Today’s children are tomorrow’s youth and the future’s adults.
Issues affecting children have often been cast aside because young people can’t cast ballots or vote with their dollars. But as they’ve grown into young adults, Generation Z is showing up in the streets and forcing people to pay attention to youths. In Nepal. In Bangladesh. In Kenya. In Madagascar, and elsewhere.
Protests (and toppled governments) are the most visible consequences of inaction on issues like employment, healthcare and climate change that weigh heavily on young people; there is much more evidence on the long-term effects of such social determinants in youth nutrition, mental health data, test scores, and educational achievement..
“Child-lens investing” has emerged as an attempt to get ahead of young people’s social and economic development. The strategy takes a long-term investment view, focusing on businesses and projects that improve younger generations’ lives through better access to nutritious food, healthcare, education, safe digital and physical environments, and protection from violence. Such a strategy ensures investments intentionally protect children and widen opportunities for them as they get older.
“As a society, we still don’t treat children as the unique stakeholders that they are,” says Sjoerd Rozing of Netherlands-based Triodos Investment Management, which manages almost $7 billion in assets as an affiliate of the Dutch bank Triodos.
Triodos’ Future Generations Fund aims to demonstrate how to do so. The firm has adopted the child-lens investing framework, developed by UNICEF in collaboration with over 100 stakeholders and reframed its investment decision-making process to consider how a company’s operations, supply chains and policies affect children and their caregivers.
For example, the Future Generations fund backed SABESP, a Brazilian water utility and sewage services provider, because it supports children’s access to clean water. The basis for its investment in Kenyan telecommunications company Safaricom is better connectivity and access to digital services for households. For cybersecurity company Gen Digital, it’s about protecting children’s privacy and online safety.
The open-ended fund has raised €95 million and made 35 investments since launching in 2022. Rozing says it is one of Triodos’ best performing funds, in part because the child-lens strategy gives Triodos the flexibility to invest in a diverse portfolio of companies that all touch on the lives of children.
“Our goal has been to deliver market-rate returns based on the level of risk and with much better impact. If you look at the performance of the fund over the last three years, we’re doing just that,” he says.
Triodos donates the equivalent of 0.1% of the fund’s net asset value annually for UNICEF programs, such as the Building Bricks for the Future project in Côte d’Ivoire, which upcycles plastic waste into bricks for building classrooms.
Nonprofit venture funds
The practice of child-lens investing is growing, particularly among cause-focused nonprofits that have created impact investment funds. With government grants and other funding in short supply, investments in startups and other ventures can help the organizations attract private capital to scale their impact with market-based, and often tech-enabled, strategies.
UNICEF, through the UNICEF Innovative Finance Hub and UNICEF USA Impact Fund for Children introduced a framework for child-lens investing in 2023, taking a page from the playbook of gender-lens (or racial equity-lens, or refugee-lens or decarceration-lens or…) investing.
The Global Child Forum tracks the performance of more than 1,000 publicly listed companies to develop an annual children’s rights benchmark for corporations. The UK government’s 10-year, £500 million ($660 million) Better Futures Fund will pay for improved social outcomes and opportunities for vulnerable children and young people.
Save the Children Global Ventures, an early adopter of child-lens investing, launched its open-ended Children’s Impact Multiplier Fund in 2023 to back social enterprises that benefit vulnerable children in developing countries. The fund provides debt, catalytic equity and guarantees in checks ranging between $250,000 to $1 million. Its portfolio includes ThinkMD, which uses artificial intelligence to interpret clinical data to improve diagnosis and treatment in areas where healthcare infrastructure is limited.
Last year, the Save the Children venture fund teamed up with Singapore-based emerging markets asset manager Kaizenvest, that’s focused on education, to mobilize $50 million for the Generation Empowerment Fund. The fund supports community-based schools via healthcare facilities and financial institutions. It backed Rwandese healthcare equipment procurement platform Viebeg in April this year, to expand its paediatric and maternity product lines to serve healthcare facilities in Kenya, Rwanda and the Democratic Republic of the Congo.
Nutritional gains
Child-lens investing fund managers represent just a drop in the bucket of all impact investment strategies, much less the broader capital markets. They’re showing how cross-cutting youth related issues are in investment strategies, and the risks they pose to portfolios that overlook them.
In a report with Criterion Institute last year, the Global Alliance for Nutrition highlighted the effect of poor childhood nutrition on learning outcomes and ultimately, productive participation in the workforce and broader economy. It can also lead to social unrest, the authors warned.
“Because good nutrition is so foundational for development and wellbeing, and because issues around food have a long history of being able to connect to political unrest like protests related to food prices and the Arab Spring, it seems likely that not attending to nutrition of young people would not be good for social stability,” GAIN’s Roberta Bove tells ImpactAlpha.
According to GAIN’s report, “persistent child malnutrition can exacerbate social inequalities and contribute to social unrest, political instability and conflict, which can disrupt markets, supply chains and investment environments.”
GAIN in 2023-year joined up with Belgian impact investor Incofin on its Nutritious Foods Financing Facility, or N3F, which focuses on improving nutrition and food security for children and other vulnerable populations in Africa. The blended-finance fund has raised $11.5 million, with backing from the now defunct USAID. According to her, children represent 44% of the consumers of investee company products within N3F’s portfolio.
“Most of [the portfolio companies] will be in agriculture, but you want to find the ones that push the needle when it comes to nutrition,” Bove says.
Kenya-based Soy Afric provides fortified flours and porridges and blended foods for vulnerable communities in East Africa. Tanzania-based Rainbow Haulage sources grains from smallholder farmers and supplies them to school feeding program managers and food relief organisations like World Food Programme.
NF3 has made 10 investments in small businesses in Uganda, Kenya, Zambia, Rwanda, Tanzania and Senegal. Bove says each deal must meet “eligibility criteria, both for the nutrition and the financial side.”
Anxious generation
Concerns over the negative impact on young people of smart phones and digital immersion has become a bipartisan cause, especially since the publication of Jonathan Haidt’s book, “The Anxious Generation.”
Hopelab, a nonprofit research and investment organization, is seeking to mobilize financing for the kind of “upstream” interventions in the social fabric that could have an impact on the mental health of today’s youths. Hopelab Ventures, with funding from Omidyar Group, has invested in two dozen youth mental health tech startups (disclosure: Hopelab supports ImpactAlpha’s coverage of Healthy Youth).
Finnfund, Finland’s development finance institution, is working to build a child-lens into its Digital Access Impact Fund, an €80 million fund ($93 million), for digital tools and infrastructure in emerging markets, narrowing its focus to companies that have family-friendly policies.
For example, “One of the most influential elements in [parents’] lives that affects their ability to care for their children is the way work is organized and how flexible the work workplace is,” says Finnfund’s Kaisa Alavuotunki.
“The whole agenda of promoting inclusive digital access or family-friendly workplaces is to address some of the root causes that are creating frustration among young people,” she says.
“We’re not the key solution to all these problems but I’d like to think that we are a small part of that force that tries for better futures – and tries to do our share in creating opportunities for the young people in the future, now.”
