The Canada Pension Plan Investment Board decided to unload its small stakes in two U.S. prison companies because they presented a reputational risk to Canada’s biggest pension fund.

The Toronto-based fund, which manages about $400 billion, held shares in CoreCivic Inc. and Geo Group Inc., which had facilities that held people suspected of illegally entering the U.S. under a policy imposed this year by President Donald Trump.

After earlier saying they would keep the stocks under their passive investing portfolio, the fund chose to sell them as part of an investment review.

“We recognize that when it comes to reputation risk, it doesn’t matter how big or small the investment is,” Deborah Orida, global head of active equities for CPPIB said by telephone Thursday. “For a long time, we’ve tried to incorporate reputational risk assessments into our due diligence process for investments and after that controversy, we did take advantages of new tools and ways to broaden our processes.”

Strong returns posted by strategies focused on environmental, social and governance issues is a reason for CPPIB to look at sustainable investments, according to Orida. Funds that take ESG factors into account in their investment decisions perform better than those that don’t, according to data compiled by Morningstar Inc. The research firm said that 73 per cent of its ESG indexes outstripped their non-ESG equivalents since their inception.

“We are not looking to sacrifice returns, but rather to make the best decisions about risk adjusted returns,” she said. “Investing on ESG strategies and doing climate-change risk opportunity assessments is not a trade off with return, it’s part of what we need to do to make good long-term investments.”

On green bonds, she said pricing is broadly consistent with other types of debt, but it helps the pension fund to expand its investor base.