Despite steady progress in promoting children’s wellbeing worldwide in recent decades, children remain vulnerable in times of crisis. In the past two years, the pandemic has exacerbated today’s global socioeconomic crisis and even more families and children have been pushed into poverty, with an estimated 60 million more children living in poverty in 2021 compared to pre-pandemic levels. This means that these children face deprivation in terms of health, education, food, water, and sanitation, increasing the risk for child malnutrition and child mortality. According to the latest report on child labour from the International Labour Organisation, progress in combatting child labour has stagnated since 2016, and the global pandemic is likely to push more children into child labour. It is estimated that in 2020, 160 million children were in child labour, and almost half of them doing hazardous work. Most child labour occurs in low-income and emerging economies. The message is clear: action must be taken to ensure the well-being of our future generations.

Exclusion and engagement

As an impact investor, Triodos Investment Management operates on the principle of respect for human rights. This is the underlying value that is reflected in our mission and vision. We believe that companies have a responsibility to uphold the respect for human and labour rights along their supply chains. For this reason, with a zero tolerance policy on child labour in our Minimum Standards, we exclude companies from investment that breach these precautionary principles or operate in industries that have high risk for violation of human and labour rights without any policy or processes to prevent such risk.

Selecting companies for investment based on strict criteria is only part of our story. Our primary goal is to achieve positive impact through our investments. Since 2018, Triodos Investment Management has been actively engaging with companies in the garment industry on the topic of living wages. Being a founding member of the Platform Living Wage Financials (PLWF), we collaborate with other investors to assess and engage with companies in the garment and agricultural sector on living wages. Living wages and living income of workers have a key link to children’s wellbeing and quality of life.

The leverage of living wages and living income

Living wages are a normative concept, the essence of which is aimed at ensuring that workers and their family have the means to live a life “worthy of human dignity”. While different definitions are in use, the core is that a living wage is high enough to cover workers and their families’ basic needs and to allow for some savings.  As such, the monetary amount differs across time and regions.

Family income has a powerful impact on children’s health, social, emotional, and cognitive development. For low-income households, the effect of poverty can be much more pronounced. Beyond the mission to alleviate poverty in terms of financial income, living wages also contribute to overall increased well-being for workers and their families, and a better quality of life and future for their children in terms of health and survival, access to education, equal opportunity and inclusion, a safe and clean environment and even protection from violation and exploitation. It should be noted, however, that poverty is not the sole cause of child labour, other determining factors include the quality and availability of education the child receives, the availability of daycare when parents are working, the level of informality of the work they engage in, and the country’s regulatory environment.

Through the PLWF, Triodos and other investors in the platform use their position as informed shareholders as leverage to influence and exert pressure on investee companies to put the matter of living wage on their agenda and turn this into concrete actions.

The slow progress on the issue of living wages highlights the importance of long-term engagement, as well as collaboration among different stakeholders, including companies, trade unions, industry groups, civil society and expert groups, governments, and international organisations.

Call to action

Our children’s future starts with us. As investors we play an important role. By investing in a sustainable future, we contribute to creating a society that protects children and offers them equal opportunities to prosper and develop. Eliminating child labour is an important step forward.