Nearly a year after UNICEF launched its Child-Lens Investing framework, the humanitarian organization is now looking for asset owners and managers to test it.

A UNICEF report defines Child-Lens Investing (CLI) as a strategy focusing on “children as intended beneficiaries and affected stakeholders and the elevation of positive child impact – either directly or indirectly – as an objective.” 

A Foundation, a pension fund, a wealthy individual or any public or private investor can apply CLI, said Alexander Rostami, head of the UNICEF Office of Innovation and formerly with SEB Investment banking in Sweden.

“It is possible to create a dedicated Children Impact Fund or apply the child-lens investing framework (CLIF) to existing funds to assess if the investments harm children and/or contribute to their wellbeing,” added Rostami.

This way, said Rostami, CLIF could complete the filtering process for climate, gender lens, education or health investing. Asset managers or owners could identify which climate-positive investments generate the best impact for children.

The two motivations for child-lens investing

As sustainable investing becomes more mainstream, CLI ensures that more money is directed toward children’s wellbeing.

Firstly, philanthropy can’t do it all, said Rostami.

“One out of six children on the planet lacks access to life necessities,” said Rostami. “The grants and the donations UNICEF receives are not nearly enough to reach all the children we need to support.”

Secondly, most investment decisions made by private markets directly and indirectly affect children. But he said, unlike other beneficiaries who can organize and lobby, children are underrepresented in investing analysis and decision-making and have no seats at the table.

Child-lens investing helps address that underrepresentation, said Rostami.

Formalize an existing investment strategy

Although not labelled “child-lens,” an active and diverse supply of child-relevant investment strategies already exists.

Foundations investing in organizations addressing child-related sustainable development goals and funds aiming for societal outcomes are considered child-relevant strategies, said Rostami.

Three examples of existing child-relevant investments include Elevar Equity, which has invested in more than 50 emerging market companies, employing 80,000 individuals and reaching 50 million underserved customers and households, they say. 

Rethink Venture Capital invests in impactful education technology companies through Rethink Education. Its portfolio includes 90 companies serving those who are low-income, cognitively or physically different, desk-less workers and the under-employed, the incarcerated, refugees and other immigrants.

Rethink Education addresses two SDG targets: ensuring equal access to technical education and increasing the number of youth and adults with relevant skills for decent jobs. 

Third, impact investor Blue Orchard created a climate insurance fund. It invests in affordable insurance for low-income communities whose livelihoods are at risk because of climate change.

Children benefit indirectly from the goods, services, jobs and education these funds provide.

The first step: create a taxonomy

UNICEF hopes to migrate from informal child-relevant investing to formal child-lens investing backed by a taxonomy and a framework, said Rostami

Between October 2022 and September 2023, the UN organization surveyed public and private market investors’ appetite for child-lens investing.

The surveys showed that investors are keen.

“Foundations and high net-worth individuals who allocate a portion of their wealth to impact investment seek a portfolio approach,” said Florian Morales, senior impact analyst at UNICEF. “They want to create impact in different sectors.

“The child-lens investing framework gives this opportunity to create diversified impact funds targeting various industries,” Morales added.

Many factors contributing directly or indirectly to children’s wellbeing already represent substantial investment opportunities, he added, citing the education technology industry specifically. 

“We know that we will have compelling data to prove that it makes sense to invest for children and do good for them,” he said.

CLIF could highlight what companies consider positive child impacts in their services, processes, or industry. For example, these organizations offer family policies, a better life-work balance and living wages, helping to retain workers, said Rostami. 

“We want to build the case that as an investor, you are better off considering women and children,” said Rostami. 

“In collaboration with researchers, assets managers and asset owners, we want to prove that companies respecting these principles generate higher returns,” he added.

CLIs are broader than many investors and asset managers envisioned during the UNICEF surveys, said Rostami.

“In their view, CLI was limited to education, breast milk substitutes, and other products closely related to children,” said Rostami. 

“Besides having no negative impact on children, this investing strategy must benefit children, but also their parents, caregivers and all the communities around them,” said Morales.

Companies soliciting child-lens investing must demonstrate a positive impact throughout their product and processes.

“If your product benefits children, but you’re harming them in your supply chain by giving lousy working conditions to their parents, it’s not how we believe you should act as a company,” he said.

Another example, said Morales: Suppose your business manufactures solar panels. How do you ensure children in African or Chinese mines do not extract the minerals?

The challenge of raising awareness

“Investors don’t know if their money is contributing to children’s wellbeing, and they cannot define the child ecosystem and how they could enhance it,” said Rostami.

It took several years and a lot of research for investors and the financial sector to recognize how investing in companies harming the environment affects their returns.

“I hope it won’t take as long to establish the financial and social relevance of child-lens investing,” he said.

UNICEF highlights that CLI and the CLIF are not their ideas alone. 

“It was developed in collaboration with financial institutions and investors. And it needs to be owned and carried forward by financial institutions, researchers, donors and NGOs,” said Rostami. 

A critical challenge to adopting CLIF is the burden it could represent for asset owners, managers, and companies in the fund.

“We need time to guarantee CLIF’s interoperability with existing filtering practices like ESG and impact investing assessment,” said Morales. 

“Companies are already complaining to investors; they are asked too many questions and too much data to report to demonstrate impact.”

The next step is testing the framework. “We are looking for partners willing to make a change, to invest differently,” said Rostami.

UNICEF published a “Private Equity and Debt toolkit” displaying case studies, diligence questionnaires and metrics bank to facilitate the journey to CLI.

Will this get traction?

CLI could probably compare to climate investment strategy, said Morales.

“Today, it is easy to say, ‘This is good for the environment, and this is not,’” said the impact analyst, adding climate and the environment are political issues.”

“Children are less political, but as with any social issue, it is less tangible than I want. I participated in European Union meetings where participants struggled with the taxonomy to identify a social investment,” said Morales.

“Our job is to connect the dots. For example, investing in solar panels in Kenya significantly impacts the connectivity of schools, households, and girls’ scholarships. There are many similar links; we need to highlight them.”

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