How can the financial sector play a transformational role for children’s wellbeing?

The link between the financial sector and children may not be immediately obvious. Banks, insurance and real estate companies don’t tend to operate factories in high-risk areas for child labour; nor do they typically develop physical products that children interact with, or technology that influences their social lives.

But these organisations do play a unique role in corporate responsibility and sustainability, and they are collectively underperforming in our benchmark – by a significant margin.

To examine why, let’s go back to the beginning and ask: why does this sector matter to children?

Banks and financial institutions

Banks have the power to channel billions of dollars towards projects and long-term investments in sustainable economic activities, through sustainable finance. They also channel capital through business loans, where due diligence on who they lend to is equally crucial. Applying an environmental, social and governance (ESG) lens has become a standard part of the banking industry’s due diligence, but too often, children’s rights are overlooked in these assessments.

Banks also have direct exposure to children through their child-related services, for example, children’s savings accounts. The services they design and the way they interact with these young customers can help to educate children on essential finance management skills for later in life. Furthermore, banks play a vital role in ensuring that children have safe access to their services. For teenagers especially, the ability to manage their own money and have access to online purchasing should be provided under safe circumstances.

In this year’s benchmark, banks scored just 2.6 on the marketplace indicators, which look at product and marketing responsibility regarding children. Moreover, while banks frequently use images of children and families in their marketing, they often neglect to disclose ethical marketing policies or safeguarding measures. Their second lowest scores were for their impact on the Community & Environment (4.7).

Insurance companies

Similar to banks, insurance companies are typically well-versed in due diligence on the companies (and individuals) they sell insurance to. But they need to extend this due diligence to the impact on children.

While they may be one, or multiple steps further along the value chain from companies that have a more direct impact on children (for example, if they sell insurance to a food chain that imports coffee beans from a company in a high-risk area for child labour), they still have a duty to manage this risk by assessing the impacts of each client, and the broader impacts of their clients’ on children.

Our findings show that while these companies are generally conducting materiality assessments on the human rights impacts in their workplace and value chain, they are not specifically mentioning children’s rights in these assessments. Their overall average score for Workplace indicators (5.6) is lower than the benchmark average (6.1).

Real estate companies

Real estate companies have the potential to impact children through their decisions on the types of companies or organisations they let or sell their properties to. What’s more, for properties under their management, they have clear health and safety responsibilities which include the specific needs of children.

Additionally, a major impact of the real estate sector is providing access to safe and affordable housing for families, which greatly benefits children’s wellbeing. This includes safeguarding against evictions, which tend to affect children more severely than adults.

In this year’s benchmark, the real estate industry performed the lowest in its sector, with an average score of just 2.8.

Since it comprises the second highest number of companies out of all industries benchmarked (9% are real estate companies), these low scores have an outsized impact on the overall benchmark score.

Responsibilities in common

Companies across all of these industries have similar responsibilities in terms of Workplace indicators. For example, it is crucial for these companies to support a healthy work-life balance for employees.

Implementing family-friendly policies is essential, as it enables parents to be more present for their children.