Global Child Forum, a foundation established by the Swedish Royal Family to promote children’s rights, has just announced the results of its 2019 global benchmark study. As part of the Boston Consulting Group team partnering with the Stockholm-based non-profit to conduct the study, the findings have been eye-opening for me. Companies around the world are making some progress in protecting children—but not nearly enough.
The imperative to accelerate the pace of progress amid rising risks to child safety and protection globally will only grow more urgent. There is, of course, the moral issue of ensuring that companies protect the most vulnerable members of the population across their business value chain. But there is a more pragmatic reason to give this issue increased attention: the rapid growth in sustainable investing which factors company performance in areas such as children’s rights into investment decisions.
Some Improvement—And Some Troubling Gaps
The study, titled The State of Children’s Rights and Business: From Promise to Practice, assessed nearly 700 of the world’s largest companies, and how they are safeguarding children’s rights as part of their business value chain. Among the key findings:
- Companies are tracking their performance in child rights indicators better than they were when we did the first such study back in 2014. The oil, gas and utilities sectors had the largest improvement.
- North American companies lag counterparts in Europe and Latin America and the Caribbean in terms of board accountability, materiality assessment, supplier assessment and, most notably, reporting on incidents or risk of child labor.
- Companies around the world still perform poorly when it comes to protecting children as consumers via responsible marketing and product safety.
In general our work revealed that companies continue to focus their efforts primarily around child labor. But while that is important, it isn’t sufficient. For one thing, companies often fail to adequately monitor their full supply chain when scrutiny of suppliers two or three steps removed from their own manufacturing operations would reveal problems. In addition, the impact on children from a company’s business extends far beyond labor practices, including a company’s environmental and social track record.
The Role of Investors
As I have seen firsthand in my work with private equity firms, that track record is getting more attention now than in the past. Assets managed under sustainable investing approaches, including strategies that integrate environmental, social and governance (ESG) performance into investment decisions, hit $30.7 trillion in 2018—up 34% in just two years. That growth is fueled in part by the mounting evidence that companies that lead in ESG performance generate better returns for shareholders.
Not surprisingly, children’s rights and a company’s overall ESG performance are inextricably linked. A company’s environmental record, for example, can have a significant impact on children’s health. And the degree to which a company supports and uplifts the communities in which it operates will have a major influence on the lives of children in those communities.
That’s why both companies and investors need to pay more attention to the rights of children around the world. If they don’t, I have no doubt they will ultimately pay a price in the market for that failure.