A study on correlations with profitability and human rights violations

How large corporates integrate children’s rights

March 2021

About this study

Within the business and human rights sphere, it is often argued that respecting human rights is also good for business as it decreases risk to the company and strengthens its license to operate. A company that harms its surroundings is not sustainable long-term. But while we frame these arguments in terms of human rights, what about children’s rights as they go beyond the rights of adults?[1] Does the same hold true for one of the, at least by the corporate sector, often forgotten groups? Children are uniquely impacted by company supply chains, operations, products and services, and in turn impact companies as family members of workers, a future workforce, consumers and, as a generation which are advocating for their future.

Since 2014, Global Child Forum, in collaboration with Boston Consulting Group, have been benchmarking corporates around the globe on how they report on their children’s rights impact. The aim of the benchmark series has been to track what companies are actually doing in relation to children and go beyond the issues of child labour and charity, to also highlight the need to look at product responsibility and marketing, environmental and societal impact and even employer practices in relation to parents. This endeavour has resulted in a rich database on corporate practice. But data, without understanding, rarely drives change. So, we wondered, is there a relationship between how companies are scoring on children’s rights and how they are performing in other areas?

We ran a correlation analysis between the results of the two latest benchmark studies: the Global State of Children’s Rights and Business 2019 and the State of Children’s Rights and Business in Southeast Asia 2020 against other parameters such as profitability, size/revenue and registered controversies around human rights[2]. It is our expectation that the results from the analysis can help bring clarity to how respecting children’s rights relates to other areas of business activity. It will also serve as a starting point for exploring how synergies and positive effects can be harnessed by integrating a children’s rights perspective in a wider human rights and sustainability approach.

This paper focuses on two of the most interesting findings from this exercise:

1) the correlation between how companies score in our benchmark study and third-party reporting on human rights violations;

2) the correlation between how companies score in our benchmark study with revenue and profit-margins (EBITDA-margin).

This report is published by Global Child Forum, using data from the State of Children’s Rights Benchmark Reports from 2019 and 2020. Boston Consulting Group has assisted in performing the data analysis using additional data provided by Sustainalytics and Bureau van Dijk. For more information see the Methodological note.

[1] Children are in this paper referred to according to the definition in the Convention on the Rights of the Child, as a person under 18 years old.

[2] Source for ESG-risk ratings and controversies data: Sustainalytics Global Access.

Source for financial data Bureau van Dijk

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Finding #1

Companies reporting on children's rights are also more involved in human rights violations

Finding #2

Large and profitable companies are more likely to be engaged in children's rights

Appendix - Methodological Note

What does this mean for business and investors?

Behind this report

This report is published by Global Child Forum, using data from the State of Children’s Rights Benchmark Reports from 2019 and 2020. Boston Consulting Group has assisted in performing the data analysis using additional data provided by Sustainalytics and Bureau van Dijk.

Global Child Forum

Founded in 2009 by the Swedish Royal Family, Global Child Forum is a leading forum for children’s rights and business dedicated to innovative thinking, knowledge-sharing and networking. Global Child Forum believes in the power and responsibility of business, working in partnership with all parts of  society, to create a prosperous, sustainable and just society for the world’s children. In addition to forums, Global Child Forum delivers research perspectives, best practices and risk assessment tools designed to unlock opportunities for business to integrate children’s rights into their operations and communities. For more information, please visit: www.globalchildforum.org.

Boston Consulting Group (BCG)

Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we help clients with total transformation—inspiring complex change, enabling organizations to grow, building competitive advantage, and driving bottom-line impact.

To succeed, organizations must blend digital and human capabilities. Our diverse, global teams bring deep industry and functional expertise and a range of perspectives to spark change. BCG delivers solutions through leading-edge management consulting along with technology and design, corporate and digital ventures—and business purpose. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, generating results that allow our clients to thrive.

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To quote this report, please use the following reference: “Global Child Forum Benchmark Quant paper 2021: How large corporates integrate children’s rights – a study on correlations with profitability and human rights violations”, Stockholm.

Address:
Global Child Forum
Storkyrkobrinken 2
S-111 28 Stockholm
info@globalchildforum.org
www.globalchildforum.org

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A study on correlations with profitability and human rights violations

Benchmark Quant Analysis

Covid-19 Snapshot

In the midst of work on The State of Children’s Rights and Business in Southeast Asia 2020 the global pandemic of COVID-19 hit, and while we were analysing annual reports for 2019, the situation in real time changed rapidly. As the Global Child Forum benchmark is based on publicly available information primarily covering annual year 2019, those information sources are unlikely to acknowledge the impact that the pandemic is having on operations or their responses to it, including those policies that protect children. This report, jointly written by the Global Child Forum and ELEVATE, attempts an overview of how COVID-19 is impacting the Southeast Asia region, including its impacts on children—while being cognizant of the fact that this is a multi-faceted issue that is still very much in flux.

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