Transforming Investments: How Child-Lens Investing Maximizes Social Impact Across All Sectors
$1 invested in early childhood development generates $6-17 of benefit for society.
Florian Morales at UNICEF is helping to pioneer Child Lens Investing (like Gender Lens Investing).
It’s not about having children be an investment theme itself, but rather as a lens that can be applied to every type of investment in every sector.
It doesn’t matter what kind of investment you have, it will have an impact on children – and being aware of that and acting accordingly is what Child Lens Investing is all about.
Podcast Transcript
Jacob: [00:00:00] Welcome to Impact Stories. I’m here with Florian Morales and please introduce yourself
Florian: Thank you so much, Jacob. My name is Florian Morales and I’m working as a Senior Impact Analyst for UNICEF and the Innovative Finance Hub of UNICEF based in Finland, in Helsinki.
Jacob: Tell me about the good that you’re trying to do.
Florian: So our team is mainly focusing on developing everything connected to Child-lens Investing. which is a new approach that was developed by UNICEF over the past few years, and that consists of integrating and taking into account children, while investing for investors. So our job is really to support investors and the investment community in trying to better integrate children in their investment processes and decisions.
Jacob: So give me an example of what that’s like. Is this very similar to Gender-lens investing or how is it different?
Florian: Yeah, it’s really similar, we realized that over the past few years, many, many very interesting and incredible things have been done within the responsible investing sphere from climate finance to Gender-lens investing, but children tend to be overlooked in this conversation.
I [00:01:00] believe that there might be several reasons, mainly because children are not economical agents in a way. They are not consumers, at least not directly. They are not employees, they are not economic agents in general. So we really wanted investors to consider children as a key stakeholder. so we tried to replicate what has been done on other lenses and other themes, but with a Child-lens. And we call it a lens because we truly believe that children shouldn’t be an investment theme itself, but should be a lens that can be applied to every type of investment in every sector.
We truly believe that Child-lens investing is fully interoperable with other lenses and investment themes. So, for example, you mentioned Gender-lens Investing of course, Child-lens Investing was built upon all the great things and learning we got from the development of the Gender-lens Investing field and a Gender-lens Investment is totally interoperable with a child lens investment. Half of the children are girls. The role of mother in the development of Children is key. So, of course, improving the situations of mothers have a huge impact on [00:02:00] children’s development.
Jacob: So on that idea of a lens through which to invest or to look at investments, how would that practically inform an investor?
Florian: I think it’s a really good question. We call it a lens because we believe that it’s a lens through which you need to look at your investment. So this means that. Whatever sector you are trying to invest in, it makes sense to try to understand how this sector impacts children’s rights and children’s wellbeing.
So for instance, if you’re investing in the energy sector and the infrastructure sector, there’s a way to better understand the impact that your investments have on children and try to maximize the positive impact while reducing the negative impact. So it differs in a way from an investment theme, because we truly believe that investment targeting children impact all SDGs, It’s not just one SDG in particular. And so if you have a strategy focusing on children, either directly or indirectly, it makes sense.
Jacob: Give me a practical example?
Florian: So we developed a taxonomy that identifies three types of investors and which kind of [00:03:00] approach differs from one to another. We have what we call Child-Screened Investor, which is more a risk based approach where we support and encourage investors to take into account any risk related to children while investing.
Then we have a second category that we call Child Inclusive which is more focusing on the positive impact an investor can generate on children. And where children are considered as one of the beneficiaries or as an indirect beneficiaries. For example, when you are investing in the sectors I was mentioning earlier, like transportation, children can be one of the many beneficiaries, but your investment doesn’t need to be fully targeting and only targeting children to be considered as a Child-lens Investment.
Let’s say you are investing in sanitary products. You are not targeting children, but we realized by conducting a study at UNICEF that providing affordable sanitary products in developing countries can have an impact on a girl’s school enrollment by almost 10 percent. So that’s an example of an investment that is not directly targeting children initially, but children and girls are one of the many beneficiaries. And it can have a [00:04:00] tremendous impact on children. Once you have understood this, you can try to maximize this impact.
And the last element of the taxonomy is what we call Child-Centered, where the investments are directly targeting and focusing on children’s benefits. So this could refer to an investment targeting a nutritious product for children or education or anything. But what is really important for us and for UNICEF in this is to make people realize that you don’t need to have an investment strategy that is only and directly focusing on children to positively impact them.
There are many ways to add this Child-lens to your existing investment strategies that could be focusing on many topics like I mentioned earlier, infrastructure, energy. Whatever the topic is, children can be impacted both negatively and positively and we are here to support, to maximize the positive impact.
Jacob: How would you respond to someone who is pushing against that and saying, why does Child-lens Investing even matter if children aren’t economic agents? What do you say to the naysayers about Child-lens Investing?
Florian: I mean, to me, there are several aspects. First yeah, you’re right. Children are not economic agents [00:05:00] today, but they will be tomorrow. So investing in children is a really smart thing to do because they will be economic agents. They will be future voters, they will be future Consumers, they will be future employees within companies. So it’s really important for the society as a whole to understand this and to try to take care of our children. This is why every investment targeting children generates many positive impacts. The returns to society are greater when invested earlier on.
For example, we conducted a study at UNICEF highlighting that each dollar invested in early childhood development programs can yield a return of $6 to $17 for the society. So it’s really a smart thing to do to invest in children. And then another aspect that is important for us is to realize that investing in children and with a Child-lens also means investing in the sector is growing and will continue to grow during the coming years. Some of our colleagues here in Helsinki are working on everything connected to EdTech. The tech industry is going to grow quite significantly during the coming years. So it’s also a smart [00:06:00] thing to do for investors to think about this growing topic that will be more and more important for children in the coming years.
Jacob: Shifting gears a little bit. I’m curious for you and your career. What was that moment when you decided you wanted to pivot towards making a difference in the world, or you knew that you wanted to do something about impact.
Florian: In a way I’ve always known that. My parents were both social workers, so I grew up with this in mind and after I graduated, I started to work within the sustainability space. So I worked as a consultant and then as a manager for PWC in France and then in Canada, within the sustainability team, focusing on sustainability issues as a whole. And I started, during the year, to focus more on everything connected to sustainable finance and impact investing. And this is while I was supporting investors to implement an EG or an impact strategy that I actually saw this offer for UNICEF talking about this child investing project. And to be honest, at that time I had never heard about this. We were all taking children into account, but mainly from a [00:07:00] child labor angle and child labor perspective. And I realized that, yes, there were so many things to do and so I got really excited. I applied and I got hired and it’s been now two years and a half that I’m focusing more specifically on investing.
Jacob: So I’m curious for UNICEF and for your Child-lens Investing initiative, what is it that you’re most looking for right now?
Florian: First we want to continue to make this field grow and to do that, we will continue to develop thought leadership pieces. So we are planning to develop guidelines, for example, on how to apply Child-lens investing in a listed equity context. We are working on a stewardship toolkit that will support investors in the development and implementation of an active stewardship strategy, integrating children. So we’ll continue to work on these aspects.
Simultaneously, we really want to make this field grow by convening people, advocate for children. And this is why we really need the overall. impact investing community to work with us. It’s a project led by UNICEF, but we need all the players to come in and to build this field together. Gender-lens investing wasn’t built by one single actor, and we really [00:08:00] want to work with everyone interested to try to make this society a better and, more, suitable and livable for children.
And the last element that is key, I really want to focus on to implement the framework to work towards adoption. So we really want to work with investors to support them in implementing and adopting this Child-lens Investing framework. To do so we recently signed MOU with FinFund, the Finnish GFI, to work together and see how they could implement the Child-lens Investing framework into their own processes. So it’s really exciting news for us to work with such an organization and we hope we’ll be able to replicate these types of partnership in the coming years.
Thank you.
Jacob: So what would an ideal partner look like for UNICEF and Child-lens investing?
Florian: We are really open. Our key partner and initial partner with the government of Finland. The whole innovative finance hub, which I’m part of, was funded by the government of Finland and we are working really closely with them. And so it highlights that we can work with all types of partners and we need to work with all types of partners on that.
DFI’s are key examples and we [00:09:00] saw the roles they played in the development of the Gender-lens investing field. We are really looking forward to working with all types of investors from asset owners to asset managers, but also with standard setters, regulators, anyone interested in Improving, the integration of children within their existing guidelines, their existing regulations and so we are really open to work with everyone interested actually.
Jacob: If someone was interested in learning more about Child-lens Investing, what resources would you point them to?
Florian: So we have resources available online on our website. We have also resources available on the website of our partner, UNICEF USA, because we are working really closely with UNICEF USA on the development of this framework.
And I would say that the field is growing. So we have more and more partners mentioning it And more and more articles or media that are eager to learn more about Child-lens Investing. So I believe that if you Google Child-lens investing, you might find relevant information.
Jacob: What are the biggest roadblocks or mental hurdles they have about this topic?
Florian: I would say that the reaction [00:10:00] people tend to have when we talk about Child-lens Investing are really, really positive. We’ve been attending several events. We organized a session last year at GIIN and SoCap for instance, and every time the reactions were really positive and people were really curious to learn more about this.
So this was a real surprise in a way for us because we were really curious to see people’s reaction and honestly, everything has been so positive. But the core questions we receive regard and are focusing on the investment theme versus children.
Many investors came to us and said, Oh, it’s wonderful what you’re doing, but I’m not focusing on education. I’m not focusing on health on nutrition, so maybe it doesn’t make any sense for us. And this is why we are trying to educate investors more and more to make them realize that whatever sector you are investing in, there are Impact on children. And this impact can be maximized literally. And the arm potentially done through the investment, through the supply chain, through the parental policy that you might have implemented. The impact on children can be maximized and UNICEF as a whole is [00:11:00] providing guidelines and can provide support to try to maximize this impact.
I would say this is the core objective that we have is to make people realize that investing for children doesn’t necessarily mean centering all your investments on children, but more applying a Child-lens to your existing investment processes and strategies
Jacob: Thank you so much for the good that you’re doing and excited to see how you advance this and make Child-lens Investing more mainstream and make more responsible investments.
Florian: We have so many great things to accomplish together, please don’t hesitate and let’s build this field together.
Jacob: Fantastic. Thank you so much.
Florian: Thank you very much.
Learn more about ISSIMO Story Agency Here