Every year, November the 20th is World Children’s Day, which was introduced by UNICEF to mark the introduction of the United Nations Convention on the Rights of the Child.
UNICEF states that children have “the right to be protected, to learn, and to have their voice heard”, but also that “children wake up to a world shaped by choices they didn't make”. At first, this might appear far removed from the world of investment, but it is not.
Children are often disproportionately affected by events such as war and famine, which for the most part are outside the influence of the private sector, but that does not mean that investors, lenders, and underwriters can’t play a role in other areas. Corporate actions impact children, be it positively or negatively, and companies can be either supported or encouraged to change by the actions of investors and others.
Companies that rely on raw materials such as cocoa, coffee, and sugar, for example, can impact children by choosing how much to pay farmers for these materials. If paid an unfair amount, farmers of these resources (which are often in the developing world) can be unable to pay for additional labour, and be forced to rely on their children and/or others from the community. This is not a matter of greed by farmers; it is matter of livelihood and survival.
By extension, companies who choose not to pay farmers fairly are undermining Article 32 of the Convention, which states that children are to be protected from work that is likely to be hazardous, or that which interferes with education. Companies that do the opposite, however, can help to support Article 32. By paying fair wages, farmers are less likely to rely on children to help on farms and plantations, with this meaning that fewer children engage in hazardous work, and more are able to attend school and receive an education.
For investors and others, they can play a role in supporting good practice and encouraging change by only investing in, lending to, and insuring companies that already pay fair wages to farmers, or at least demonstrate that they are making efforts to ensure this is the case in the near future. This can signal that fair payment is a prerequisite of investment or underwriting by firms that choose to take this approach.
Using signalling to encourage changes in corporate actions can work across a number of sectors and company types, and can benefit children in a number of ways, but it goes without saying that the effectiveness of this approach depends on the number of investors and others that choose to take it.
So, if you are an investment manager, fund manager, lender, underwriter, or even an individual, ask yourself this - what can YOU do to help children around the world?