Children today are still a largely neglected stakeholder. Global Child Forum’s 2023 report about the state of children’s rights and business shows that the collective commitment to children’s wellbeing has declined compared to 2021. This is a disturbing finding that needs to be reversed. The fact that most companies have a short-focus and hardly operate with the wellbeing of children in mind, has resulted in today's big challenges (biodiversity loss, climate change and inequality).
Taking the wellbeing of children into account automatically means more focus on the long term. This is exactly what we expect from companies we would invest in. Our engagement agenda therefore not only includes overarching topics such as climate change and plastic pollution, but also more specific topics related to the wellbeing of children, such as family-friendly work policies.
Relevance of family-friendly work policies
The alignment with our objective to improve and enhance the wellbeing of children and recognise them as a specific stakeholder makes family-friendly work policies a logical and important engagement topic for the companies we invest in. Below we expand a bit more on this view.
UNICEF makes a clear link between children’s wellbeing and working conditions for parents, stating that working conditions for parents and caregivers have direct impacts on the health, development and well-being of children and therefore making them a critical children’s rights issue.
However, the specific rights of working parents are rarely considered in sustainability standards, beyond issues applicable to all workers including forced labour, living wages, and decent working hours. Yet, decent working conditions for parents are critical to sustainability and have several business benefits because they ensure employees can successfully balance their work and family life. A UNICEF study from 2022 found that family-friendly work policies help reduce staff turnover rates, enhance productivity and loyalty and boost workplace morale.
So how do we assess a topic that’s rarely being considered in sustainability standards? We draw in this on the expertise of UNICEF and use their methodology to assess a company’s work policies related to children and their parents. The assessment consists of topics such as parental leave, flexible working hours, breastfeeding support at work, childcare support, living wages and job security.
To assess companies on these topics, we used benchmark data from Global Child Forum This is a rich data set that contains indicators about child wellbeing for over a thousand companies. For some questions we had to dive deep into annual reports, sustainability reports and even job advertisements. As the final step of our assessment, we discussed our findings with the portfolio companies.
We found that many companies were (sometimes pleasantly) surprised about our questions. Most of the time investors tend to ask the same questions about financials and some sustainability topics are now starting to get broad adoption (which is a good thing!). That being said, we typically found that most companies address equal opportunities, living wages and flexible working quite well. For other topics the findings were mixed. For example, most companies provide paid maternity, paternity, and parental leave. But the offering is typically a reflection of local regulations. As a result, within the same company, leave can vary between 12 weeks up to more than a year. The same can be said about providing childcare support. In many countries the government enables access to childcare, so employers tend to provide limited support. In the US, it’s more common for childcare being offered as a benefit to employees. Lastly, we found that breastfeeding support is not always available. This in part also reflects regulation, yet we believe companies should do more to support this.
We often hear that smaller companies have poor ESG ratings because they have fewer policies than larger companies. While this is true, you could wonder if this really makes the company a less sustainable operator. During the conversations we had, we again found that not having a policy doesn’t have to be a bad thing. Two examples from Triodos Future Generations Fund are Amsterdam Commodities and Ebro Foods. Both are relatively small companies that operate in the food sector. Both also have fewer policies on paper, yet this allows them to be more flexible. For working parents, it means that arrangements could be made to balance their work and life commitments. Still, we would prefer to see companies drawing up policies that meet the best practices, as defined in the UNICEF tool.
We have only just begun putting the wellbeing of children on the corporate agenda. So naturally, we will continue our efforts. We also hope that our first steps inspire other investors to address this topic in their engagement efforts. Because in the end, engagement becomes more effective when more investors contribute to it. The recently published UNICEF Child-lens Investing Framework provides an approach to consider the wellbeing of children in investments. So, when we report about our efforts next year, we not only aim to report progress at the companies we invest in, but also a broader adoption of the topic by the investment community.
Disclaimer: Neither UNICEF, nor its partner in Luxembourg, Comité luxembourgeois pour l'UNICEF, is acting as an investment adviser and neither of them has had or will have any role in the design, structuring, development, management or operation of the Triodos Future Generations Fund. UNICEF, and the Comité luxembourgeois pour l'UNICEF, have not been and will not be involved in the management of the Triodos Future Generations Fund, including its investments decisions. Neither UNICEF nor the Comité luxembourgeois pour l'UNICEF has endorsed Triodos IM, Triodos SICAV I, the Triodos Future Generations Fund or any investment by the Fund. UNICEF and the Comité luxembourgeois pour l'UNICEF make no recommendation as to investment in the the Triodos Future Generations Fund. The sole role of UNICEF, and the Comité luxembourgeois pour l'UNICEF, is to receive the donation from Triodos IM and apply such donation to UNICEF’s programmes for children. UNICEF and the Comité luxembourgeois pour l'UNICEF will have no liability to the Triodos Future Generations Fund or investors in the Fund in relation to investments in the Fund, the performance of the Fund or otherwise in connection with the Fund. UNICEF is immune under international law from every form of legal process.