For Investors

By proactively identifying and mitigating Child Labour risks, investors can safeguard investment performance, enhance portfolio stability, and ensure compliance with evolving regulatory and market expectations.

Contact us to learn how we can help you to identify Child Labour risk in your portfolio.

  • Exposure to Child Labour in supply chains can result in reputational risks, regulatory penalties, and financial instability.

    Asset and wealth managers who assess and mitigate these risks can enhance portfolio resilience and long-term value creation. Many firms already have policies addressing modern slavery, forced labour, and human trafficking. However, one important issue remains largely overlooked: child labour.

    As institutional investors are demanding greater transparency and ethical responsibility in portfolios, asset and wealth managers should be proactive in addressing all labour rights risk, as a core part of a wider human rights agenda in order to safeguard investments from these risks to ensure long-term, sustainable returns for shareholders.

  • Consumer, Real Estate and Infrastructure investments are at high risk of Child Labour in both direct and indirect operations. Institutional Investors are increasingly incorporating human rights strategies into their portfolios, and firms must be ready to answer to their shareholders on how they are monitoring labour risks in their own operations (Real Estate, Infrastructure) and their portfolio companies (Consumer).

    Poor social governance can be a wider indicator of broader operational inefficiencies and mismanagement of portfolio companies.

    • If Consumer brands are exposed to unethical sourcing, it risks regulatory fines, supply chain disruptions, and brand damage - impacting margins and exit valuations.

    • If a construction firm relies on unethical suppliers, it risks project shutdowns, contract cancellations, and financing difficulties.

    • If infrastructure investments are tied to unethical labour practices, they risk being excluded from government contracts and international financing.

  • As stewards of pensions, pension funds must ensure that their investments align with strong governance, financial sustainability, and public accountability. Many funds already have policies addressing modern slavery, forced labour, and human trafficking. However, one important issue remains largely overlooked: child labour.

    For pension funds, this presents both financial and reputational considerations. Public pension funds are uniquely accountable to members, local councillors, and taxpayers, making proactive risk management essential. As regulatory scrutiny of supply chains increases, investors may wish to ensure that their approaches fully capture the scope of human rights risks.

Benefits for Investors

Competitive Advantage in Capital Markets

Companies with strong Child Labour compliance are more attractive to institutional investors, ESG funds, and lenders. This can lead to lower borrowing costs, higher stock multiples, and better liquidity.

Supply Chain Resilience and Operational Stability

Ensuring ethical labour practices reduces the risk of sudden supplier disruptions due to legal shutdowns or media scandals, leading to more predictable cash flows.

Reduced Regulatory Scrutiny and Fines

Proactively addressing Child Labour risks minimises legal exposure, prevents costly investigations, and avoids forced operational changes or supply chain sanctions.

Enhanced Talent Acquisition and Retention

Companies with strong compliance and corporate governance attract better executive leadership and skilled workers, improving long-term operational performance.

HACE’s Solutions for Investors

HACE provides a structured, managed service model, supported by HACE’s proprietary Products, designed to help investors identify, engage, and mitigate Child Labour risks across portfolios using both qualitative and quantitative insights. This framework is tailored for three key investor groups: Asset & Wealth Managers, Private Equity Investors, and Institutional Investors.

Firms can start anywhere on the HACE solutions journey.

Company Scorecards are a snapshot of how HACE objectively quantifies a company's Child Labour performance for investors. As part of a dynamic scoring system, they evolve with new data and are updated monthly. HACE alerts clients when there is a significant score change with our Advanced Monitoring system.

Understanding your portfolio or fund scores helps to stay ahead of risks, maintain trust, and demonstrate a commitment to responsible investment practices.