Introducing FREEIN: The Story Behind the First Decarceration Index (1/3)

This post is part of a three-part series about The Decarceration Index (FREEIN), the first index to track the performance of companies engaging in fair chance hiring practices as well as managing their exposure to prison risk. To be notified about future posts, follow our LinkedIn.

Those who have followed our journey at FreeCap Financial know that we’ve spent the last 5 years gathering impactful, reliable data at scale to enable investment in solutions to mass incarceration.We’re proud to say that our data has since influenced $10B in assets across numerous asset management firms, Registered Investment Advisors (RIAs), and a Fortune 100 Bank.

Our mission has always been to transform capital markets to be a force for good by unlocking impactful investment opportunities in the public markets through transparent data. To make this possible, we’ve launched The FreeCap Financial BITA Decarceration Index (FREEIN), which allows investors to track the performance of companies who lead in criminal justice efforts. This is just the first step in turning decarceration into a global investing movement.

Why a decarceration index?

Since 2019, we’ve collected data on the largest U.S. companies to disclose their fair chance hiring policies for people with criminal justice histories, use of prison labor in their supply chain, and vending contracts with prisons. Through this, we’ve seen how a company’s link to prison labor damages their reputation. Decades later, scrutiny persists for some companies even after discontinuing involvement. Additionally, as the United States grapples with labor shortages across various industries, rejecting the estimated 1 in 3 American adults with a criminal record on background checks could leave companies understaffed and struggling in the competitive talent market.

All of this adds up to material financial risk for companies and their investors. However, no product in the market exists to allow investors to quantify and track that risk – until now. We created The Decarceration Index (FREEIN) to capture these financial risks that have gone unmeasured for far too long.

What does The Decarceration Index (FREEIN) track?

The Decarceration Index is a thematic index of U.S. large-cap stocks selected based on their impact on the prison industry. Using FreeCap Financial’s criminal justice investing criteria, FREEIN is the first index that includes a positive screen for fair chance hiring and weighs “prison risk” as a key financial metric, offering substantive social and financial returns. The result is an index of companies who not only mitigate the risk of being tied to prisons, but also reduce recidivism by tapping into an underutilized workforce and uplifting the justice-involved workforce upon reentry through their fair chance hiring efforts.

Interested in learning more? Contact us and stay tuned for our next blog post that will dive into the investment thesis and methodology behind FREEIN.

Sources:

U.S. Chamber of Commerce: Understanding America’s Labor Shortage: The Most Impacted Industries