The investment policy pursued by Triodos Investment Management (Triodos IM) focuses on a transformation of the economy and society that ensures a sustainable future for humans and animals. Children are the kingpin of that future, as Rozing puts it. “We are able to make a difference even now, by not just providing for children's basic needs, such as clean drinking water and food, but by also preparing them for the far-reaching changes that lie in store for us.”
The challenges are huge. Worldwide child mortality is unacceptably high, 160 million children work out of sheer necessity, 58 million children receive no or very little education and many children do not have equal opportunities. “As a parent I came to realise how fortunate my child is and how unjust it is that many children do not get a good start. Children are our future.”
This is why Triodos IM has taken the initiative to launch an investment fund that focuses specifically on children and is aimed at investors who want to make the world a better place, but also look to achieve a competitive financial return. “We select companies that contribute to children’s welfare, but that also have solid financial fundamentals,” explains Rozing. These companies must also meet the sustainable criteria that Triodos IM applies to all its funds.
In support of UNICEF
For a start, Triodos IM provides financial support for a UNICEF project in Ivory Coast by each year donating the equivalent of 0.10% of the fund’s assets under management. This project addresses both the problem of plastic waste in this African country and the lack of good education, by using building blocks made of plastic waste to build schools.
Rozing: “Besides the donation to UNICEF projects, we also want to really work together. UNICEF is not involved in the day-to-day investment decisions but is an important and valuable partner because of its experience and expertise.”
The fund manager sees opportunities especially regarding the dialogue with companies. Triodos IM already engages about issues such as CO2 emissions and biodiversity, but children’s rights hardly feature on the agendas of many companies. “Together with UNICEF we can have more impact than on our own and will be able to get children’s rights on the agenda,” comments Rozing. However, the fund mainly aims for positive impact by investing in companies that make a clear contribution to the well-being of children and to their futures, says Rozing. The fund does this based on five themes.
Improving the position of children via five themes
Child labour, quite rightly, attracts a great deal of attention. Triodos Future Generations Fund stays well clear of companies, such as in the clothing industry for example, that are linked to this. But children’s rights involve a lot more than just this issue. When selecting potential investments, Triodos IM distinguishes five themes that are aligned with the United Nations Sustainable Development Goals (SDGs). These themes are a positive impact on the survival and health of children, access to education, promoting equal opportunities and inclusion, access to clean water and other basic needs and, finally, protection against violence and exploitation.
Rozing: “When selecting companies, we find that especially small and medium-sized listed companies that focus on a limited number of projects or services offer a good match. This results in a clear and convincing impact that tends to be less evident at larger companies. One example given by Rozing is OrthoPediatrics, which makes medical implants for children. This requires a very specific approach and expertise because implants must ‘grow with the child’. Another example is Natus Medical. The products of this company include equipment for hearing screening for babies. It is very important to carry out hearing tests at an early age, to avoid development delays.
Whereas these companies clearly support the health of children, it is not so easy to find companies that fit with the theme of protection against violence and exploitation, says Rozing. “But one such company is NortonLifeLock, which makes software that parents can use to protect their children on the Internet.” Another example is Telecom provider Safaricom, which provides mobile services that can be used to facilitate online teaching to children in rural areas of Africa.
The fund also invests in several so-called large caps, including DSM. Rozing: “Many investors know this company as a sustainable pioneer. But it is less well known that DSM is also involved in the production of healthy food and of vitamin A, which is important for preventing pneumonia, which each year kills 800,000 children worldwide.
The fund's investments mainly focus on the healthcare, consumer goods (food), education, telecom, and water sectors. With 40% invested in the US, another 40% in Europe and 20% in the rest of the world, emerging countries are somewhat underrepresented in the portfolio. “They currently represent 5%, but we are aiming for 25% in the longer term. We believe that emerging countries are in fact where we are most likely to find companies that can make a difference in the lives of local children,” says Rozing.
UNICEF has no role in the development, management, or operation of the Triodos Future Generations Fund, including the Fund’s investments decisions. UNICEF does not endorse any investment adviser, investment, company, or product, and makes no recommendation as to investment in Triodos Future Generations Fund.
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