraw from these activities: they may engage with the companies, shame them, work with them to create better due diligence mechanisms and human rights policies, put consumer pressure on them, file shareholder resolutions, or dump their stocks.
Specifically for responsible investors, we recommend they refrain from owning stocks or bonds of the companies we have highlighted as “recommended for divestment.” Based on the three criteria listed above, these companies were ruled as consistently and knowingly involved in particularly harmful violations, in a significant way, and as unresponsive to stakeholder engagement. According to our assessment, these companies would not respond to shareholder activism on these issues at this time, which makes the ownership of these securities a moral liability. Adding these names to a widely-accepted human rights screen helps develop clear standards for corporate respect for human rights for other companies in the same industries, and in some cases pushes companies to become more responsive.
Once exposed and confronted with the potential controversy, reputational, and regulatory risks, many large companies respond to engagement efforts by stakeholders, try to present a human rights policy, or even step away from additional controversial activities.
Our database is regularly updated based on changes in companies’ operations and responsiveness. Between 2011-2017, we removed almost a dozen companies from our database, and we hope that our database continues to shrink.
Our divestment list is neither a “black list” nor a boycott list. We use it to advocate for a specific course of action, and we recognize that different stakeholders might have different opportunities to help promote the same goals. Please contact us if you need assistance in tailoring specific screening recommendations for different investors, asset managers, or investment consultants.
Divestment from the Prison Industry
We hope that the research presented in this publication will help investors refrain from any investment in the prison industry, unless they intend to use it for corporate engagement and shareholder activism to help companies change their policies and transition out of this industry.
The American Friends Service Committee does not invest in any company that owns, operates, or manages prisons, regardless of the size of that business or its centrality to the core activities of the company. Additionally, we avoid investments in companies whose primary business involves the design or construction of prisons.
Our Prison section profiles the main companies involved in ongoing human rights violations as part of the incarceration industry. Among those companies, we recommend divestment from:
- Companies that own, operate, or manage incarceration facilities anywhere around the world.
- Companies whose primary business is in the prison industry.
- Other companies with significant involvement in this industry, that prove to be unresponsive to public and investor pressure.
This list is continuously reviewed and adjusted based on these companies’ operations and responsiveness.
Divestment from the Occupation Industry
The American Friends Service Committee has worked with Palestinians and Israelis for peace and justice for over 70 years. Our own investment policy precludes investment in any company that provides products or services, including financial services, to Israeli or Palestinian military bodies that are used to facilitate or undertake violent acts against civilians or violations of international law, or to Israeli or Palestinian organizations or groups that are used to facilitate or undertake violent acts against civilians or violations of international law.
AFSC’s investment policy responds to human rights violations by both sides, but the Investigate database focuses only on corporate involvement in Israeli violations. This asymmetry is a consequence of the inherent asymmetry of this conflict: the provision of any form of support to a Palestinian armed group or political party is illegal under US anti-terrorism laws. In other words, existing legal structures enforce strict sanctions and already prevent meaningful involvement of public corporations in Palestinian violations.
Over the last several years, several large corporations were taken off our divestment list or altogether from the Investigate database, after they have changed their activities on the ground. This includes, for example, CRH, SodaStream, Veolia Environnement, HP Inc., Orange, preceded by Unilever, Assa Abloy, and the privately owned companies Keter Plastic and Barkan Wineries. Other companies, which have changed or announced an upcoming change in their West Bank business operations, remain under close observation: G4S, Caterpillar, Cemex, and Fosun International.