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, farmworkers' 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, 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. As far as companies go, once they are exposed and confronted with the potential controversy, reputational, and regulatory risks, many of them respond to engagement efforts by stakeholders, develop a human rights policy, or even step away from additional controversial activities.
We advocate divestment from all forms of state violence. On Investigate, we offer information and divestment recommendations on three such institutions: the prison industry, military occupations, and border militarization. Each of these issues is a priority for AFSC’s long-standing work where we have detected a lack of available information about the roles and involvement of corporations. 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.
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.
We urge responsible investors to refrain from owning stocks or bonds of the companies on our divestment list. Based on our assessment using the criteria detailed below, these companies are consistently and knowingly involved in particularly harmful violations, their involvement is significant to the continuation of the violation, and they are unresponsive to stakeholder engagement. We conclude that 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 companies 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.
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 three criteria: the salience of the human rights violation, the company's responsibility for the violation, and the company's responsiveness. These are explained below in detail.
Each criterion is evaluated on a 1-5 point scale, from least to most severe, leading to an overall score of 3-15 points for each company. We evaluate the companies in our database separately on their involvement in all three issues we track: the prison industry, military occupations, and border militarization. Companies that receive more than 10 points on any one issue become part of our divestment recommendation.
- Salience - 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. Salience is also adjusted by measuring the scale and scope of the violence.
- Symbolic: Discrimination
- Structural: Exploitation or sporadic indirect violence
- Indirect: Large-scale systemic indirect physical violence or sporadic direct violence
- Direct: Systemic direct physical violence
- Severe: Large scale and severe direct physical violence
- Responsibility - 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 degree to which the company’s products and services contribute to the violation and the degree to which the company is knowingly and intentionally linked to the violation. For example, supplying custom-made crucial equipment or services would constitute a more significant involvement than the supply of an off-the-shelf product.
- Normalize: The company’s relationships link to the violation.
- Capitalize: The company’s activities, services, or products link to the violation.
- Support: The company’s activities, services, or products exacerbate or contribute to the violation, or deliberately support it.
- Facilitate: The company knowingly and intentionally provides products, activities, or services which exacerbate or enable the violation.
- Enforce: The company’s activities cause the violation.
- Responsiveness - 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 full knowledge of the impact of their actions. Their responsiveness is assessed by monitoring the company’s attempts at dialogue and remediation as well as changes in corporate policies or activities.
- Responsive: The company announced it would fully withdraw from the violation.
- Responding: The company is changing its behavior, but not enough.
- Dialogue: There is a dialogue or a possibility of a dialogue with the company about this violation, with a potential for improvement.
- Nonresponsive: The company is unlikely to respond to stakeholders’ concerns.
- Resistant: The company has not responded to public stakeholders’ concerns regarding the violation.
Our research and recommendation are updated regularly with changes in companies’ operations and responsiveness. Since the inception of the Investigate database in 2011, we removed from it more than a dozen companies. We hope that our database continues to shrink as companies divest from state violence.
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 prisons, jails, or detention centers 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 investment policy excludes companies that provide 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 a change in their West Bank business operations, remain under close observation: Caterpillar, Cemex, and Fosun International.