Ethic sits down to talk about values alignment, child-lens investing, and corporate responsibility with UNICEF USA’s president and CEO

by, Melissa Banigan

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Ethic is always on the lookout for organizations whose stakeholders — from investors to individuals and institutions engaged in philanthropy — are driven by values alignment. UNICEF USA is one such organization. Last week, Ethic’s director of content strategy, Melissa Banigan, spoke with Michael Nyenhuis, the president and CEO of UNICEF USA, a non-profit, non-governmental organization that supports the United Nations Children’s Fund (UNICEF), about the organization’s deep commitment to children’s rights and his thoughts on climate impacts, corporate responsibility, and the role of finance in helping young people survive and thrive.

Michael brings over 25 years of global humanitarian, development, and fundraising experience to his role. A former journalist, he has served as the president and CEO of the disaster relief and global health organization, Americares, and was the CEO of the humanitarian relief organization, MAP International. He has also served on USAID’s Advisory Committee on Voluntary Foreign Aid and chaired the board of Integral Alliance, a global network of faith-based NGOs. He currently sits on the board of InterAction and the leadership council at Concordia.

Michael’s calendar is jam packed, which is why we were honored when he gave us 15 minutes of his time to speak with us about investment strategies that can impact outcomes for children.

ETHIC: In October, UNICEF USA’s Impact Fund for Children, in collaboration with the UNICEF Innovation Hub and impact investment consultant, Tideline, released the Child-Lens Investment Framework (CLIF), a tool that directs capital toward improving outcomes for children.  

At Ethic, we believe there are a lot of critical issues facing the world today, and we help our clients align their investments with the values most important to them. Could you tell me why people in finance who don't already prioritize children's well-being in their investments ought to do so? Can investing in children’s rights-themed strategies strengthen investment portfolios?

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NYENHUIS: Thank you. We’re excited about the impact of a child-lens investment framework to guide investment strategies. 

We see it as critical because investments in children are investments in tomorrow’s citizens,  workers, consumers, and decision-makers, and because the financial, societal, and economic returns in including children as essential stakeholders in investments will contribute to a more equitable world for us all. Research shows that when children are adequately invested in, childhood has the capacity to break cycles of poverty and uplift entire societies. 

UNICEF launched its Child-Lens Investment Framework to provide the necessary tools and considerations for asset owners and asset managers to invest in projects that positively and proactively influence child outcomes. Investing in children is not just the ethical thing to do but also the right thing for the children, businesses, and our society. And there are vibrant, growing markets that are starting to make some real impacts, including: 

• For the child that grows into tomorrow’s leader, we know increasing preschool enrollment for children in lower- and middle-income countries to 50 percent can result in $14 to $34 billion in lifetime earnings gains, according to a World Bank Study. The global early childhood education market is expected to grow at a 13.5 percent compound annual growth rate (CAGR) between 2022 and 2029.
• For businesses, failing to consider impact on children can run the risk of potential negative consequences, including fines, litigation, negative media attention, and increased regulatory oversight. Further, limited studies from the Global Child Forum have shown companies that perform well against child-rights benchmarks financially outperform their peers, but we know building this evidence base will be a continued effort in a nascent field. 

• From a societal standpoint, it is estimated that child malnutrition costs up to $3.5 trillion a year globally. Yet the investment firm, FTW Ventures, suggests there is a $6 trillion opportunity in disrupting the current state of the food and beverage industry in favor of building more sustainable food systems that can better serve children, their families, and their communities.
  
  

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ETHIC: Before talking more about the direct involvement of youth as stakeholders in investment, can you tell me a little about the nitty-gritty of how CLIF can be applied to investment portfolios?

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NYENHUIS: Absolutely. CLIF is designed to promote the adoption and implementation of the child lens throughout the investment lifecycle, and it is accompanied by an Investor Toolkit for tangible support to do just that.

First, in creating our tools, we didn't create something from scratch. We used existing standards so that any investor can easily apply CLIF to their strategies. CLIF incorporates the SDG Impact Standards, Impact Management Project’s 5 Dimensions of Impact, and the GIIN’s IRIS Data Measurement and Management System.

Second, we created a child-lens taxonomy that classifies investment strategies based on how the strategy affects and impacts children. It recognizes many different types of investment strategies, from those screening in listed equities that perform well against child rights to those where direct child outcomes are the north star. This taxonomy didn’t exist in other lenses, and it allows investors with diverse strategies to understand how they can incorporate children. 

The toolkit helps investors create an investment strategy that considers children, outlines the discrete impact of that strategy on children, and details clear diligence standards for environmental, social, and governmental (ESG) and impact investments throughout the investment process. It also includes a due diligence questionnaire and a set of child-related metrics. Additionally, we included case study examples to demonstrate how fund managers today are using the tools.

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ETHIC: Ethic provides a personalized direct indexing solution to investors, allowing them to have more control over their investments than many other more traditional investment approaches. Are there specific things our investors may want to consider when allocating capital toward enhancing child outcomes?

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NYENHUIS: We encourage investors to consider the whole child in their investment strategies. 

But what does “whole child” actually mean and why is it important? It is the notion that the quality of children’s lives is significantly influenced by the interwoven conditions of the broader social systems that could or should support them. If you consider the whole child, CLIF exists across most of Ethic's 19 pillars. For example, at the family or caregiver level, it can focus on gender or nutrition; at the societal level, it could look like investments in climate-resilient agriculture, poverty reduction, and education systems. In renewable energy, a child lens allows for a focus on solar projects that give more hours of light to help low-income households, schools, and clinics serving youth, achieving both reduced emissions and improved health and educational outcomes. In affordable housing, it is an elevated priority for proximity to quality childcare. The list goes on.

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ETHIC: Ethic thinks a lot about what happens in the workplace. For example, our Worker Treatment Pillar (one of our 19 Sustainability Pillars) helps investors consider how companies track down child labor in their supply chain and identify whether they are taking child labor seriously. The pillar also looks at the implications of adult worker treatment on children and families — for example, how flexible working schemes can benefit workers’ children. Are there specific child- and family-friendly workplace policies that you think investors ought to consider when making investment decisions?

NYENHUIS: This is a priority for UNICEF as well. Our due diligence process, built to be incorporated into other due diligence questionnaires, is the most direct manifestation of that. It builds on UNICEF’s “Children’s Rights and Business Principles,” which was the first comprehensive set of principles to guide companies on the full range of actions they can take in the workplace, marketplace, and community to respect and support children’s rights. 

The absolute north star is not a particular policy but an explicit recognition that children be enumerated as key stakeholders in governance policies, such as codes of conduct or marketing policies. More specifically, we work closely with corporate partners on a range of these kinds of issues. We partnered with LEGO Group, for instance, on family-friendly workplace policies, online child safety, and more. We designed a Child Online Safety Assessment Tool that helped LEGO review its operations across the business and identify areas of best practice alongside those that could be strengthened.

What’s good for children — and the communities they live in — is good for business. The more we consider them, the better off we’ll be. 

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ETHIC: Company impacts on children can be indirect as well, like through environmental impacts. Can you talk about companies’ more systemic contributions or harms to children?

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NYENHUIS: Businesses have a great deal of impact on the well-being of children and communities. More than 1 billion children are touched by global business supply chains directly or indirectly. Ensuring that companies have a useful, consistent, and relevant process to identify and address issues before or as they arise is critical. It’s a focus here in the U.S., but beyond this country as well. UNICEF has made children’s rights in business a core programmatic priority in about 40 countries.

Supply chain and environmental impacts may be the most obvious. But less obvious impacts include how quality work policies address parental well-being and leave, or the way products are marketed and used, perhaps in ways that are detrimental to children’s health or self-esteem.

ETHIC: Let’s keep talking about climate change. UNICEF recently issued a special report titled “Children Displaced in a Changing Climate.” I was shocked to learn that nearly 43 million children have been displaced by weather-related disasters over the last six years — or about 20,000 children per day.

Clearly, young people are navigating a future made uncertain by climate change. Ethic believes this is an area where young people’s contributions can create meaningful impact, yet currently,  only 2.4 percent of climate finance from major multilateral climate funds goes towards “child-responsive” activities, which according to the report addresses “the distinct and heightened risks children experience from the climate crisis, strengthening the resilience of child-critical social services and empowering children as agents of change." Driving more funds toward youth climate solutions is key. Can you tell me how youth can get involved as a primary stakeholder group?

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NYENHUIS: In UNICEF USA’s recent report, From Eco-Anxiety to Eco-Optimism, over 3,300 youth from 15 countries were surveyed about how they view climate change, their approaches to dealing with the impacts, and what they demand from leaders to drive more meaningful change. We learned that there is an activism gap: young people want to take action, but they don’t know where or how to start. They need more tangible, impactful opportunities. They want to have a role in mitigating climate change. 

The first step is that companies and organizations must give young people a seat at the table. Climate change is a children’s rights issue. They have the right to be included in conversations that impact their future and well-being, and their voices deserve to be heard. 

Something else we learned from the survey is that young people want access to local solutions and green skilling, which can help them tap into — and build — the green economy. Through its Green Rising initiative and education programming, UNICEF connects young people to these types of opportunities. 

As we further develop child-lens investing, we seek to create even deeper sector guidance.  Explicitly recognizing youth impacts and voice will be key. In climate, for instance, solutions for children will vary dramatically by region. In some island countries, the consequences of rising sea levels or the disappearance of some types of fishes are disastrous. In some other rural areas, off-grid electricity access must be a priority for child education. In other areas, the lack of a variety of nutritious products leads to stunting, which makes regenerative and climate- resilient agriculture the top priority. This will all be part of a CLIF climate strategy.

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ETHIC: Are there things the private sector can do or scale up to help youth access to capital?

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NYENHUIS: There are many levers the private sector can pull. We think one of the most important ones is advocating for and investing in policies and strategies that benefit children. Once children are recognized as a key stakeholder in all investment and governance policies, the intentionality for all decisions is elevated to reduce harm and improve child and youth outcomes. 

A key way to start is to start asking questions:

• Does your investment affect children? If so, how? What are the outputs and outcomes of your investment vis-à-vis children.
• Does your investment impact children indirectly? If so, how? 

The journey with CLIF is quite similar to how it worked with other investors to implement a gender lens — sometimes by just asking simple questions.

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ETHIC: Michael, we share a background in journalism. So much in today’s local and global news is discouraging, and the media often crafts doomsday scenarios that can feel overwhelming. Yet I think journalism and storytellers in general have a huge role to play in shaping narratives that enable us to not only understand the issues of the day but also frame potential solutions. How can we use storytelling as a catalyst for change?

NYENHUIS: Storytelling, broadly, has to speak to the head and the heart. UNICEF has strong data, which we elevate in our messaging. But we also know the value of personal stories and making data come to life. 

Last year, I visited the small, remote community of Losol in Kenya. It sits on a small hilltop in a desert-like environment made even more so by the severe droughts of the previous years. There is no water nearby, no latrines, no agriculture, no schools, no clinics. While there, I met a mother named Akalaptan, who’d recently arrived in Losol to sift for small flakes of gold that she can sell to buy water and flour to sustain her family. Yet her children were still suffering from malnutrition. UNICEF was there to help families like Akalaptan’s by treating malnutrition, and in 2022 alone, UNICEF and partners reached 7.3 million children suffering from malnutrition.

It’s important to learn about the people who are facing these challenges, but it’s also important to leverage data in our storytelling to illustrate the breadth of need and the impact UNICEF is having on children across the world.

ETHIC: I’ll throw the final question in your court: What question should I have asked you that I didn’t ask?

NYENHUIS: I have been thinking a lot about what legacy I want to leave and how I can help UNICEF USA have the maximum amount of impact for children. I want to serve as a champion for children’s rights, helping ensure that societal structures, policies, and systems are oriented more directly toward giving more children the opportunities they deserve. And I want to support more people to channel their own energy and superpowers towards joining me in these efforts. It’s a huge undertaking, but at the end of the day, it’s a privilege to lead an organization that seeks to make sure all children are healthy, educated, protected, and respected.