Who works for your money
A report about Swedish savings and risks with child labour.
When Swedish savers are allowed to rank which sustainability issues they prefer to influence with the help of their savings capital, the prevention of child labour falls to the top of the list. We took a closer look at the situation regarding child labour and what risks there are for Swedish savings to come in contact with child labour.
Child labour and supply chains
Around 10% of all children between 5-17 years old, or around 150 million of the children in the world, work. More than 50% work with what is called hazardous work. A majority of these children live in Africa or Asia, but child labour occur everywhere. The agricultural sector accounts for the largest proportion of child labour, where 71 percent of the children in child labour work. As a result of globalization, supply chains are large and increasingly complex with many intermediaries. The possibility to outsource production to other countries make it more difficult to gain an insight into the working conditions further down the supply chain.
We investigated how much of the Swedish savings that potentially could be invested in companies using child labour. We looked at the fund assets for funds investing in different categories, and matched it with the sector allocation from indexes in each category. For example, a global index, which represents the sector allocation on the worlds’ equity markets, have a large exposure towards sectors such as finance, IT, health care, industry and cyclical consumer goods and services. We have identified many of these sectors to have a high risk of child labour.
” 1700 billion SEK could be invested in companies using child labour “
In our analysis, we find that almost 74% of the Swedish savings in equity funds, or 1700 billion SEK, are in sectors which we have identified to have increased risk of child labour. In other words, our savings has a high risk of being invested in companies that directly or indirectly use child labour.
What can the financial industry do?
Working against child labour as an asset manager is not about finding the company or the individual children who work, and excluding these companies. Rather, it is about reviewing and managing the total exposure to the sectors with increased risk of child labour, and to strengthen controls to reduce the incidence and improve the living situation for the children who are forced to work. In other words, being a manager is about being an active owner.